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Dollars and Sense

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Always think positive.

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Money, get away.
Get a good job with good pay and you're okay.
Money, it's a gas.
Grab that cash with both hands and make a stash.
(Pink Floyd)

Good morning and welcome back to the warming. Spring has arrived and there's love in the air as Boo and his crew try to swipe the last chair. They gave it a try with some Monday supply but late day demand left the bears high and dry. "The ducks are aligned for a spank from behind," said the bear as he stared at the tape intertwined, "the bovine brigade is now flying blind as they try to resume their steep upside grind." Can the fundies now save the Minx from her grave or will we cut the rug at a loud Red Dye Rave? It's tricky, it's Tuesday so please turn around as we ready to put our ear to the ground!

Last night, after pouring through a bevy of kind email vibes, I spent some time diggin' into the Minx. It typically takes me a few days to find a rhythm after a few days away from the fray and yesterday was no exception. While I genuinely enjoy watching the tape, the "know thyself" rule had my fingers manicuring risk rather than pulling triggers. Sure, there were some trades that got away--perhaps I'm suffering from premature evacuation in the metals and energy--but the best part about this business is that each session is ripe with fresh opportunities and new beginnings.

One of the more salient columns I read was the weekly missive from Jeff "Will I see you in Vail? You Betcha!" Saut of Raymond James. The savvy soothsayin' sommelier pondered the possibility of negative "real" interest rates in the context of mixed messages from the FOMC and BLS. He further opined that "the highs are in" for the equity markets and capital preservation is a focus, particularly with cash now serving as an "attractive asset class" that provides a 4.75% risk-free rate of return. Indeed, there aren't many seers that I respect more than Jeff--he nailed the "stuff stocks" (commodities) before they were on anyone's radar--and I read every word my good friend writes.

His observations, coupled with a conversation I had a few weeks back with a buddy who runs ten figure size, triggered some thoughts in my crowded keppe. Minyans know that I believe that we're in an "asset class deflation vs. dollar devaluation" conundrum, a thought that echoed in the Ojai mountains. And while it seems that Boom Boom is committed to keeping all boats rising amidst the liquidity tide, it's curious to note that not all vessels are created equal. Indeed, while the CRB is up 8% after bouncing on its multi-year trendline, the S&P is actually down during that same time horizon. Telling? Only if we slide down a slippery slope, I know, but it's certainly worthy of a mention.

The natural extension of these thoughts is the very basis of our valuation. I've opined that a "dollar shock" is a distinct possibility with a higher probability than most would assign. That doesn't mean we should run for the hills (unless, of course, they're alive with the sound of music), it simply means that we should remain conscious of the potential risks. Remember, Minyans, if you're making 10% on your equities as the greenback gives back 15%, you're a net loser in the global economy. That's not on many radars despite a 26% drop since 2002 and, as we know, it will likely be too late by the time it is.

We power up this Tuesday pup to find pink metals, a marginally lower dollar (DXY 88ish is six month lows), slightly green equity futes, a crude 'tude north of $70/brl and S&P 1295 serving as initial resistance. We're also entering the meat of earnings season and it'll be interesting to see the collective state of margins. With input prices rising anew and debt levels where they are, I wanna see how pricing power factors into the corporate equation. A lot to think about, to be sure, but that's why we're here--to figure it out together. Trade to win--never trade 'not to lose'--and think positive. Always think positive.

Good luck today.

R.P.

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