General Update, Featuring Gartman's Failure...

The ubiquitous Dennis Gartman, a self-aggrandized, self-appointed market expert.  Yet for those of us who really know the markets,  he is nothing more than a supreme buffoon - big hat, no cattle.  The numbers bear this out as, courtesy of my friend and colleague "Jesse," it was revealed that in 2010 he was outperformed by 82% of all mutual funds.  It's worse for the round, mound of absurdity from Virginia:  in 2009 over 98% of all funds outperformed this charlatan.  Here's the report:  LINK.  Once again my adage proves true:  those who can, do - those who can't, sell newsletters to the morons who buy them...

Housing:  Oops.  Per the Case-Shiller index of 20 large cities, housing prices have hit their lowest price level since the housing bust began.  Here's the report:  Look Out Below.  The factors driving housing prices lower will only intensify as 2011 unfolds:  foreclosures, joblessness, housing inventory build-up AND, in a historical contex and relative to renting, home prices are still way too high.  At some point prices will regress to long-term mean level and then overshoot below that level.  We have at least another 30-50% of downside in most areas...

Inflation:  I'm sure most of you understand that the price levels for everything we need to buy on a daily basis have risen quite a bit over the last year (especially gasoline over the last month - up almost 24% in the last month for me).  Here's an article from the Chicago Tribune sent to me by my friend/colleague Hal discussing the imminent price increases in the retail food distribution system (supermarkets, restaurants, Mickey D's): LINK. The only time you should put your head in the sand and ignore the news is when the Government or the Fed want to give you their version of reality...

And finally, an adverse effect of QE:  Commercial real estate lending is on the rise again.  Why this is, I don't know.  Denver is typically indicative of national trends and, while commercial space is still being built, the vacancy rate is going thru the roof.  I know this for a fact from some tenants and I know it anectdotally from seeing "for lease" signs flourishing at malls and office buildings all around the city.  Here's the report on money flowing back into CMBS:  LINK.  Interestingly, the money manager being cited is from PPM in Chicago.  I remember from my junk bonds days that we loved PPM as a client because they took rediculous risks in distressed securities and we could make a lot of money pumping garbage into them.  I guess if they want to "leg" into being commercial landlords, buying into this via senior lending positions is one way to go about it.  Or maybe they foresee the Chinese eventually moving a lot of their businesses over here LOL.  Whatever the dynamic is, it is clear that all the money the Fed is printing has to go somewhere besides into Treasury bonds.  We know the "smart" money - i.e. the sell-side of Wall Street - is using their QE largesse to Treasuries.  We also know this same constituency would be the ones unloading commercial paper into funds like PPM...