Lemony Snicket ...The Grumpy Rally and Contrarian Investments

We all known about the notion of getting a lump of coal in our Christmas stocking, but maybe this year coal could be the hottest thing to own when the holidays come around. I like the action in coal the last week or so as well as other beaten down niches like agricultural nutrients. One thing about severely beaten down sectors is that they always come back in a very stealthy manner but not before a few false starts. They also come back before the fundamentals give a clear cut buy signal-but a string of positive hints, some could even call them anecdotal. 

The most abundant and most hated source of energy looks compelling.

What if?

Europe has hit a bottom and begins to turn around?
China is only lying a little about their economy and growth rebounds north of 8%?
The Fed stops printing money because the worst is over and 160,000 job gains a month is the new normal?
What could happen to the stock market? Well, we are told to brace for a massive correction as the market is only up on Federal Reserve money-printing. People that have collected guns, thousands of rounds of ammo, and pounds of gold bricks but never read income statements in their lives are joined by supposed experts calling for Armageddon. In a way it's funny because all the guns and ammo stocks have soared and at the very least people could have been paid to be paranoid. Of course paper money means nothing when the world hits re-set, but until then I'll keep gathering the stuff to live this odd thing called life.

Ironically some people are so eager for the end of the world they're pissed when the Fed prints money and pissed when the Fed stops printing money. 

I hate the Federal Reserve printing money and think the whole thing is a scam designed to protect the super wealthy (for the record that includes Obama and his inner circle) and banks at the expense of Main Street. Their actions never seem to really help, and by the time funds from all their shenanigans begin to seep out to Main Street, we see inflation rear its ugly head (see Japan, where prices spiked immediately even as incomes remained flat). Be that as it may, I want to remind everyone tapering is different than raising interest rates.
Tapering means buying fewer assets each month
Rate hikes means the economy is improving fast enough to make money scarcer

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We are years from the Fed hiking rates, but that doesn't mean the Street will not freak out with some kind of pity party. I just happen to think such whining will create opportunities. In the meantime perhaps the best action and most underreported news of the week has been the rebound in commodities and commodity stocks. The action could reflect short-term trading as this is one of the few sectors not up for the year, or it could be a sign a bottom is being put into place. I lean toward the latter and think the traditional role of the market as a harbinger of economy six months out is at work as it applies to certain sectors like coal.

Modern Welfare State: