Thoughts {12.09.15}

Energy looks to be catching a bid in early trading.  Energy is also broadly oversold now.  Not great short-term fundamentals in that space.  Market higher on on Dow/Dupont merger?split-up/whatever you want to call it news.

The term "technological deflation" is the new economic buzzword.  Its concept is that technological deflation is a good thing {classic economics would disagree} because it improves our standard of living even in a world where wages are stagnant.    You can read about that over here at Business Insider.   The example they use in the article is the iPhone, a device that even though it is expensive replaces the need for several other devices that in aggregate cost more.  I largely agree with the thinking regarding technology but I don't think we've thought about or worked through all of the societal implications from this.  For example two jobs that technology endangers would be bank tellers and your neighborhood mailman.  Cash stations and electronic banking are making costly branch offices for banks obsolete.  Email and, again, electronic banking  has for the most part done away with what a first class letter was supposed to be used for, to pay bills and send personal messages.  Both job classifications have been entry level ways for minorities in this country to enter the middle class.  Nobody seems to have come up with ways to replace the jobs going out with similar ones to take advantage of these gains.  It's hard then to think about technological deflation if a larger and larger percentage of the population can't afford to the products that are becoming cheaper.  

In a strange twist of events, Bloomberg notes that a strong dollar hurts China more than it does the US.  That's because, "the asian nation has tethered the yuan, for the most part, to the dollar in order to enhance financial stability.  That means as the dollar advance against most currencies across the world on expectations of rising U.S. interest rates, the yuan does too.  China suffers more though because its slowing economy is almost twice as dependent on trade".   It is fascinating to see all the odd twists and turns the money pumping policies of the past eight years have loosed upon the world.  I doubt that there's to many economists a year or so ago that would have thought an appreciating dollar might have ended up hurting the Chinese.  That's why it's so hard to trust those in the financial media who think they know all the outcomes and have all the answers.

*Long Energy ETFs in client and personal accounts although positions can change at any time.  Dow and Dupont are components of many of the ETFs we own in both client and personal accounts.