Market Commentary
WSGardener
6-12-2014

Well it looks like we got ourselves a real pickle of a situation with Iraq in a very severe state.  The market is certainly spooked taking Dow down small again today.   When we combine this with what seems like an ever deteriorating state of affairs in the East Ukraine, it is hard to feel real comfortable about world peace.   I don’t think US has the stomach to get involved with boots on the ground in either situation.  Well I think we now see what lack of action in Syria has brought us.   Not good

Oil in on the move with WTI crude trading up to $106 this afternoon, still a nice discount to North sea Brent at around $112.   That discount has slimmed down in the past year, as I believe it was up near $14 not so long ago.   US oil and gas production has been an interesting wild card which has changed the dynamic.   It seems the more we produce, the less likely we are to be involved in Middle East affairs.   But I am only telling you what you already know.  Is anyone surprised?    

In the last note I mentioned the VIX – a US indicator of fear in the market trading at fairly depressed level around mid 11ish, today it is trading closer 12.70 level, a nice bump up with the market off about 1% from the highs.  We get a big move down and that can trade past 16 in a moment, but I am not discounting the idea of re-testing 17k in the Dow.   Let’s see how quickly we get bored with the Iraq story.   With insurgents only 80 miles away, this could get ugly.  If Baghdad falls all bets are off.   Watch closely!!

I still think there is good reason to have a bit of a hedge on in this market.  Sometimes these things come like a slow pitch.    I am lobbing the ball right now, and there is plenty of time to take a swing.   If the insurance is still cheap I think it makes sense but I don’t want to spend other people’s money.   Just keep it in mind

Good Luck!!!!