The Big Picture for the Week of March 27, 2011

Seeking Alpha sent me some interview questions that I am working on over the weekend and should be published mid week sometime. The following is a preview with one question and answer.

SA: Where would you plot U.S. equities as an asset class on the risk curve right now?

RN: I think I would frame my answer a little differently versus the question. The fundamentals in the US are not good and I cannot envision how the Fed’s targeting of asset prices and equity markets won’t end up causing more pain but right here right now, for whatever reason, these things don’t matter to the market. It is important to realize that the market seems inclined to go higher for some period of time and as malignant as the environment might be, the right trade is more long than not with some sort of defensive trigger point in place if there ever turns out to be a consequence for what the Fed has been doing. In theory, there could be no consequence but planning for consequence is very important.

Yesterday and today is the Prescott Basin Ops Drill which is an annual inter-agency training that apparently is very unique. I am told that this drill is a national model and that the level of cooperation we have here is rare.

This year I participated with the planning group which started back in November with monthly meetings. Amusingly it reminds me of something from college; I organized the Greek Week Volleyball tournament one year which required work and planning with a bunch of people from outside our house.