Pharoah Value

If they move too quick
Oh whey oh
They're falling down like a domino
--The Bangles

The three general macro scenarios that I constantly assign probabilities to are 'big' inflation, 'average' inflation, and deflation. Due to massive worldwide debt and leverage, I've favored the deflation scenario for years and have been tilting my asset allocations appropriately.

When the Fed announced QE2 late last summer with intent to achieve inflation targets regardless of cost, that gave even deflationistas like me cause for pause. Since then risky assets like stocks and commodities have taken off in anticipation of the print fest.

It feels like the market is at an important juncture. Either risky assets run out of upside gas and begin a new deflationary leg lower. Or, after a brief siesta, and perhaps ignited by darkening skies in the Middle East, they sprint higher.

While I still favor the former, I must say that I've been eyeing commodities (again) as a hedge in case we climb the latter ladder.

Have re-established small positions in gold and general commodity ETF positions. Depending on how the Egypt picture shapes over the weekend, I may be a buyer of energy early next week. If commodities get their groove on, I may be prone to pyramid (!) higher.

position in GLD, RJI