As we start the year, I'd like to make a few changes to our blog. Daily commentary will cease, though ES1!6929.25 levels will still be provided when VIX is high. I will begin posting cross asset allocation updates with entry and exit notes after the market closes for positions opened or closed that day, and before the market opens for overnight position updates.

I have been warning about stagflation for a few years, and it is playing out as expected. The US debt crisis is getting worse, and long end yields are not following the Fed's rate cuts, which suggests inflation is here to stay. Yet over the weekend, an unexpected and swift move by the US government to kidnap Venezuela's President Maduro, whose country has the largest oil reserves in the world despite outdated infrastructure. Index futures initially reacted slightly negatively over the weekend, but quickly recovered on Sunday night, and most are in the green premarket. Suppressed oil prices have been the one major headwind to our stagflation thesis, given oil is the most important commodity. It could take a year or two for Venezuelan oil to catch up, as infrastructure takes time to deploy. Markets may start pricing in the expectation of additional supply over the coming months, even though it could take years to fully play out.