USD/JPY vs Dollar index

Interesting relationship unfolding right now between the dollar and the yen.  While the dollar index has been tanking, USD/JPY is strengthening!  This seems to support a theory of mine that the yen will probably be the first major currency to need replacement.  

QEnfinity and the changes to the game

QEnfinity is here, and much sooner than I expected.  I figured the Fed would have its hands tied with the S&P at near all time highs, commodity prices up, and operation twist still in full effect.  I guessed wrong, my short opportunities post from august is now null.  I've closed my VIX positions for a moderate loss, and from here I will keep the focus on FX and long positions in certain equities and commodities.  S&P will hit new highs, apple will hit new highs, and I expect silver/gold/oil/corn will test previous highs.  While I still think there will soon exist great short opportunities in the Euro, I remain sidelined for bit while I wait for it to unfold.  Naive in my thoughts of a Eurozone breakup, I now realize that is much more likely that Germany leaves the euro than a nation on the verge of default.  This realization comes at the hands of Mario Draghi and the ECB, who seem intent on doing "whatever it takes" to hold the eurozone together.  Either way it's all bad news for the Euro.  In light of the recent QEnfinity (called so instead of QE3 because it is open ended, can last forever), EUR/CAD will be my favorite short when the time comes.

Good twitter people to follow

Some good people to follow on twitter: John Kicklighter, Chris Martenson, Ilya Spivak, Erik Townsend, djfxtrader, zerohedge, theEconomist, CodyWillard, dailyfx, soberlook, theanalyst_hk, MarkitEconomics

VIX call/SPY shrt opportunities approaching

As I stated a while back i've been preparing for somewhat of a VIX all in that will payoff sometime between september and jan 2013.  I believe that the time to make this all in is now, or in the coming weeks, with VIX at around $15.  Although I've noticed a disappointing trend lately: wide call/put spreads and poor correlation to changing fundamentals in equities. With this in mind, I think the better way to go about this is a AUD/USD or AUD/CAD fx short or USD/JPY long.  I'll probably be in a mixture of the above.  When fx technicals look favorable i'll continue to enter into fx. positions.  The rest of August should be relatively quiet until Jackson hole on August 31... which i doubt will bring any new news and will only succeed in bringing exasperated highs and lows only to retrace a week later.  The real event risk comes mid september, this looks to be the money maker.  Global fundamental outlook will be revisited countless times and im looking for VIX -> 20+.  

Student Loan BBLE

Somethign I've been preaching about for a while but haven't necessarilly written about is what will likely be known eventually as the student loan bubble.  The overextension of credit in this area of the market is beyond make beleive.  As legislation continues to roll through congress pertaining to helping students fund education and forgive student loan debt, it seems clear that the end is near.  Universitys with state funding may take a hit, but the real losers in this equation are private universities.  To be more clear, you may be a university that's about to fail if you fit the following criteria.....

1.  The cost of attendence is on par with most public universities.
2.  Admission standards are relatively low
3.  You offer online degrees
4.  You do not have a med school or engineering department.
5.  You recieve no community or state funding

The best way to make money today

Is to listen to mainstream economists and brokers tell you what to do, and then do the opposite

To Make the Predictions Clear

The following events are going to happen, this is not a question but a matter of time.  I've listed a sequence of events in the order I perceive them happening.   The order could be way off and surely I am leaving out steps, but it will all happen in my lifetime, likely the next 5-10 years.

- Bank downgrades and bank runs across Europe (continuing process throughout the next 5 bullets)
- Greece leaves Euro, defaults
- Spain leaves Euro, defaults
- Italy leaves Euro, defaults
- Portugal leaves Euro, defaults
- Ireland leaves euro, defaults
- America officially recognizes itself in a "double dip" recession
- Housing Prices take out 2007-2008 lows and create new low.
- QE3:  a monetary stimulus package of at least 200 billion.
- gold/silver take out previous highs
- Downgrades of american banks
- Treasury bonds lose value, Fed becomes only buyer of debt.
- QE4?
- YoY or MoM inflation surpasses Fed target
- Interest rates forced to rise
- American Bank downgrades, failures, and bailouts
- Riots/Protests
- Bond market collapse
- Global Depression
- Dollar loses reserve currency status

Ahead of Today's FOMC Minutes Release

There is a strong case to argue that the FOMC minutes will bring nothing but bad news.   Released at 1:00 pm CT today, the fed will either do one of two things: They will confirm the notion that everything is peachy, but emphasize that they are willing to take measures if the "euro contagion" spreads our way.  OR, The fed will express  neutrality with regard to the current conditions and hint that QE3 is a necessary tool that will be employed if conditions deteriorate.   The former is more likely and will likely add some to the recent dollar strength and force more more calls as certain equities/commodities hit new lows and we break through some stop losses.  The latter should send the dollar pummeling like a fat kid on a steep hill.  This summarize the consequences, equities and commodities are either going to get pummeled or an expectation bubble is going to be created.  I figure I'll be disappointed in the end either way.   

As usual though, this won't stop me from profiting.  Since I already have open positions short the EURUSD and the AUDUSD,  i'm going to weather through the event risk and hope the FED doesn't get too dovish just yet.  

Banks will Fail

JPM fell 8% today, this is not the main show, but a preview of what is to come.  The financial system is entirely reliant on QE and low interest rates.  The velocity of money is the only thing that matters right now.  For the financial system to remain in tact, a continuous (not just continuous but continuously growing) stream of liquidity needs to be introduced into the market.  Banks cannot afford higher interest rates, which would simultaneously force them to tighten loaning standards and discourage them from obtaining new liquidity through loans.  Suddenly, interest on debt and toxic asset risks would actually matter... but how can anyone possibly expect to profit off loans when artificially low interest rates were set that fail to compensate the bank for the risk of default?  We forget the purpose of an interest rate in the first place.  In a free market, interest rates are based on the risk of default, and set such that banks can make a profit despite the risk of default.  We have forgotten this, but if money velocity is fast enough default risk can be lowered while increasing credit availability.  But what happens when money velocity slows???

  With the existence of the FDIC, all banks hold near the minimum 10% reserves (electronically...the actual amount of cash on hand is far less).  Thanks to fractional banking, most institutions are linked to one another such that the failure of one institution will lead to the failure of others.  Thus it will not be 1 bank that fails, it will be many.  It will not be 10 years before banks need another bailout, it will be 2, or less.  Will we bail them out? Probably, but if we do its just a matter of time (~5 years or so) until we will have to do it again.  Until the underlying problems are solved (Federal reserve, interest rates, FDIC), this cycle will repeat over and over.  The crash is not the problem, the problem is currency policies.  Crash is the solution, and we can then start anew.

It can happen

"By the end of November 2001, people fearing the worst began withdrawing large sums of money from their bank accounts, turning pesos into dollars and sending them abroad, causing a run on the banks. On 2 December 2001 the government enacted a set of measures, informally known as the corralito,^[29][30] that effectively froze all bank accounts for twelve months,^[31][32] allowing for only minor sums of cash to be withdrawn, initially announced to be of just $250 a week.<sup>[33]" - Argentina


It can happen, it has happened, and it will happen.</sup>

greece, merkel, and more.

Its amazing how much more prosperous a region can be without taxes, and absolutely stunning how much poor people, yes POOR PEOPLE, can benefit. In the video below, a town in Greece has partially converted to the barter system.   Goods are cheaper when sold this way, making it easier for the Greek people to buy and sell what they want or need.  This is what happens after a default, this is the next step in a currency collapse, it won't be too many more years until we all have to face something like this.
http://www.youtube.com/watch?v=9y9R0v96K48

In other news, Angela Merkel has confirmed to the world that she isn't just telling the world one thing and doing something else behind the scenes... she really is stupid enough to let Germany go down with the Euro.  Here's a quote:


"Angela Merkel is not happy that financial markets have not made any contribution to resolving the financial crisis" - from Reuters.

Understanding can be a wonderful feeling.  However, understanding that our policy makers do not understand the financial crisis gives me feelings of anger and despair.   Sure I am excited about trading new rounds of asset purchases, QE, and the eventual bust, but what about the future???

Financial markets contribuiting to resolving financial crisis? Please.  These are businesses.  You put a federal guarantee on deposits and expect banks to care about holding cash reserves?  You give banks funding when the fail yet expect them to take measures to prevent failure?  You set artificially low interest rates to make loans more available and expect banks to still be able to compensate for the risk of default?  This is all absurd.  Banks, investors, traders, we are all just playing the game.  You tell us what we can and cannot do, you give us money, you take responsibility for our actions.... in the mean time we find ways to profit off of it.... because the alternative is to not profit off of it .... and sorry but that just seems silly Angela Merkel.

History

200 years in the future, students will learn from history and economic books that cite the failures of a centrally planned economy.  I expect there will be at least a chapter devoted to "The Great Keynesian Experiment in America 1971 - 2022", and maybe hopefully another chapter to address "Deficit Spending as a Means to Economic Growth and Recovery in America 1931-20??"

Lastly I hope these textbooks compare the benefits and shortcomings of long term price stability vs. short term price stability.  

Similar to last year, only this year we have a timetable.

The economic woes of the world haven't changed much in a year, they are just ever so slightly worse.  The benefit we have is that at this point is that we've done it all before.  We even have schedules and specific dates to guide us this time around.  We know that operation twist comes to an end in June.  We know that on April 16-17th North Korea will try to launch a test missile, and we know that the US will breach the debt ceiling before the November elections.  My timeline is as follows:

Now -> mid May:  Rally mode, possible QE3 anouncements/hints, possible N Korea scares which may have effect on select commodities.

Mid May -> August:    The emergence of QE3 announcement if it is going to happen.  I expect mediocre economic data.   We can rally on QE3 or dip some without it.

August -> December:  This is where we bring the pain.  Debt ceiling will be breached at latest in October, republicans will not be any help in getting a debt ceiling raise to pass because they have an election to win.  Country is likely to be more divided than ever.  Even with QE3, I think any rally dives for a moment during elections and debt ceiling breach.

Based on this timeline i'll hold on gold and oil for the time being.  Upon emergence of QE3, i'll continue holding my gold and oil positions.  Without it i'll begin the VIX all in.  When September rolls around i'll begin shorting financials again if we already aren't in avalanche mode because of the lack of QE.

Preparing for a VIX all in

Lately a number of sources have noted the incredibly low price of the VIX lately.  I have predicting a time line in which the easy money and growth in stock prices will cease sometime around may.  Operation twist ends in June, so if we don't start hitting the fan in May, June would be a good second guess.   Debt ceiling woes should start having an effect sometime around august or September, and elections tend to throw everything into a tussie.   My point here is that the culmination of my financial reading and analysis points to significantly higher volatility in the fall and i'm tripling-down-all-in-throwing-the-childrens-college-funds into the VIX sometime early May or late April, and then again in September if that proves to be a wash.

Greek Default Timeline and more explained

Voting may be a right, but it is certainly not a privilege.

What is a vote worth?  The answer changes for everyone.  Not because different people value a vote differently, but because from an omnisceent perspective a vote is intrinsically worth more to someone who has something to gain than from someone with something to lose.  It is the means by which the poor can be subsidized by the rich.  I say subsidized and not supported because any monetary benefit given out by the public for the benefit of a specific group/cause/corporation/industry is a subsidy.  I dislike the word support because that infers a long term solution, whereas the current "support" is more like a child "supporting" a feather by continuously blowing it up in the air.  Subsidies are specifically for the purpose of lowering prices though..... right?  In fact prices are lowered, the price it costs to live for anyone subsidized is greatly reduced.  The obvious flaws in the voting system reflect current and past economic policy.  If this does not yet seem logically clear, take the example below, writen as a microcosm:

Suppose a society of 11 people exist on a small island as well as a small governing body that attempts to organize their productive efforts.  In this society not everyone is equally skilled.  They gather coconuts, and the best coconut pickers on the island manage to get 7-8 coconuts a day while the worst can only manage 0-3.  The very worst coconut picker on the island mostly just relies on the charity of other cononut pickers to get by, and occasionally the second worst coconut picker does the same.  The top coconut pickers end up with the most leisure time of course because they consume less than they produce and can afford to take time off.  All 11 islanders are given the right to vote in an upcoming election.  There are two candidates, and one promises that he will create legislation requiring islanders picking 6 or more coconuts daily to give one each working day to someone who picked 2 or less in order to win the election.  Now lets suppose the generated coconut income per day of the islanders is as follows:

islander 1:  8 coconuts
islander 2:  7 coconuts
islander 3:  7 coconuts
islander 4:  6 coconuts
islander 5:  5 coconuts
islander 6:  5 coconuts
islander 7:  4 coconuts
islander 8:  3 coconuts
islander 9:  3 coconuts
islander 10:  1 coconut
islander 11:  0 coconuts

Assume that ideally one would need to consume 2-3 coconuts per day for a healthy lifestyle.  The above follows a rather standard distrbution of wealth whereas 2/11 islanders are in poverty, 6/11 are somewhere between lower and upper middle class, and 3/11 are wealthy.  How do you think these islanders will vote?  It seems obvious that islanders 10 and 11 will support the legislation to redistribute wealth.  Islanders 1-4 will likely oppose the legislation.  Islanders 8 and 9  will likely support the legislation; maybe they have a bad day one day and only get 2 coconuts, the new legislation would provide them with an extra coconut, it would be like a safety net.  Since 8 and 9 are also rather poor themselves than can sympathize with islanders 10 and 11.  Islanders 5 through 7 are the swing votes and aren't affected either way by this legislation, but they still get to vote on it.  More than likely they will all support the legislation, after all its not their money, and it feels good to help the poor.  Maybe one of the middle class islanders understands economies and opposes it.... it doesn't matter, a majority still support.  It is also possible that one of the rich islanders, maybe islander 1, will be feeling charitable and won't mind supporting the legislation.  However, this principle doesn't work in reverse as islander 11 will virtually never vote to not give himself an extra coconut.  Regardless, it should seem clear that with any income distribution similar to the above voting would favor subsidizing the poor islanders.  Apart from being unconstitutional to take something earned by one islander without choice and give it to another, there are a number of defects with this type of legislation: negative incentitves are created.

- Islander 4 picks 6 coconuts a day and has to give one up so he always ends up with 5.... he could work less, pick 5 coconuts a day, and have the same benefit!  Islander 4 has been incentivised to produce less by this legislation.

-Islanders 8 and 9 are in the same boat.  If they picked one coconut less a day, they would qualify for an extra coconut.  Either way they end up with 3 coconuts, but they don't haver to work as hard if they just pick 2, giving them some leisure time. These islanders are also incentivized to produce less.

-Is anyone incentivised to produce more??? Nope, that just seems silly.  Why would islanders 5 or 6 try to pick more coconuts?, they would just have to give one away.

-The worst part is, in real life the administration of such a plan would have a slight cost as well.  The government would need to take a small fraction of every coconut in order to pay for the organization of such a plan.

Now it should be clear that the island is incentivised to produce significantly less coconuts.  Its possible that there won't even be enough rich islanders to pay for the poor islanders at some point... but the poor islanders have been promissed coconuts.....maybe the government can borrow coconuts from another island temporarilly to pay the poor the coconuts they were promissed and pay it back later when the economy is better?  That is another story all together.

Regardless, the point here is that free voting is rarely a priveledge to those with something to lose.  A vote that is free is worth nothing unless you have something to gain from it.  Voting is a joke.  As far as I am concerned, boycotting a vote on the premiss that it incentivises unproductive behavior is just as patriotic if not more than voting itself.

Erik Townsend on the markets:

Erik Townsend: Expect a US Price Shock as Black Swans Come Home to Roost

American investor (and longtime CM.com member) Erik Townsend has spent the past several years living internationally, with an eye to which countries may be good alternatives if economic crisis and/or Peak Oil start to materially impact life in the US. 

His main observation as an expat? Through its misguided policies, the US has been exporting inflation to the rest of the world, raising prices all over the globe (as an example, he cites a $57 chicken pot pie from the menu at a 'working class' restaurant in Australia). 

This inflation is affecting the rest of the world harshly, but is not yet being felt in the US due to our ability to export it as the issuer of the world's reserve currency. Our immunity will not last forever though, and when it ends, a massive upwards spike in prices is going to hit US markets.

On the Global Economy

As far as I can tell, this whole economy is being propped up by stimulus and money printing, really since 2009. And I think that what is going on is we have forgotten that we are literally changing the—I do not know if you want to call it changing the terminology or changing the paradigm—but what is going on here is, we used to use words like “solution” fairly accurately. Now as we are just creating these Band-Aid fixes to temporarily put symptoms of problems at bay.

We are calling those solutions, and we are actually behaving -- and when I say “we”, I mean collectively market participants -- are behaving now as if the ECB printing money in order to buy some more Greek bonds and put a bid under that market was a solution to the European sovereign debt crisis. And it is obviously nonsense. The ECB printing money just dilutes the value of the Euro and causes more reason in the long term for people to flee away from making investments in Euro-denominated sovereign debt. So it does not solve anything.

But we have gotten to the point where we are so overwhelmed that the market is thinking in terms of these Band-Aid patches as being actual solutions to problems. And I think as long as that is the case, we are going to continue to apply these Band-Aid patches, which are things like printing more money, until it all comes to a head. When it comes to a head and how it comes to a head, I do not think anybody is smart enough to predict accurately.

At some point, though, we are going to get to a point where we cannot handle any more printed money and I think that the black swans that have been leaving the market alone for several years are going to come in force.

 On The Market's Willfull Blindness

I do not think that we have ever seen a larger basket of major macro structural risks that everybody is aware of. It is not like nobody sees these things. But we have just somehow put them all on the back burner. Do not worry about China. Do not worry about Europe blowing up. Do not worry about Iran. Do not worry about the carry trade unwind in Japan that you have just written about recently. Do not worry about Peak Oil. Do not worry about the domino effect of China and Japan going down, taking out other economies that depend on them.

It is all fine. The LEIs are looking up. And we just seem to be in this cyclical trading mindset

that it is going to continue to last until something breaks. And I think that when something breaks, it is going to break big.

On The China Wildcard

I think China has quite a bit of pull here. In that as QE3 happens—and I am convinced it is going to happen sometime this year, I do not know when—it is going to export so much inflation to China that it is going to be almost intolerable for them.

And I think that we are forgetting that if China says, “Okay, guys, we have had enough of this. If you do any more QE-ing we are going to dump the US Treasury bonds that we are holding and we are going to use the money to save our own economy.” If we see that kind of reaction from China, it really could put a monkey wrench into the plans of the central banks to inflate this all away.

I think that whether it is that mechanism or another one, at some point we are going to get to a hard wall here where you cannot just print money forever without the unintended consequences coming back and biting you.

LTRO 2 529.5 bil euros

The numbers for ECB (euro central bank) bank refinancing operations came out today.  It will be 529.5 billion euros dished out to between 500 and 800 banks in the form of 3 year loans.  I'm not sure if the ECB actually expects most of this money back or not, but the smart money says that most of it will not be repayed.  This is most certainly neutral-bad for my current bank-shorting positions.  I say neutral-bad and not bad because it was rather in line with market expectations and doesn't seem like its causing any eye opening upside movement in the markets.  Gold/silver should be the stand out beneficiaries here.  The bankers can celebrate their victory, even if the wealth of a continent may suffer because of it.  I'm going to set the over under at 3.5 years for the next european bank bailout.

Greece is Saved!!! 130 bil

Looks like Greece is going to successfully kick the can down the road moving that march 23rd default date out a year or so.   ECB balance sheet expanded once again, gold is up big.  Everybody is happy.

Of course no problems have actually been solved.  I can't wait for Italy's turn at the wheel.

Expansion on Previous Post, Gold

The ECB (european central bank) has swapped all of its Greek bond holding for new Greek bonds that do not contain a collective action clause.  Meaning many of the possible notions in the previous post/essay are no longer possible, such as any blocking attempts or restructuring to benefit private bondholders.  The end math is this:  the ECB now controls greek debt, and Greek bonds are worthless.  Private investors and hedge funds with money in Greek bonds are taking huge losses as we speak (this likely includes the IMF, no confirmation yet though).  Full consequences of this may not be entirely clear yet, i'll update as this unfolds.


and just to remind anyone that had forgotten, this is why we buy gold:

Expensive Advice for a Cheap Price

Ever wonder about the way out for Greece?  Who goes down with them?  What happens to bond holders? what happens to the ECB?  What happens to the IMF?  What happens to America?

I've come across some brilliant information that comes from Felix Salmon of Reuters, expanded upon by zero hedge's Tyler Durden.  It's a month old, but more applicable now than ever.  With a full understanding of this essay  anyone would have a full understanding of exactly what will happen to Greece, its balance sheet, and its bondholders.  It's packed with legal and financial insider information.  The cheap "price" I refer to in the title is time and patience.  It takes savvy 5+ year  Goldman vet to understand everything in this article first read through.  Take some time and google the numerous acronyms, legal terms, and financial jargon you've never seen before.  Essay below.

http://www.zerohedge.com/news/subordination-101-walkthru-sovereign-bond-markets-post-greek-default-world

March 23?

Fresh out of the rumor mill.  It seems apparent that Greece actually has a plan to default on March 23rd in place if austerity measures don't provide the necessary support in time.  Let the games begin.

Banks under review by moodys, seems under the radar

Investors and hedge funds seem to be downplaying the fact that moody is doing some serious review on the ratings of a ton of European and American banks including BofA, Morgan Stanley, Goldman, JP Morgan, Barclays, ect.

Make no mistake about it, hedge funds maybe be downplaying this in the public eye with statements like "the public has already priced in such downgrades" and "ratings downgrades on banks don't hold the same significance they once did", but behind closed doors they are laying down the hammer knowing full well that many of the banks under review will be downgraded and it will move the sector down as much as 5%.

I'd like to take this opportunity to be the hawk as opposed to the sheep, and make some puts on the most likely candidate for downgrades in my eyes: MS.

All I do is win win winnnnnn

knock on wood.  My bets/predictions/investments have been amazingly accurate this year.  Even if 90% of it is based on tyler durden and zerohedge.com guest posts.

Greece Doomsday Clock

Is running out of time.  After yesterdays tax revenue numbers it is clear Greece has, and will continue to have less and less means to avert a complete default.  GREECE WILL DEFAULT, it is a matter of time.  As I predicted earlier somewhere, I think the doomsday clock on Greece is counting down to May sometime.

EU fiscal discipline treaty good for europe, gold.

Now when I say this is good for europe, I mean this in a mother beating her child for bad behavior sort of way.  Many of the nations involved in this treaty are going to have SIGNIFICANT difficulty limiting their national debt to 0.5% of GDP.  This will bring about depression-like environments in countries relying on their debt to preserve their prosperity.  If the treaty is stuck too, it solidifies default or depression in portugal, italy, spain, ireland, and greece... maybe even others.

Why this is in any way, shape or form good for gold:  Significant concessions have been made by debt ridden countries to conform to merkel and a a debt free future.  In return these countries are going to need a bigger bailout package to keep on this stringent track.  Like always, +bailout = +gold.  I expect some finance professional to come out with an article stating these points in a few hours when America wakes up.  I'll post the link when it happens.

VIX!!!!

lol, just one day after my analysis on the VIX, zero hedge comes out with an article saying roundabouts the same exact thing!!!  winning.

http://www.zerohedge.com/news/long-dated-vix-still-priced-depression-risk

The VIX

The VIX, aka the fear index.   It is a hovering close to 52 week lows at ~18$ (52 week lows around 14.50). Since its inception in 2007, the VIX has been a tool that has been known to see fast and furious spikes to the upside during times of panic in the markets.  The VIX has yet to stay below 20$ for more than 6 months before spiking, often in dramatic fashion.  Looking at some of the yearly trends below, it seems clear we are going into the calm before a storm.  If the trend holds, I anticipate ~4-5 more months of calm.  Surely it is possible for European woes to put a damper on that parade, but I think the most likely solutions in Europe will postpone rather than fix problems.  

The VIX is an attractive buy at ~18.00, but I think it could go as low as 14$ before we see some real action. I am going to start entering into positions (6-8 month expiry) in a month or so, and if the VIX dips further in the coming months I will essentially double down on these positions.  I will not be left behind the next time the VIX decides to climb the slopes.

A Good Paper on Averting Inevitable Currency Armageddon

http://www.zerohedge.com/news/guest-post-gold-bonds-averting-financial-armageddon

Gold glitters as much as the Euros future.

It seems the Fed and the ECB are in an arms race to print.  Euro printing makes for a stronger dollar which is largely a negative thing for all stocks and equities.  With Euro stimulus and bailout packages dominating Europe right now the Fed has been keen to attempt to keep relatively constant balance sheet with ECB, which means more dollar printing.   This is very good for gold, the ultimate safe haven from currency printing.  The only downside to gold would come if the US decides not to keep pace with Europe, and that would likely take us to depression levels the year of an election.  I'm not saying this isn't possible, but the safe bet is always on politicians doing whats best for the next election, not the country.  That being said, gold has a lot of upside going into the new year.