No Fed hike. Loose monetary policy, scared PhD's, bombastic candidates globally. Hmmm..isn't that a buy commodities smoke signal? Not the rush out and buy bush fire signal, but oil barely broke down on Brexit. Could oil be worth more than paper?
Wednesday, June 29, 2016
So This is What will Happen
Brexit proved that all contracts can come to an end.
Terror attacks around the world seem to be on an upswing.
Monetary policy is loose globally.
Money flows from war to North America, oil and gold.
Europe may fall a part for their own benefit (I cannot wait to invest in a free Austria). Buy NA stocks.
Canada may start to outperform.
Terror attacks around the world seem to be on an upswing.
Monetary policy is loose globally.
Money flows from war to North America, oil and gold.
Europe may fall a part for their own benefit (I cannot wait to invest in a free Austria). Buy NA stocks.
Canada may start to outperform.
Brexit = Y2K?
Expect markets to do the opposite of what the experts tell you. Except maybe the Pound, which should decline, but it becomes a buy wherever it troughs.
Think about the undercarriage of the Brexit vote. Britain has just removed a level of government. Each level of government has a cost.
Canada and the EU have not been able to finalize their trade deal. I would bet England makes free trade agreement with other Common Law nations before the EU can. Again BUY THE POUND AFTER THE TROUGH.
England may rid itself of Scotland and Northern Ireland (areas that receive more government revenue than they contribute) making England stronger. London, like Zurich, are both outside the EU. Both are the European money centres. Will finance go to Frankfurt? No. London will get stronger. England with out the UK (Scotland and Northern Ireland) will be the new Switzerland. Let the Pound decline, but get ready to buy English/London stocks.
Gold made its blow off top. It could not hold its break out number. Gold should correct before going higher.
Oil did not break down during the Brexit stress so the bull has not ended. Target of $72 still in place.
US stocks did not break support. Expect more money into the US. DOW of 20,000 still in place.
Thursday, June 2, 2016
US Economic Update
A quick scan of the US economy:
Total hours worked per week are at an all time high. Lower wages and more hours is not a better world, but its not the apocalypse.
The Labour Force Participation is ticking up for the first time in about a decade. This is a positive.
While autos and light trucks together have broken the trend line, light tricks has not. Light trucks tend to decline prior to recessions.
The Yield curve is still steep at the front end and the slight kink has disappeared. This suggests bond markets expect an increase in the short run but then very gradual increases. An inverted curve may not be possible in this environment, but a flat one may be the signal.
The US economy is not overtly strong but is still moving forward. I think Brian Wesbury's Plow Horse is a good description.
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