Where Our Energy Comes From

Natural gas has over taken coal as the number one source of electrical generation. In the Q3/16 newsletter an allocation towards natural gas was added. This was more of a play on the potential for strong demand should a strong La Nina follow the strong El Nino. The last time this happened was the late 1990's and gas had a 500% rally. It is unlikely to be able to rally in such a manner this time as there is more potential supply than the late 1990's but gas could rally 150%.

US Global Funds

Data Continues to Surprise on the Upside

For all the doom and gloom out there economic reports have come in better than expected. In my quarterly newsletter we have been long US stocks indices for over a year as money is flowing away from Europe and the "battlefields" of Asia and Africa to America. I think that the fear of Trump will cause money to flow from the US to Canada and that was the reason for adding Canadian Stocks and this chart in a previous post to the most recent asset allocation in the quarter 3 Newsletter (which will be available on the web shortly) and open to subscribers when the new website is finished.

US Global Funds

Canada Should not Import this Much Refined Product

Maybe Canada should build a refinery as part of Trudeau's infrastructure plan?

Scotiabank May 6, 2016

Current Oil Rally Fibonacci Levels

If I have the rally correct in my oil price forecast and my current oil price chart then oil should bounce off the 61.8% retracement level.

www.stockcharts.com

Brexit and UK Stocks

The Leuthold Group compared Brexit vs. the exit from the Exchange Rate Mechanism (when Soros famously shorted the Pound for a billion in profits) and so far the results are similar, however, UK stocks started froma lower base in 1992. Will it be the same?

Leuthold Group

Reflation

I believe reflation is closer than deflation. I used a line in my oil price forecast along line of "Generals fight the last war, economists the last depression" and that is why deflation is the ingrained into the minds of Central Banks as an end of the world scenario. The below chart by Dana Lyons of J. Lyons Fund Management on his Tumblr page gives me more confidence I am facing the right direction.

You can read his excellent article on whether reflation is real here.

Barbell Portfolio

Paul Brodsky of Macro-Allocation Investments put together this excellent chart in a free edition, I dont have the research budget at the moment to subscribe to everything I want to but it is high on my list, of his MAI Views Newsletter, where he discusses "Owning the Tails".

Macro Allocation Investments

I think I can simplify the idea using a simple barbell portfolio where you still own the tails.