Loading ...The US stock market has lagged far behind the rest of the worlds in terms of real recovery. This means that we have experienced a hidden correction as the dollar devaluation helped our stock market remain competitively priced against foreign markets. […]
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What ever happens, we recommend every investor to be hedged 25/25/25/25, betting 25 on US asset inflation, 25 on US bonds, 25 on emerging market inflation and 25 on emerging market high yield government bonds. This strategy will assure you will make it through the next 6 months which we feel will be very dangerous and unsure times. The fact is that pressure is building every day as the US markets remain stagnant. When decisions are made to break this stagnation, the market will move violently in either direction. The way in which it will move will depend on if the US dollar remains the supreme kind or will talks of a different global banking system materialize. […] There can only be two possible final outcomes to the current global economic situation. On one hand, the rest of the world can lose trust on the credit of the dollar not just because its GDP will lag behind the rest of the world but because of its ultra low interest rates. This would cause a push to trade commodities and reserves to be held in a currency outside of the dollar causing the US to freefall leading to hyperinflation. On the other hand, foreign equity markets will be so overbought that its interest rates will have to move significantly higher to encourage investors to remain in its local currencies. This would cause an eventual recession in emerging markets bringing the global economy to another correction. The only difference is that the US would be leading the world out of the second and deeper recession. […] Buy gold, or your precious rare metal of choice! It is crystal clear for those of us at Alphas Edge that commodities will be the next boom. Sure, little time remain left for the government of the United States and countries around the world to take the corrective action to prevent this disaster from happening. The problem however is that they are purposely causing it and preventing it is the last thing they want to do. […] If you had to make up unemployment number that would least move the market, you would have had the exact number that came out today. There was a net LOSS of 216,000 jobs to the economy this month (consensus was -230,000). Yet, somehow, this was supposed to be good news because it beat the consensus. The percentage of working Americans that are unemployed crept up to 9.7% of the population. Real unemployment numbers however is closer to 20% if you add those no longer receiving benefits and those who have given up looking for a job. […] Putting it all together leads to one simple to see conclusion. The equity market will be supported by a Fed driving inflation of commodities. The real economy however will be weak and subpart for years to come. As it recovers, the Fed will have to increase interest rates to fight the beast that they have been so eagerly feeding. […] This is the second day in a row that the stock market has opened in confusion. The dollar is weakening leading to support for the commodity prices and stocks heavily priced by commodity value. At the same time however the equity markets are lower and the DJI opened down 20 basis points. The bond market is trading slightly down signifying a small flight to safer assets. The Job number came in worst than expected but the number is continuing to show improvements. […] |
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