Wednesday, January 13, 2016

A Bright Shiny Future?

China on the ropes.

High Yield yields higher.

Stock indices down around the world.

Oil leading the way down with the prospect of widespread bankruptcy.

All of the above spells DEFLATION.

Central banks hate deflation. They have been fighting the deflationary forces for decades. Deflation bursts debt bubbles.

What is next?

Central Bank easing will come down the road. Just as the Fed started to back off ZIRP.

And the Democrats will win big in the next election. And then FISCAL stimulus will happen.

The bottom is IN in gold and the miners.

Plan ahead.   (Forget about that frog with wings. Nothing to see there.)


Tuesday, January 12, 2016

Supply Side Blowback

Decades of declining interest rates and manipulation of interest rates with the intent to stimulate production has resulted in overproduction. This is not more apparent than in energy production. Technologic advances enabled by easy money has resulted in over supply. This has occurred as the traditional oil producers became dependent on oil revenue to sustain their economies. The people in these countries are accustomed to high living standards and accustomed to not paying taxes to support those standards. This leaves the governments of oil producing countries with a cash crunch. What better place to get some cash than by using savings. And many exporting countries have large investments in stocks and bonds around the world. Countries, like many individuals with extra money, don't just save, they invest. Stocks and bonds are the savings of the world. What happens when we cash in the savings. This at a time when a large cohort in the western world is approaching retirement and any retirement "savings" are in stocks and bonds......

Sovereign Wealth Fund Institute

Thursday, January 7, 2016

Post Election?

I have noticed the strength in solar, most notably FSLR. As a general rule solar depends on high hydrocarbon prices to maintain viability as an industry despite gains in the efficiency of the solar technology. The industry still depends on tax breaks and support from government.

But solar has been strong, relatively, lately during this latest general market selloff and during the last year of precipitous declines in oil and gas prices.

The market may be of the mind that solar has a future despite the gloomy outlook for petroleum energy. This may be due to political factors. It looks like the Democrats have the best shot for taking the presidency in 2016, and may make gains in Congress. And solar has always been a favorite of progressive voters.

Another thing that may happen if Democrats win may be the long awaited national investment in infrastructure. Cement and steel come to mind as investments at this time. Steel in particular has remained resilient despite China's precarious position.

Time will tell. But a massive infrastructure investment by the U.S. would take a lot of the slack out of world markets, put Americans to work, and increase the velocity of money.

Lots of 'ifs' there....

Look at Brazil as well. Enough is enough..... 


control risk,