Governments are desperate for money to fund their promises. They are going to go where the money is & Michael forecasts where the money is that Government is going to go after. If you are a homeowner, you might best listen to what Mike thinks is coming right at you:
Victor Adair has had a superb month in Stocks, Currencies, Crude Oil and Gold. Here is his interview with Michael followed by Victors trading notes for this week and next - Robert Zurrer for Money Talks
The US stock market was a great barometer of risk appetite this week. The DJIA rallied to 3 week highs on Monday but began falling early Tuesday morning (Powell testimony) and was down nearly 1,600 points at Friday’s lows. The prospect of “trade wars” following Trump’s proposed steel and aluminum tariffs contributed to a high volume acceleration of the decline on Thursday. The major American stock indices all registered a Weekly Key Reversal Down.
For the past couple of months my Trading Desk Notes have maintained that risk appetite was “dangerously high” and was due for (at least) a correction. I wrote that: Markets are in a blow-off phase...My gut instinct is to fade this price action...but my risk management override says wait...it could get even crazier! The key aspect of market psychology so far this year has been a willingness to aggressively take on risk. I quoted Bob Farrell, “The public buys the most at the top and the least at the bottom.”
I’ve had 2 key reasons why I thought there could be a significant reversal in risk appetite:
Looking at the charts I believed that the stock market “melt up” in January was likely the last leg of a parabolic blow off. The DJIA had quadrupled from the 2009 lows, had rallied 45% since the Trump election, and now the public was “beating down the doors” to buy anything and everything.
The global central banks, which had “underwritten” the 9 year rally in asset prices, were in the process of “changing their ways.”
My short term trading: February was a good month for me as I caught parts of the “correction” in the stock, currency and commodity markets. I started this week short CAD and Euro, and bond puts, and added short gold and short S+P. I closed all of those positions with profits except for the bond puts which I closed for a small loss. I’m flat at the end of the week, but in my managed futures account that Drew manages we remain short CAD and WTI.
The US Dollar rallied to 6 week highs this week but then reversed sharply on Thursday on “trade war” fears.
The Canadian Dollar broke its relationship with the Euro on Thursday...that is CAD kept falling against the USD while the Euro rallied. I think this points to REAL weakness in CAD...which is now threatening to break below the 7750 lows made last fall. The “trade wars” story has real impact on Canada as it pertains to the Nafta renegotiations. The 2 year interest rate spread is ~45 bp in favor of the US and markets may be anticipating “dovish” comments from the BOC at next week’s meeting. Markets are still pricing a 36% chance that the BOC will raise rates in April...I have my doubts!
The Yen has been rising steadily since early January and ended this week at its best levels against the USD since Trump’s election. It’s often called a “safe haven” currency but it was rising in January even as the US stock market was soaring...so there’s something else in play...any unwinding of the massive short Yen positioning in the futures markets could accelerate the rally.
WTI has had a very similar chart pattern to the S+P so far this year...rising through January...falling the first 2 weeks of February only to bounce back the next 2 weeks. This week it rallied on Monday along with the stock market and then fell sharply with the stock market Tuesday through Friday.
With Governments desperate for money we can all expect there will be changes in tax collection practices. Even worse, in an An Ominous Prediction Michael made this morning they are coming after all homeowners. Because that's where the money is. More below: - Robert Zurrer for Money Talks
00:35 - 05:14 - Mike's Editorial - "You're innocent until proven guilty' before the law EXCEPT when it comes to tax collection. There, Revenue Canada says its up to you to prove your innocence. Now the Federal Government is about to hand more power to the already mightly Revenue Canada to enhance their ability to declare more Canadian busiinesses "guilty".
Greg on the giant air pockets that could open up in the market as massive pension funds attempt to liquidate 10's of thousands of $100 plus tech stocks. When there are no buyers the market collapses, often with no trades taking place as happened in 1987 when the Stock Market dropped 22% in one day. Trouble is, Greg thinks it will be much worse this time and explains why. Bottom line, Greg issues a major warning that the game's changed) - Robert Zurrer for Money Talks
02:50 - 19:24 Featured Guest: A word to the wise - big name analyst, Greg Weldon issues a major warning for investors. Hint: the game's changed.