- There are as many slogans as there are opinions. Most are just catchy without merit, but in deeper reflection, there is a kernal of truth.
- JFL
Historically
The actual catchphrase continues to say, "...and go away." The thinking is the market is entering a slower season with less volume and volatility. Earnings which drive the market has a tendency to fall. Some investors turn to oil because people do more driving, however, smart money has already drove up those stocks. You are chasing and speculating. This is the perception behind the thought.
Today
Looking at the plus and minus of things, the bulls are still strong. You can see this in the reliable indicator, the VIX. When the VIX is above or below its 50-day moving average, you can see market direction.When it is above, the bear is out. When it is below like now, the bulls hold sway. However, this market does not come completely in the upside. "King Dollar" remains strong. Any price level above 103.5 confirms this outlook. This puts a damper on inflation and limits profits. In addition, we informed you that according to Dow Theory, the industrials and transports must both be in harmony. The transports have never rallied since August 2023. With that said, oil remains high in this political environment. Commodities like copper are rising. The leader in the segment, SCCO has already broken out to new highs. Gold is ready to explode. The only thing holding it back is the dollar and high interest rates. Bottom line: The market is forming a consolidation pattern. The slogan may hold that kernal of truth. With that said, here are some things to keep your eye upon.
Potential Trends
The election will impact everything with the market, especially in sectors. If the Dems retain power, IT and discretionary will benefit. If the GOP wins, utlities and energy get a boost. Clean energy will be more of a campaign promise rather than an actual funding.
Defense in this geopolitical environment gets funding. We think cybersecurity, semi's and satillite providers get more dough.
Mexico becomes the big winner in the ongoing tension between the US and China.
AI and regulations will be in the news. There are 12-states seeking laws and reforms.
Of course, the war in Europe and the Middle East could get worse.
Basel III was suppose to force banking to rein in leverage. It has become a campaign promise. Stock market debt is way too high. Any pullback could force margin calls. By the way, the first bank failure came at the end of April.
The Fed Chairman, Powell says, "Inflation will be much lower by the end of the year." Then, he covers his ass by saying, "...but probably won't reach the 2% target." He goes on to say, "No stagflation! He is tired of answering that question."
Dear Reader, when inflation is higher than your income, you are in stagflation. When inflation is higher than your GDP, your economy is in stagflation. Sebastian reminds us that he pointed out that we are in stagflation for our economy since the beginning of 2022. Beside our ongoing meme, End the Fed, we now add this. Gordon Johnson, financial analyst, calls Powell, "The Gaslighter-in-Chief." Peace.
