Commentary

The May Employment Report was a Blowout but What’s Next?

Putting it all together, it seems likely that we are dealing with a short but sharp recession. The resultant recovery will initially look strong from a momentum point of view. That’s because the economy will quickly open up, egged on by the positive effects of record monetary, fiscal stimulus and over time with the reshoring of manufacturing jobs.

Commentary

Our Business Cycle Work Is Close to Signaling a Stage III. Guess Which Market That’s Bullish For?

Always being alert and anticipating the next inflection point in the business cycle can help you actively manage your investments while taking advantage of emerging profit opportunities and more importantly protect your wealth from the inevitable cyclical declines. This exceptionally long business cycle appears set to emerge from its third growth slowdown and has now reached the stage where a cyclical bull market in commodities can be expected.

Commentary

Recession Watch Update: Four Leading Economic Indicators Signal a Stronger Economy Ahead

Even though we have already experienced the longest expansion on record, the latest data suggest the possibility of a resurging level of business activity as the economy emerges from its third post 2009 slowdown. As a follow-up to our July article, Recovery or Recession? Ask the Stock Market Stupid!, here’s our latest business cycle update.

Commentary

Recovery or Recession? Ask the Stock Market Stupid!

Even though there has been no recession for 10 years, students of the business cycle know that it is still alive and well. Instead of a full-blown contraction in business activity, the last decade has seen the US economy experience two mid-cycle growth slowdowns and subsequent recoveries. A third slowdown has been underway for the last year, begging the question of whether it will morph into a recession or transition into a fourth growth phase of this extended economic expansion.

Commentary

A Slowdown is in the Bag, but What About a Recession?

There is little doubt that the US economy is in a state of slowdown. The big question, is “How will the economy emerge from this slowdown?” Will it be with renewed growth like 2016? or Does it fall into a full-blown recession a la 2007? The answer to that question is unknowable at this point in the cycle.

Commentary

Using Dr. Copper to Check the Pulse of the Global Economy

Holy cow! This economy is on fire; witness the second quarter U.S. GDP growth rate of 4.1%. Is it sustainable or a just a temporary spurt? It’s often said that the Copper price has a PHD in economics, because of its widespread use in many diverse industries. That use ranges from homes, factories, and electronics, to power generation and transmission and much more.

Commentary

Whatever Happened to the Business Cycle?

July 2018 will mark the 108th month of the economic recovery, making it the second longest expansion in history. Another 12-months or so and it will be the longest ever. Moreover, the consensus of economists foresees little trouble ahead.

Commentary

The Holy Grail Investment Formula: Better Returns with Less Risk

What would you do if I handed you a map to the Holy Grail of investing? Would you toss it in the trash because Nobel Laureate economists say it’s impossible to beat the market with less risk? Or would you give it a thorough read to see if there is any validity? Let’s find out.

Commentary

The Big Blow-off Before the Big Blow-out?

Stocks are most vulnerable when optimism is at an extreme and its long-term trend reverses. This is when careless investment decisions are exposed, as well. Right now, the P/E is well above its 48-month MA and secondary up trendline, and is showing no signs of weakness.

Commentary

What Would It Take to Trigger a Secular Reversal in Bond Yields?

In the fall of 1981, the twenty-year US bond yield peaked slightly above 15% and has been zig zagging down through each successive business cycle since. During the last one hundred and sixty-years or so, the average secular, (very long-term) trend in rates has lasted around twenty seven-years. After thirty five-years of declining rates, the current secular bear is getting long in the tooth. 

Commentary

Have Commodities Peaked for the Cycle?

Anyone thinking that we may get a repeat of the spectacular 2001-2008 and 2009-2011 rallies in commodities may have to think again, at least that’s what’s being hinted at by many of the long-term technical indicators. You could say it depends on what the definition of the word “is” is, to quote a well-known Clintonian expression. In this case, it all depends on what the direction of the secular trend is, as we explain later.

Commentary

When will Rising Rates Deliver a Knockout Blow to an Overvalued Stock Market?

A major anxiety amongst stock market participants revolves around two key factors that appear to be on a collision course. The first is an overvalued stock market. The second, is an emerging trend of rising interest rates.

Commentary

A Turn in the Tide: The Case for Rising Interest Rates

The purpose of this article is to make the case for a primary trend rise in yields. If this assumption turns out to be correct, it is within the realm of possibilities that this same rally may also be a turn in the tide for the initial advance in a new, very long-term or secular uptrend.

Commentary

Stocks Are Breaking the Glass Ceiling: 6 Reasons to Be Bullish

At the beginning of 2000, I unsuccessfully submitted a bearish stock market article, A Turn of the Tide, to a well-known US financial publisher. At the time, in the middle of a market mania, my contrarian warning was unwelcome. Ironically, it was later carried by a Polish financial magazine—not exactly the wide distribution channel I was hoping for! This incident is being brought up now because the S&P Composite, when adjusted for inflation, has made no real progress in the intervening 16-years. That said, it now looks as though bullish forces are conspiring to take prices through the 16 year inflation adjusted glass ceiling to significantly higher levels. Guiding the way higher is our composite stock market indicator the stock “Speedometer”
Commentary

Streamers: A River of Gold – Part 2

In May we laid out the case that a new cyclical bull market in gold had begun - Win-Win Case for a Bull Market in Gold – Part 1. As an advisor or individual, you may be looking for a lower risk way to invest in gold. One relatively unknown yet very attractive way we invest in gold is through precious metal royalty companies or “streamers.” These companies possess a simple and profitable business model that captures the benefits from investing in gold while minimizing the drawbacks. Streaming and royalty companies (both referred to as “streamers” in the rest of this article) provide early stage financing specifically for mine development. It may be helpful to think of them as providing venture capital or banking services to the mining industry. They receive either a royalty payment on future production or a “stream” as an exchange for an upfront cash investment. A stream is the right to purchase a percentage of future production at a very low fixed price for the life of the mine. In simple terms, streamers share in the success of mining projects without incurring any of the operating risks. Even a skeptical Mark Twain would be impressed with this novel mining investment model.