Embed Size (px)
Citation preview
NICO Omer Jonckheere, SE, MM
INVESTMENT STRATEGY FOR THE 4th QUARTER OF 2015
Will And CAN The Fed Increase Interest Rates For The First Time Since 2006?
Artist’s Impression Of Current Fed Policy
There are two reasons why pressure is mounting for US Federal Reserve chairwoman Janet Yellen soon to start raising the cost of credit after six years of easy-money policies:
•Without higher rates, the central bank lacks its most powerful traditional weapon for combating the next recession – cheapening credit.
•Growing recognition that quantitative easing and zero rates have inflated a bubble in asset prices and driven related rising wealth inequality, yet failed to boost economic growth.
5 Reasons Why The Fed Won’t Raise Interest Rates
1. An interest rate increase will make the dollar even stronger than it already is.
2. The Fed has been keeping their eye on inflation (deflation), but they haven’t hit the magic 2% inflation target since 2012.
3. America is bankrupt and on borrowed time.
You can see from the chart above that despite the hiccup in 2008-2009, the central planners are determined to continue inflating the global ponzi debt scheme.
4. Back in June, the IMF urged the Federal Reserve to delay a rate increase because of a still-struggling US economy and warned of “significant uncertainties as to the future resilience of economic growth.”
5. The US stock markets are ADDICTED TO FREE MONEY so we may need a bigger balance sheet in the future.
The War Against Deflation“The Fed raising rates is out of the question.
What’s more likely is the return of QE, because the Fed is terrified of the current position in which deflation is taking over from the much desired inflation. It would not surprise me to see QE4 established as the Fed addresses the
deflationary trend.”
-- Richard Russell
What Should You Buy And What Should You Sell?
Source: www.technicalindicatorindex.com
Given that US markets have been driven to giddying heights by the combination of maxed out margin debt and stock buybacks, it is clear that a crash of perhaps unprecedented proportions is on the cards.
Source: www.moneyweek.com
Source: www.stockcharts.com
Source: www.moneyweek.com
We are going to need more QUANTITATIVE EASING…
Seasonals are poor as Aug., Sept. and Oct. are the worst-performing months of the year.
The MSCI emerging markets Index has gone absolutely nowhere for the last six years – a time frame during which the S&P 500 Index has doubled.
U.S. equities are currently 70% more expensive than emerging market equities.
It should come as no surprise that fund managers’ positioning on EM relative to DM is the most extreme on record!
While relative to history, the space is under-owned – by a lot:
GOLD
Gold and silver are safe havens within periods of economic uncertainty. As you know a global financial crash creates
economic uncertainty. It is time to get out of paper and into tangible assets.
Currently the “Gold Optix” is at its second-lowest level in history, undercutting even the low recorded in the year 2000, at the bottom of a 20-year bear market:
Source: www.clivemaund.com
The gold shares to gold ratio is now at the bottom side of a 44-year down channel and it’s formed a several decade falling wedge.
History Doesn’t Repeat Itself But It Does Rhyme
Source: www.zerohedge.com
Gold bulls will cite the 1970s experience as to why they are not worried about the current slump in the price.
Gold Bullion “Extremely Rare”
In contrast to fiat currencies, gold supply has grown by only 1.6% per year. This clearly underscores its relative scarcity!
Is Oil’s Rebound Going To Last?
So has the oil price bottomed out? Well, oil has certainly fallen to the point where things are starting to get interesting.
Global inventories will pile up further and demand will not cut into the surplus until late 2016 at the earliest.
Any realization that the Middle East is suddenly a far more violent powder keg – one which may promptly include the Saudis in any confrontation – could result in an epic short squeeze.
This Is a Very High Probability Location for a Base to Develop
Source: www.elliottwave.com
The RSI indicator is showing significant positive divergence to the oil price which is supportive of expectations for a trend higher.
SUPPORT AND RESISTANCE – Bear market bottom low lies in the zone $37 to $40, while trading range resistance lies in the zone $60 to $63.
“The current action makes it look like 1998, and if that is the case then we should be putting in the low here.”
--Tom Fitzpatrick, City Analyst
Timing the Coming Monster Trade in Oil
“There’s blood in the streets in the energy sector right now – and I love it!
If you believe that, as I do, to be successful in the resource sector one must be a contrarian, now is the
time to become engaged.”
-- Marin Katusa, the Chief Energy Investment Strategist at Casey Research
How About The US Dollar?
Source: www.clivemaund.com
Source: www.rambus1.com
All eyes are on AUD as it is currently testing a very long-term trend line:
As you can see on the chart below, there has been major CARRY UNWIND:
Talk of more easing from the BoJ could weigh on the yen, but it seems that until there is action, JPY sellers will wait.
Is The Great(er) Depression Part 2 Underway?
Good luck and may God bless you!
Follow us @researchvaf and @researchvas on TwitterYou can read more of my writings on
http://nicoomer.blog.kontan.co.id
THANK YOU
