Saturday, March 11, 2017

MAD Economic Review - 3/11/17

This week had some interesting developments.  For one we saw Gold and Oil pullback from recent strength. The EIA report this week showed crude oil inventories were at record highs. We have a huge energy problem right now. We literally have to much OIL!!!  My how things change.  It seems not so long ago gas was piercing $5/gal and oil seemed poised to make a march through $150 and straight to $200. The world scrambled for alternatives, and now we have to much energy swishing around.

On top of that we had an ECB meeting, which is going to be followed up with an FOMC meeting next week.  The ECB did state it's easing program will still continue at least until December, and that it's in no rush to raise rates yet. That's a complete 360 from Janet Yellen and The Fed as she basically confirmed a March rate hike is happening.

So what's the prognosis?
 

I think longer term we can continue to expect a strengthening Dollar vs the Euro. Although short term we might see some wild swings as traders cover positions.  This week odds for a rate hike were fluctuating between 80-90%. For a quick take on both central banks putting all their eggs in one basket see my recent article.

Also we've seen big upticks in treasury yields. The one year treasury for instance finally broke above a 1% yield for the first time since 2008, and 5 year treasuries have seen their yield climb to 2.1%, which is up from 1.25% just before the election.  In other words markets were expecting low inflation until Trump was elected then did an about face as they expected "Reflation".  


Taking a back seat were the markets despite the fact this week marked 8 years since this amazing bull run started. The indexes drifted sideways and lower a bit as earnings season is over, and we await more news.  A lot of people are still calling for crash. I'm calling for one too because I want to buy stocks at cheaper prices 😀!!! Joking aside the huge crash pundits keep calling for just never seems to materialize.  Will stocks pullback 5% or more? Sure they will and that's normal.  Just as it's normal for stocks to surge 10%+ when business opportunities start looking better as they are now.

Just keep in mind most people will tell you when interest rates rise the markets will fall. That's just not how it works. Markets keep rising despite the fact everyone knows the Federal Reserve plans on raising interest rates this year. So it's rates up markets up. Rates down markets down. You heard it here first!! Actually I said it awhile ago on Facebook but who's counting!?

There wasn't much going on in the market except for Snap Inc(SNAP) taking a dive down to $20, and then recovering a bit to $22. You can read my thoughts here. Of course things could be worse. You could have bought or shorted the wrong Snap.  Just look at what's been happening to shareholders of Snap Interactive(STVI) since last week.  Yep that's right people actually bought and sold the wrong company!!!


Other big news centered around federal agents raiding Caterpillar's(CAT) offices on allegations of tax fraud, and possibly a few other issues. If Caterpillar were smart they would have used one of their earth movers to bury all the evidence a long time ago. Haha kidding. Everyone knows you shred it like Arthur Anderson(now Accenture) did during the Enron fiasco. 😅😅😉. I know a little heavy with the emoji's today so I'll stop. The best way to deal with this is come clean, admit you did something wrong, and move on.

Remember if you are getting a tax refund give MAD Consulting a shout to get yourself setup with an investment account. We can discuss ways to give yourself a tax free income stream for life based on current IRS rules!!! I recently went over this strategy on my Topstep Trader Investors Corner segment which I'll write-up a post soon. 



If you have kids we do full college planning and can set up a tax advantaged 529 plan which entail additional tax breaks. Reach me through my main page at www.getmadconsulting.com/contact.html. 

In other news I'm working on a big re-branding project the next few weeks.  Be on the lookout for some major changes which will finally combine the blog and website into one place which is my mistake for deciding to do a blog after I setup my original site. Hallelujah! 

Have a great weekend

MAD Consulting

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