Monday, November 5, 2018

Multi month stock market rebound possible | Sell stocks on Strength

The markets have been wonderful for a while but Marc Faber thinks its time to get worried. In his latest November Market Commentary he states his cautious outlook. 

"Under the heading First Phase of a Bear Market, Joe Granville writes that, “Bear Markets never visit by appointment, ringing your front doorbell during the daylight hours. They come like a thief in the night, sneaking in the back door while the public sleeps the slumber of confidence."

In my opinion, equities around the world have made an important high between 2016 and 2018. In the case of the US, the orthodox top was probably on January 26, 2018 (S&P 500 Index at 2872). Marginal new highs occurred among various indices between late August and early October 2018 but were not confirmed by the majority of stocks. A rebound lasting a few months is now possible given the oversold condition but new highs for the majority of stock markets around the world are most unlikely. The strategy should now be “sell on strength” and not “buy the dip,” which was the right thing to do since the March 2009 low.

I should warn my readers that the Wind of Change may bring about the end of the Great Asset Inflation, 1981 – 2016/2018, which inflated all assets including bonds, stocks, commodities, precious metals, properties, art, collectibles, etc. We may enter a period where asset prices stagnate or decline. This would imply a change from asset inflation to asset deflation."

Wednesday, October 24, 2018

This correction is not very meaningful yet

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"The financial markets were already very fragile at the beginning of this year and this fragility has actually increased because there is a tendency among central banks to step back from asset purchases, letting interest rates gradually adjust on the upside. And so this liquidity that we have in the world has been diminishing. It is not shrinking, but it is growing at the diminishing rate. 

Then came the announcement of the Trump administration. It is a really bad idea to pick on China and to launch not only a trade war but a confrontation with the US’ largest trading partner who also happens to be a large buyer of US assets, bonds, stocks and of course, properties. This idea has disturbed the financial markets around the world and so they are adjusting on the downside. Now, I would not call that the crash. A crash happened in 1987 when the Dow Jones dropped 21% in just one day. "

Monday, October 15, 2018

Central banks could eventually end up owning all assets

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Tuesday, October 2, 2018

Top world cities positioned for long term success

The cities positioned for long term success does not include any from China or India. Marc Faber talks about current top cities vs future top cities on his latest October 2018 GloomBoomDoom report.

According to Jones Lang LaSalle (JLL), the cities which are best positioned for long term success are San Francisco, Silicon Valley, Boston, New York, London, Los Angeles, Paris, Amsterdam, Toronto, etc.

JLL further states that, "In an increasingly digital and global economy, cities must be able to attract high-end talent, foster innovation, and maintain competitiveness – and failing to do so can have dire consequences. 
Which cities are prepared to adapt, and which will get left behind in the dust?"

In order to answer this question JLL produced a City Momentum Index, which tries "to identify the cities that are at the forefront of the innovation economy, by looking at key factors such as the number of tech firms, education, environment, transparency, infrastructure, and international patents." The cities that are at the top of the JLL Momentum Index are: Hyderabad, Bangalore, Ho Chi Minh City, Pune, Kolkata, Hanoi, Nanjing, Delhi, Hangzhou, and Xian.

Out of the 30 cities best positioned for long-term success, 12 are in the US and 3 in Canada, 2 in Australia, and 10 in Europe. Only three cities were located in Asia (Tokyo, Seoul and Singapore, but not one was located in either India or China).  

Of the 30 cities with the highest growth momentum, only 5 cities were outside Asia (Nairobi, Lagos, Dubai, Seattle, and Bucharest).

I have to say, I found it bizarre that no cities in China and India were on the list for long term success.

As Herodotus opined already in the 5th century BC, "The cities that were formerly great, have most of them become insignificant; and such as are at present powerful, were weak in olden times. I shall, therefore, discourse equally of both, convinced that human happiness never continues long in one stay.”

Monday, September 10, 2018

More fiscal and monetary accommodations are inevitable

The US stock markets are making all time highs with the S&P500 and DOW almost at record highs. There will be a decline at some point in the future, and when that happens, investors should be prepared.

"With respect to asset markets, I think the most important question investors have to consider is how central bankers will react when the global economy weakens and when asset markets decline. Furthermore, how will currencies, capital markets (stocks and bonds) and precious metals, and other asset markets (real estate, collectibles, cryptocurrencies, etc.) react to another round (inevitable in my opinion) of monetary and fiscal accommodations, and other interventions such as tariffs (in short further manipulations of free markets)?"