Written by Chris Vermeulen
Friday’s, April 7th 2017, poor jobs report was really nothing new. It released yet another terrible job report showing that only 98K new jobs were created in March of 2017. Wall Street expected 180K new jobs. It continues to be a very disappointing and dismal fact of our daily reality!
So, no trend in the market, i.e. not overbought nor oversold. The SPX is trading in a Non-Trending market. I expect this next retracement will bottom by the end of April 2017. I plan on taking advantage of this summer’s rally.
According to ShadowStats.com, unemployment for March 2017 was a whopping 22.5%.
The Good, The Bad And The Ugly!
There is a lot of political maneuvering that is presently occurring in Washington, D.C., as well as around the world. The executive branch of the government has set the stage.
The real results will all be realized when Congress passes real legislation. It is very important to monitor what will take place! It is also about event risk. After April 21st and May 7th 2017, the respective following Monday mornings will be critical to observe what the market’s reaction is! It represents how the new theme of the populist could change and how the European Union may shift!
Egon von Greyerz, Founder and Managing Partner of Matterhorn Asset Management AG & GoldSwitzerland, said, “The central banks are leading the world into a black hole and have no idea what disaster they have created. What initially seemed like a nice money spinner for the private bankers in 1913 when the Fed was created, has resulted in a $2 quadrillion (at least) monster that is now totally out of control…”
The economy has NOT grown in “real terms”. We are living in a false economy! On short term, The Fed has been focused on instant gratification. They have started to marginally increase interest rates and now, finally, are publicly discussing their bloated balance sheet.
They should have implemented these actions years ago, NOT today nor tomorrow, as there is no going back to the solution that would have created the much-anticipated economic growth!
All that they can do now is to artificially inflate the stock market so, the only solution that they have in order to go forward is ‘QE to Infinity!’
The Fed has been concentrating on cushioning every stock market decline with loose money, for over 30 years. Former Federal Chairman, Ben Bernanke, wrote an editorial in which supports “that the FED acts to support the stock market because it wants spending by rich people to trickle down to the rest of the economy”.
Whatever the true motivation of the Fed was, one can be assured that future market crashes will cause the Federal Reserve to try to save the stock market as it is it’s number one priority!
Beyond The Confront Zone!
It appears that almost everybody has been forced to leap into the bull market. This has led to a momentous supply/demand imbalance throughout the securities markets. Too much “money” has been flooding into the markets, while an atypical dynamic ensures a dearth of willing sellers. This powerful market dislocation has granted the ‘Bulls’ the luxury of easily pushing the market higher and with little resistance from any sellers. It is no coincidence that markets of “risk on” assets demonstrated a tendency for the “melt-up” in the face of mounting global risks. For years now, it has been similar to that of the late 1920’s, and the fragile backdrop has ensured that central bankers will continue their extraordinary monetary stimulus!
After so many years of ultra-loose monetary stimulus, these conditions have ensured that everyone is on the same bullish side of this crowded trade. Changing the rules, in the middle of this game, at this point, will be chaotic. The FED clearly does not want to crash this market. Therefore, the tiny baby-steps, that have been taken, have only ensured that the ‘bubbles’ and the ‘financial excesses’ will continue to be even more problematic.
Opportunity Is All Around Us!
Allow me to position you in the right ‘asset class’, at the right time, which will add value to your portfolio. Gold is still under the radar, today. The stock market is not a one-way trip up.