March 18, 2020
Getting right to it…Short and Sweet…
Buy the Stock Indices
Buy Crude Oil
Buy Corn, Cotton, Wheat & the Soybean Complex
And we are out of our Short Gold position…
The past few weeks have been unlike anything I have ever seen in the markets…by four-fold. Fear is now more rampant that it was even at the 2009 Stock Market lows (Dow 6500) when there were actual fears of the entire financial system collapsing.
As I’ve written forever, the markets are more about mob psychology than anything else. The markets are emotional…and absolutely prone to overreaction…which is what I think we’ve seen virtually across the board. I am NOT saying that we don’t have to worry about the Coronavirus…It is quite serious, and beyond its danger as a health issue, it is impacting society and businesses in ways that I never would have imagined possible…wherein individual owners and entire industries are closing their doors…and very definitely leading to economic numbers that are going to be catastrophically negative in just about any category you want to name…Businesses will be suffering, and obviously massive segments of the working population as well…No need to go on and on…It’s BAD. And it’s going to get worse…BUT…BUT…I firmly believe the markets (again the world’s biggest video game, played with real money) WILL turn back up at a moment when the mood across the nation has become “HOPELESS,” when the news is terrible every day, and only getting worse…and worse…and worse. AND I THINK WE ARE THERE...I THINK THE PAST FEW DAYS, PRECEDED BY LAST WEEKS EQUALLY DEVASTATING MARKET COLLAPSES (in Stocks, Bonds, Gold and other Commodities…in EVERYTHING), HAVE BROUGHT US TO THE POINT…SPECIFICALLY TODAY…WHEN MY GUESS IS THE FEAR HAS NOW PLAYED OUT AS MUCH AS IT EVER COULD…AND THAT ALL OF THOSE MARKETS LISTED ABOVE ARE BUYS…RIGHT HERE, RIGHT NOW.
Yes, it’s stupid to say that, “This is THE day.” But that IS the way I see it from here. Today, with markets continuing to crash, inclusive of Crude dropping almost $7.00 to $20.00, my impression is that even though the news WILL continue to worsen, the markets have already “accounted” for whatever is coming…and that going forward, all of those markets will be moving higher, and sharply so in many cases, while the headlines will get more and more worrisome.
I’ll leave it a that…and just give you the charts…and let you decide for yourself where you think the opportunities might be…
Owning equities is really just another way of "owning" Capitalism...And while the economy is experiencing a severe "jolt", it WILL pass...and Capitalism WILL march on.
Here are the row crops…AND I WOULD DEFINITELY REMIND YOU THAT NOT A SINGLE ONE OF THESE CROPS HAS BEEN PLANTED YET HERE IN THE USA…And I would offer that these newly low prices (except Soybean Meal) are NOT going to encourage planting…nor are they going to have Bankers being entirely comfortable in lending to farmers when prices may already be below the cost of production…For sure, farmers WILL plant…but I can’t help but think they will not be doing “fencepost to fencepost. And then there’s the weather…and the erratic weather patterns we now have can affect planting, growing and harvesting. And again, the seeds are not even in the ground yet, much less grown and harvested.
Cattle and Pork….And yes, again I know that a major part of meat consumption comes from restaurants, and for a WHILE, people won't be eating in restaurants. But let's get real...Firstly, everybody already knows that and this is obviously part of why we HAVE gone down...And secondly, PEOPLE ARE NOT GOING TO BE EATING LESS MEAT...whether it's being delivered to them, or they pick it up at the supermarket, they WILL be eating meat...And finally, I would note that the Cattle and Hog markets are FAMOUS for their "V" type reversals...that is, where the can go straight down...and then straight up. I obviously don't know if that will be the case here...but I do know it is a possibility.
As of today, we are no longer Short Gold
In February, I recommended shorting Gold, pointing out that it appeared that the whole world was long…and NOBODY even remotely considered the idea that it could go down…with the everlasting rhetoric being, “Gold is a safe haven.” Well, I’d say that this MYTH has once again been proven to be false…Here the Stock Market has nosedived…and Gold, which was “supposed” to protect investors from exactly that, just dropped as straight down $250 a contract about as fast as any market ever has…in SIX DAYS to be precise….
I suspect that Gold still has a LONG way to go on the downside…for years really…but I have no official positions here at the moment…Maybe it can rally big…or maybe it just keeps tumbling…I might be trading it personally but probably won’t make any recommendations in the near term.
That’s it…Wish some of you guys who HAVEN’T gotten back on board would call me…I’d love to call you, and do try, but just can’t get to it with all the action that’s taking place.
It doesn’t mean I will get it right, or that I AM right…and if I’m not you could lose every dollar you invest…but I think these are some of the biggest opportunities I’ve ever seen. Everything seems to be moving big…and I expect to see that continue for a while…And the 1&1 thing is letter perfect for markets like these…Again, that does NOT mean it will work for you…You can lose money…but it IS a hell of a strategy for volatility like we are seeing.
Pick up the phone if anything here interests you…and I’ll help you price whatever it is you want to do…First and foremost though, I STILL AM ALL OVER THE SOYBEAN MEAL..THE ONLY MARKET THAT HAS BEEN GOING UP WHILE EVERYTHING ELSE WAS GOING IN THE TANK.
All option prices in this newsletter include all fees and commissions.
All charts are by Aspen Graphics.
The author of this piece currently trades for his own account and has a financial interest in the following derivative products mentioned within: All of them