May 23, 2017
The Trump budget plan is now out…and no matter how you shake it, NONE of the news for at least the next few months is going to be about the government spending LESS. There will be lots of political yammering about what will and won’t work, what will and won’t increase the budget deficit, or who will win and who will lose…But the bottom line is, aside from the Russian story, EVERYTHING ELSE COMING OUT OF WASHINGTON IS GOING TO BE ABOUT RAMPING UP THE ECONOMY, STIMULATING BUSINESSES AND ACROSS THE BOARD INFRASTRUCTURE CONSTRUCTION…WHICH WILL REPRESENT INFLATIONARY PRESSURE FOR PRICES AND WAGES…AND MORE IMPORTANTLY, IT’S ALL GOING TO BE DONE WITH BORROWED MONEY…FROM BOTH THE GOVERNMENT AND PRIVATE SECTOR…ALL OF WHICH WILL MEAN SIGNIFICANTLY HIGHER INTEREST RATES. I MAY BE DEAD WRONG BUT RATES RISING IS NOT A QUESTION OF WHEN (IT’S NOW) BUT MORE OF HOW FAST AND BIG THEY WILL BE MOVING…WHICH, AS I KEEP SAYING, IS GOING TO BE A LOT FASTER AND BIGGER THAN THE ANALYSTS AND THE MARKETS ARE EVEN CLOSE TO BELIEVING.
MORE SO THAN EVER, I CONTINUE TO RECOMMEND BUYING EURODOLLAR PUTS, NOW FOCUSING ON THE DECEMBER CONTRACT SHOWN BELOW.
Just about every major stock market in the world is dead on its all time, or at a minimum, one year highs…And all of that GLOBAL equity market strength is NOT signaling a world slowdown…Quite the opposite I think, and I therefore think it is absurd to be expecting that the lowest rates in modern history are just going to slowly creep higher…For 37 years I have watched the Fed, Economists and Analysts repeatedly misread the speed and direction of interest rates and I see no reason to expect anything different now.
I MIGHT BE DEAD, DEAD WRONG BUT I AGGRESSIVELY BELIEVE THAT HERE AND NOW…WITH THIS RECENT REVERSAL HAVING PERHAPS BEEN MADE…TO BUY ANOTHER 7 MONTHS OF TIME WITH TRULY INCREDIBLE LEVERAGE AT $206 AN OPTION.
Not happy that we’ve been sideways to higher for 5 months…but I absolutely think this thing is DONE with that and about to start moving down…
Give me a call if you want to talk about it…
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The author of this piece currently trades for his own
account and has a financial interest in the following derivative products
mentioned within: Eurodollars