October 30, 2016
The first thing is I want you to know is whatever opinions get expressed here are solely my own; also that I have no bias towards either side of the markets as this is an absolutely useless (detrimental) attribute in trading. All I ever am trying to do is understand what is happening and then look for what I think will be profitable ideas. Nothing else. I have no political agenda. All I want is to be right.
It is quite popular now to disparage the growth in the economy, with the idea it has been too slow since the pits of the Great Recession in 2009…Quite contrary to that, the view I have frequently expressed here is that the past 7 years have seen the economy experience definitively solid growth, by any economic standard you want to use (charts of which I have repeatedly shown you in this newsletter), as well as my firm belief that this growth will be continuing, and in fact, accelerating in the years to come…And that anyone who wants to cling to the idea that “things just aren’t good” is most likely being influenced by all the Internet/Brokerage House “color commentators” who routinely display a total ignorance of how the markets (and the economy) actually work. As I am forever reminding you, how many times do you have to see all those guys totally miss EVERYTHING big that ever happens…to KNOW they are going to be perennially WRONG? To KNOW that relying on their oh-so-polished and articulate “logic” is the WORST thing you can do in this business?
Of late (going back have few years at least) one thing those boobs seem to forget (or simply don’t know) is that The Great Depression started in the late 1920’s and actually continued for the entirety of the 1930’s, including at least one 45% drop in stocks in the latter part of that decade…and the truth is, what really pulled the US and the world out of the Depression…again, more than 10 years later…was nothing less than all the FIERCELY ramped up, government sponsored industrial production to fight World War II…and without that MASSIVE, MASSIVE STIMULUS, there is no telling how long the bad times might have lasted.
So when I hear the typical herd of analytic wrong way sheep talking about “how much better we should be doing by now”, the implication being that it should be quite quick and easy to recover from a time when the economy was losing almost a million jobs a month, I just have to laugh…And then offer the following 50 year chart as one piece of evidence that demonstrates that we are doing just fine…and really, QUITE WELL, when you consider the fact that 7 years ago the economy actually WAS in the worst shape since the Depression.. and the system really WAS in danger of a true collapse…
We ARE moving forward…
Along the same lines…and this is the real, and very immediate, point I want to make…I WILL CONTINUE TO REPEAT THAT I BELIEVE THE ECONOMY IS IN THE BEGINNING STAGES OF A LIFT OFF GOING INTO 2017…AND A CLOSER LOOK AT THE GDP NUMBER FROM FRIDAY…PROVIDES MORE EVIDENCE THAT THIS IS WHAT WE ARE ABOUT TO SEE…
As I often do, I could now show you all sorts of charts of production, auto sales, retail sales, the unemployment rate, housing sales, housing prices, consumer confidence, etc., etc., etc…ALL of which DO point to economic strength...but I’m just going to leave it at this…
The USA and World Economies are on the UP…Grexit didn’t matter, nor did Brexit, nor did the supposed collapse in China, nor Europe, and nor did election “uncertainty”. In essence NONE of the reasons given by Wall Street to “Get in there and SELL! SELL! SELL!” (from the Dukes in the movie, “Trading Places”) have mattered…and won’t…AND FOR THE 100TH TIME I WILL REPEAT:
THERE IS NO REASON FOR INTEREST RATES TO BE THIS LOW…THEY HAVE ALREADY STARTED MOVING HIGHER…I CONTINUE TO STRONGLY RECOMMEND BUYING PUTS IN THE JUNE 2017 EURODOLLAR CONTRACT.
I don’t know any other way to say it…I am totally AMAZED by how many people I talk to who STILL think rates will NOT be moving up from here any time soon…Who still are buying the “growth too slow” story…Who basically are saying, “I think this chart will still be sitting here at 99.00 nine months from now.”
I CONTINUE TO SEE THIS AS THE BIGGEST TRADE I HAVE EVER SEEN IN THIS BUSINESS…I PERSONALLY WANT ALL OF IT I CAN GET.
Give me a call if you see what I see…and want to do something with it…Or if you already are on this, with the market now back on its lows for the past 5 months, I suggest you add to the position here…BEFORE the big break comes and option prices become more expensive.
All option prices in this newsletter include all fees and commissions.
The author of this piece currently trades for his own account and has a financial interest in the following derivative products mentioned within: Eurodollars