Market Update

Volatility is back in 2018. The low volatility in 2017 was abnormal. The markets are back to normal. Economic activity has increased and gained momentum. This will boost earnings in the US and the world. The markets have had a minor correction so far. Amazingly, fear has gripped every investor. The bull market that started almost 10 years ago has had five corrections above 10%. The current one has been about 12%. Each time the correction ended and moved to make new highs. I don’t believe this one will be any different. Until I see signs of a recession, I will not issue any major warning.

Yield Curve and Money Supply

The yield curve is still in positive territory. This is good for the economy and stock prices.

Money supply growth has been falling. It appears to be leveling off. I think it will turn around in the next few months.  We shall see.
 

Components of M1 and M2 growth are shown below. Demand deposits are crashing, but this is usual for this time of year.

Gold is Knocking on the Door

I have a wait and see attitude toward this gold rally. My personnel opinion is it will bust through 1360-1380 this time. However, I don’t trade on opinion. I will wait and see if it breaks resistance or turns away.

John Williams to Head New York Fed

John Williams is your typical Keynesian inflationist. He will be aggressive in his advocacy to print money. He will also be very influential at the Fed.

He will be slow to raise interest rates and “normalize” the balance sheet. Read the full statement here.

Manufacturing Jobs- The Fake Crisis

Manufacturing jobs are decreasing.

I say good riddance.
Politicians and economist say, “We need to bring back manufacturing jobs”.
I ask:
Who is “we”?
Why?
Here is what they never show you.


Manufacturing jobs are disappearing. Productivity is up. This is a good. Robotics and outsourcing has decreased the necessity of men in manufacturing jobs. These people can now do other task in the economy. The USA is second only to China when it comes to manufacturing output in dollar terms. The third, fourth and fifth slot are far behind.
These same people would have been warning about the agricultural jobs disappearing in the 20th century. However, productivity in agricultural is up. US farmers feed the world. Less people are needed to toil in the fields. These people can serve their fellow man in other ways. Instead of picking corn they can become engineers, doctors, barbers etc.
Here is Joan Norberg to set the record straight.

The next time some one tells you about manufacturing jobs, and how the USA does not make anything any more. Tell them what a remarkable success US manufacturing has become. More productivity, less workers. This is called high efficiency.

Tesla Meets Gravity

I issued warnings about Tesla here and here, when the price was $350 per share. Reality caught up to this company.

There is no reason to own this stock. There are better quality companies with sounder financials out there.

Platinum- Another View

Platinum at $950 is cheap right now. I have detailed the bullish case for platinum over the last few months. See here, here and here. You buy investments cheap. You sell them when they get expensive. Over at capitalist exploits they have made the case for owning platinum. Read the article here. He points out the South Africa problem that I have detailed at this website. He also has other observations I have not detailed at this website.

Gold to Test Resistance

Update on the gold market.
Gold looks set to break out from its multi-headed bottom.

It must break 1380 forcefully in order for me to take this trade. Once it breaks out, there is not much resistance until $1580.
Another reason why I think it is going to break out is because on the daily chart it broke out of a bull flag.
In my experience, these smaller daily patterns are used to launch the bigger weekly patterns.