MARKETCYCLE WEALTH MANAGEMENT

No, the yield curve has NOT inverted.

 

Every two seconds in the financial press:  “The yield curve has inverted and we’re heading into recession!  The yield curve has inverted and we’re heading into recession!”  But, no it has NOT inverted and the U.S. is NOT heading into a recession.

The normal yield curve, in a healthy bull market, looks like the panel on the (above) left; short-term interest rates are at a lower yield-percentage than are long-term interest rates. To borrow money, one would have recently paid 2% for a less risky short-term loan (that might be paid back within a few years) and perhaps 5% for a long-term 30 year loan (because loaning money out for a full 30 years is more risky).  The Federal Reserve directly controls short-term interest rates and traders/investors mostly control long-term rates.

When the economy becomes overheated and/or if inflation rises too high, then the Federal Reserve must raise short-term interest rate levels in an attempt to weaken the economy enough to allow for the release of excess built-up economic heat (before everything literally blows up).  It is better to release a controlled amount of steam than it is to allow for the explosion of the entire economy.  If the Fed raises short-term rates, then it costs corporations more money to borrow for their short-term needs; if corporations weaken, then stocks weaken since stock ownership represents partial ownership in a corporation.

The right side of the above image shows an inverted yield curve where the Fed has had to purposefully weaken an overheating economy.  They raise the part of the yield curve that they control, the short-term rates, to an extremely high level even while the long-term rate level falls as investors buy long-dated Treasury-bonds as investment account protection.

The economy works sort of like a pair of lungs; it expands and then it contracts.  It is better to be able to offer some controls, via interest rates, than it is to allow economic growth to go too far in either direction.

With interest rates having fallen for the past 40 years and with the short-term rates recently near 0%, the Federal Reserve will generally, over the next 15 years, be gradually raising interest rates in a zig-zag manner based on where the economy is at any given time. They will still lower rates during recessions and raise rates during any over-heating, with a general and gradual upward bias over time.

In my opinion, we may eventually see the short-term interest rates near 25% in the late 2030s, but we’ll reserve this economy-crippling story for another time.

The financial press is all about how the YIELD CURVE has now inverted.  It has not.  Again, it has not inverted.  The only part of the yield curve that is important (and always accurate) is the 3-month as compared to the 10-year.  This next chart, which offers a unique view of the yield curve, shows that the yield curve is not only NOT in inversion territory, but it is getting even stronger and more bullish. (Note: the blue arrow on the right side of this chart shows where we are today, the S&P-500 is shown as a black line, the red boxes show recessions that correspond to the red “WARNING” dips below the green line.)  Simply put, on this chart below, red = WARNING… but right now, as of today, the green area is going higher, not lower.  It would take a minimum of a full year to reach the red “RECESSION-WARNING” zone and likely even longer.

 

 

So, even though MarketCycle expects some increasing volatility in the near-term, the U.S. economy itself is, once again, getting even more bullish.  The United States economy is currently (still) leading in strength relative to all other countries.  Where our economy goes, so goes the economies of everyone else.  So, the U.S. avoiding an economic recession in the near-term is vitally important on a global scale.

 

Thanks for reading!

MarketCycle Wealth Management is in the business of navigating client investment accounts through rough waters.  We have worked hard to be able to identify high risk periods and to protect client accounts when we foresee this happening.  The process is simple and easy and affordable.  There is a CONTACT tab at the top on the website.

Our second (paid member) website (REPORT) can be accessed via the link on this website.

 

 

MARKET CYCLE  —  DUAL MOMENTUM  —  TREND FOLLOWING  —  LOW VOLATILITY  —  HEDGE FUNDS 

A price chart is a sequence of prices ploted over a specific timeframe; information is shown at the top, prices on the right and time at the bottom.  A price chart can plot the price of almost anything, including the cost of a head-of-lettuce, over any selected period of time.  Shown below is what you want to see on a stock price chart.  CSQ is one of our portfolio holdings and it has an almost identical price chart to our other closed-end-fund (CEF) holdings of RNP and ACV.  Over just the past 12 months, CSQ started at a price of $12 per share and it is now $18.62 per share for a 12 month gain of roughly 55% and it also paid 5.5% in interest payments directly into client accounts.  This was accomplished despite having lower risk than does the S&P-500.  You want to see chart price lines moving up from lower left to upper right.

 

PDBC is our commodities fund.  We picked this particular fund because it does not exploit animals as commodities and it sometimes pays interest (I’ve seen the yield as high as 2.5%) and it has no complicated K-1 tax form.  And we like this type of fund because it merely sets its value based on the price of commodities and it does not participate in the actual mining, drilling, lumbering or basic exploitation of the environment.  Notice how PDBC moves differently than CSQ so it helps to smooth out the path of profits; sometimes when stocks and bonds drop, PDBC will go up.  PDBC has gained 70% in the past 12 months (try beating this via flipping houses!):

 

SWAN is an example of a protective portfolio asset that MarketCycle also holds.  Like CSQ, it also moves from lower left to upper right, which is good, but it was less profitable during the past 12 months because it generates most of its outperformance when markets correct, and there has not been any meaningful stock market correction during the past year.  Still, it is doing its job while making another 20% in profit in just 12 months (similar to the gains on our gold-bullion trust holding).

 

From CNBC as reported in the October 29, 2021 issue of The Week:  “The wealthiest 10% of Americans now own 89% of all U.S. stocks held by households, a record high.  The top 1% of all Americans gained more than $6.5-trillion in the stock market since the Covid-19 pandemic began, while the bottom 90% made $1.2-trillion, according to the latest data from the Federal Reserve.”   

 

On Tuesday October 19th, the stock market suddenly became very strong again.  Very strong.  We had predicted a September pullback and MarketCycle used the opportunity to add to account positions with new client money; we did so on the exact day of the pullback bottom and the stock market has marched straight up from that day to today.  MarketCycle recently sent out a private Client Market Update with a list of our near-term predictions and they all proved to be correct except for our call for bitcoin to move lower.  Bitcoin rose instead when it got wind of the news that a new bitcoin ETF (BITO) had been approved by the SEC and was about to come out (and 8 similar ETFs are in the works).  A chart of bitcoin will be presented further below.

I have to use several services to gather and assemble all of the information that I need each day, but I usually present StockCharts in my blogs because the charts are so clean.  In March of 2020 (when we were still at point “A” on the chart below) I drew the new upper trend channel line (indicated by “B“) of where I thought that the stock bull market was headed; at the time this line was just sitting all alone out in chart-space.  I wrote repeatedly about this by saying that the S&P-500 would soon head up to between 4500 and 4600, depending on how rapidly it moved higher; it ultimately hit 4550 before pulling back (right in the middle of my prediction range) and the S&P-500 re-touched this 4550 number again on Thursday October 21st and then closed at a new record high.  If my predictions remain on track, we will have over 1000 new record highs over the next 8 years.  And we should expect the S&P-500 to hit 4700 before the Spring of 2022.

So, the S&P-500 will likely churn higher, moving along the bottom side of the “B” line shown below for the next couple of years.  It did the same thing in 2013 & 2014.  The bull charges ahead!

 

The all important S&P-500 Advance/Decline Price Line (which shows the breadth of market participation… it reveals whether a market is running on all cylinders), as it has done since March of 2009, it is still saying that we are in a Secular stock bull market.  The S&P-500 is superimposed as a grey line:

 

In the near-term, all U.S. stock indexes remain above their individual short-term trendlines (blue dashed lines below).  A trendline is just a line, usually at around 45 degrees, that indicates market direction and once established the markets tend to want to touch the line repeatedly.  Small cap stocks (labeled as $RUT below) are showing weakness but this is only natural as we now leave the early-cycle and enter the mid-cycle portion of the current market cycle.  The pundits on the financial sites are out promoting “cheap” small-cap stocks, but sometimes certain stocks (or even entire categories of stocks) are cheap for a reason.

 

Market strength:  The United States continues to lead in strength relative to all other regions of the globe.  The U.K. is also surprisingly strong.  The most recent stock bull market started in late March of 2020 and it still has a long way to go before it reaches the end of this market cycle.  We have left the early-cycle and are entering the mid-cycle where stocks will continue to plow ahead, but in a slightly slower and more choppy manner.  $3.5-trillion is still sitting on the sidelines in the United States; it is waiting to go into the markets or to be spent in the economy.  Low interest rates plus strong cash levels = stocks to go higher.

Market weakness:  The only major countries showing measurable current economic distress are:  Canada, Luxembourgh, China, Argentina and Brazil.

 

Fixed-rate bonds often move in the opposite direction of stocks.  The main reason that bonds are held in investment portfolios is because they usually go up when stocks go down.  The most likely near-term direction for bonds is lower and perhaps down to the red dashed line on this next chart.  So, they will likely move down as stocks move higher.  Generalized fixed-rate bond weakness will likely persist for the next 15-ish years.  Roughly speaking, for each & every 1% rise in bond yields, the value of your fixed-rate bonds will go down by 10%.  Ouch.  We are just now coming out of the biggest bond bubble in the history of the universe; it was 40 years in the making.

 

Inflation means that the prices of everything that we consume, both goods and services, are heading higher.  Inflation is caused by supply chain disruptions and/or by money printing.  14% of all of the USDollars ever printed were created during the past 12 months.  The good news is that wages also generally head higher during inflationary periods (although automation and robotics will ultimately keep a lid on the wage gains of real people).  MarketCycle’s system of indicators were the first that I know of to pick up on the current inflation story.  We saw it way back in March of 2020 and now it is the only story that anyone is talking about.  Our indicators tell us that inflation persists.  Although we may be wrong about this, over the longer term MarketCycle expects (roughly) three temporary inflation spikes, perhaps spaced two years apart, before inflation then just steadily grinds higher during the 2030’s.  We are experiencing the first inflation spike right now. 

 

Two great books on inflation & deflation:

1. Inflation Matters… by Pete Comley (Pete is a great guy that lives in the U.K. and he is a reader of this blog)
2. The Great Devaluation… by Adam Baratta

 

High inflation and falling bonds:  People that hold the typical 60%-stock/40%-bond portfolios (60/40 is the most common portfolio mix) or that simply hold a template of mixed assets (such as the ones that companies like Wells Fargo put out) or that invest in “can’t fail index ETFs & mutual funds” are all going to get punished going forward and for the next several decades.  Starting right now is the time that alpha-level professional help will really pay for itself.  My prediction is that the S&P-500 will no longer lead; you can no longer just “buy the market.”  Going forward, sector and factor selection for outperformance becomes of the utmost importance.

 

Interest rates?  MarketCycle has discovered how to accelerate the same data that the Federal Reserve looks at so that we know, ahead of them, what their next move will be.  Our indicators just changed to show that the Fed could now raise rates at any time.  The likely path would be to start with visible tapering in November, although they have already been secretly tapering for months.  Certainly there will be rate increases in early 2022, if not by late 2021.

 

Bitcoin is getting closer to forming a new price top.  Parabolic tops always correct rapidly once they start.  Nothing can go straight up forever and the faster & higher it rises now, the faster & lower it will fall in the future.  IMO, it should head lower sooner rather than later, perhaps down to 27,500 and this would be a greater than 50% loss, but it could drop down to any of the red dashed lines shown below, including all of the way down to 7000.  Charting bitcoin is problematic; this is an ‘asset’ that is actually only a ‘digit’ saved in one’s computer, so it ultimately could go as high or as low as the majority of (mostly young) traders imagine.  It is not really a usable currency and it will likely never be one simply because it is way, way too volatile and therefore offers no stability; currencies must hold a relatively stable value.

 

Bitcoin is an asset that consists of nothing tangible when almost every other investment asset represents something real and tangible, stocks are partial ownership in a corporation and gold can be held in one’s hand, but if bitcoin dropped to $7000 again I would be a buyer (or perhaps buy ethereum).  Cathie Wood of ARK Investments optimistically believes that “bitcoin will go to $500,000 in 5 years.”  The much respected Jamie Diamond of JPMorgan pessimistically called it “a fraud worse than the tulip mania of the early 17th century.”  Warren Buffett says that “it has no unique value at all.”  Donald Trump says that “it is built on a foundation of thin air.”  Elon Musk and Bill Gates both believe that Internet mining for bitcoin is destroying the environment because of the truly gigantic energy requirements involved in the process.  But the financially savvy Ashton Kutcher recently stated that “a revolution is taking place.”   

The IRS is cracking down on cryptocurrency profits and many people are going to be receiving heart-stopping letters in the mail.  They warned us but nobody listened.  And if President Biden replaces Federal Reserve Chairman Jerome Powell (who dislikes bitcoin) with Janet Yellen (who hates bitcoin), she may outlaw or regulate its use and then institute an official Federal Reserve cryptocurrency; according to Ray Dalio, recently retired CEO of the world’s largest hedge fund, there is a decent chance of this actually happening.  Confusing, ain’t it.

 

And now for some levity:

 

 

That’s it; thanks for reading!

Please remember that MarketCycle has only one focus:  We carefully manage people’s investment accounts, positioning the portfolio for where we are in the market cycle (early, middle, late, recession) and constantly watching for increasing risk levels and moving to hedge (protect) accounts when risk levels rise.  We have clients all across the globe.  We’re here to help you, the process is easy, and our fee is remarkably low considering how correct our predictions and positioning are (I always say that we pay for ourselves).  The first 3 months are free.  There is a CONTACT TAB on our website.  Let us help you.

We have a second (paid member) website, MarketCycle Wealth REPORT, that offers weekly advice and it is available via the link on this webpage.  We now have a new REPORT section specifically for European and U.K. subscribers.

 

 

MARKET CYCLE  —  DUAL MOMENTUM  —  TREND FOLLOWING  —  LOW VOLATILITY  —  HEDGE FUND

We live in a world where everyone is absolutely certain about their facts and everyone is an authority on any topic that is even remotely of interest.  Consequently, some people will be offended by the following material.  We currently live in a world where there will be, today, ten fist fights in the aisles of commercial airplanes over whether one should wear a mask or not in crowded conditions.  So, I would ask that if you do not believe this information or if you do not agree with what I am presenting here, then please just ignore it.  Whether I succeed or fail, my goal is to present facts merely as facts and as FAQs.  I know that this is not ‘investing’ material but please just look at this as a ‘blog extra’ where I am, once again, just presenting my point of view on a topic and yes, I already know that my point of view is often controversial and contrarian and sometimes wrong.

My ultimate goal is to present this as a sort of public service, although it may not be read or believed by enough people to be of any help.  Parts of this article may make it sound as if I am against vaccines but I assure you that I am not.  In fact, I believe that the vaccines used against the majority of viruses (DNA viruses) are one of the best things that medicine does (along with emergency care, extreme acute care and plastic surgery).

I still read, on average, 15 peer reviewed medical articles per week.  And this posting represents a large body of research narrowed down to just 12 (printed) pages.  If you take it one sentence at a time, you will understand it.  You may not agree with it, but you will understand it.

From Scientific American, July 1, 2021:  “The popular move right now is to declare that we must follow the science.  But science is a process of learning and discovery, and sometimes we learn that what we thought was right is actually wrong.  We can’t even agree on what the ‘scientific method’ actually is.  Science is not simple and neither is the natural world.”

 

Print & PDF functions are at the bottom of the webpage and please feel free to share via the [+] button that is also at the bottom of the webpage.  Or send the link or send a PDF out to your friends via email.  And when you click on the ‘print’ function, it then also gives you a very easy & clear & simple ’email’ function.  Printing this article will allow you to read at your leisure and then, if you think that it may be of benefit, hand it off to a friend or stranger.

So, please PRINT this out…  and please SHARE.

 

COVID FAQs:

• What is Covid-19?  Covid-19 is a (deep lung) coronavirus, which is a type of virus that only infects mammals and it rarely jumps species.  The human common-cold is also a (sinus) coronavirus.  It is called a ‘corona’ virus because it wears a ‘crown’ of spikes (as shown above).  Covid-19 is a coronavirus that infected human mammals starting in 2019.  Whether this strain escaped from a lab or from a wet-market (that sells bats as ‘food’ out of filthy stalls), it likely jumped from bats to humans because there is a 96% similarity.  Recent documents slipped out of the Wuhan Lab suggest that Covid-19 may have been accidently released from the Chinese lab (Google:  ‘Wuhan Scientists Planned to Release Coronavirus Into Cave Bats 18 Months Before Outbreak’).   Regardless, the Covid-19 coronavirus, along with the longstanding common-cold coronavirus, is now a human mammal virus.  Viruses in general are not living things, they are pure genetic material contained in a capsule.  When they inject themselves into a living cell, their genetic material takes over control of the cell and they become both different and ‘alive’ with the ability to reproduce.  Like a horror movie, their surprisingly intelligent goal seems to be to reproduce in a host that they do not kill so that the host can be reused all over again at a later date.  With RNA viruses, mutations are how they ultimately pull that off and that is explained further below.

 

• When will it all end?  At this point, Covid-19 will likely always infect humans, much like the flu will always infect humans despite yearly vaccinations that are obviously not very effective.  (Quite literally, as I sat here typing that prior sentence, a friend and client phoned to tell me that her already fully vaccinated family now has active Covid infections.  The family doctor prescribed antibiotics which has exactly zero effect on viruses; antibiotics kill bacteria, not viruses.)  We will eventually begin to ignore Covid-19 just like we began to ignore the flu after the disastrous 1918 Spanish Flu pandemic.  Although we may eventually find a way to kill both the flu and the corona viruses, we are nowhere close to doing that now… it would take an out-of-the-box quantum leap in science to pull it off.  I just read a peer reviewed research paper where it stated that more and more scientists are now suggesting that we may be continually vaccinating and wearing masks and avoiding gatherings for the rest of our lives.  The head of Moderna (on September 17th) stated that we may not require yearly shots and later the same day stated that vaccine immunity appears to only last for a few months so we will need ongoing Moderna shots and then one week later said, quite hopefully, that Moderna will wipe out Covid within the next 12 months.  Possibly someone keeps correcting his viewpoint.  I remember Warren Buffett’s quote:  “Never ask a barber if you need a haircut.”

 

• Why will it always infect humans?  There was a possibility that it could have been stopped if people had reacted aggressively at the very beginning with a global in-home quarantine and in-home masks for perhaps only a few weeks.  Now, despite any heroic vaccine attempts, it will be next to impossible to ever eliminate Covid-19.  Today it is everywhere and it is continually mutating and migrating in order to assure its survival.   Most viruses are stable double-stranded DNA viruses that do not mutate easily.  DNA viruses include measles, mumps, diphtheria, smallpox, polio; most of the viruses that can infect humans are DNA versions.  Vaccines work well on these DNA viruses because DNA viruses normally do not mutate.  Vaccines work like a lock and key.  But if the lock is changed, the key will no longer work.  The flu and coronaviruses are unstable single-strand RNA viruses that mutate often because they have great difficulty correcting for any errors of reproduction.  You could think of it in these terms: Single strand RNA viruses do not have a back up copy (double strand) to rely on.  If the lock (virus) is altered enough, then it is almost impossible to have a key (vaccine) that continues to fit.

 

• Do vaccines stop people from getting viruses?  No, Covid-19 can and will still get into your body whether you got a vaccine or not; the theory is that the vaccine (or prior natural immunity) helps you to fight it off quickly and more easily and usually without symptoms.

 

 

• Is there anything that worries you about vaccines?  Yes, definitely.  With an ever higher percentage of people getting vaccinated, there is an increasing chance that there is a higher selection pressure on the part of the virus to aggressively mutate in order to alter the spike protein that the new mRNA vaccines are designed to effect.  And if it accomplishes this, then there is also a chance that the new Covid-19 variant starts to exacerbate the Covid-19 infections via a phenomenon known as ‘antibody-dependent-enhancement’ where certain antibodies stick to the virus spikes incorrectly and actually end up contributing to the infection.  This means that the vaccine could end up making the virus much, much more contagious (but not more lethal… the most likely pathway will be for the virus to become less and less deadly regardless of any variation).

 

• We are now being told that we will need ongoing “boosters” into the future.  If the virus mutates several times per year, then how will the labs know what the future mutations will look like so that they can make a new updated vaccine that will work against any mutation that defeats the mRNA vaccine?  They won’t know what a future version will look like in advance because labs are not psychic.  Right now, a “Covid-booster” is just a third shot of the same thing.  While theoretically it is better than the ‘old style’ vaccine, the new mRNA vaccine (Pfizer & Moderna) for an RNA virus will help until it no longer has any ability to help.  There are a dozen new variants circulating around the globe.  Researchers are suggesting that the new MU-variant coming up from South America (and already in every state in the U.S.) is not stopped at all by the current vaccine that the government is starting to mandate.  The idea behind the mRNA vaccine was that it would give more lasting immunity against a mutating RNA virus since it deals entirely with the ‘spike protein’, but it already appears to do nothing of the sort.

 

• I was told that if I already had Covid, that I still need the vaccine.  Why, if both produce immunity?  The “vaccine is better” promotion comes from the vaccine manufacturers and from the Center for Disease Control (CDC) and Dr. Fauci, but the reputable National Institute of Health (NIH) states quite the opposite.  Regardless, the very clear science is that the immunity from receiving the jab or from contracting Covid naturally are exactly the same.  Exactly the same.  However, strong immunity from either method likely lasts for no more than the following 8 months (according to NIH studies).  It is important to note that the vast majority of people that contract Covid will naturally present with zero symptoms, so one could have natural immunity right now without even knowing it, and this could apply to hundreds-of-millions of people across the globe, so this complicates the equation.  I do understand that “natural vs vaccine” is a very difficult choice to make when dealing with something like Covid-19 that has the potential to cause death.  On some deep subconscious level I have to admit that I do wonder what happens if we constantly and endlessly inject ourselves with Covid concoctions, especially in the light that no long-term studies of the effect of the mRNA vaccine on humans has ever been done.  It is simply a fact that we are all mRNA vaccine test subjects.  Yes we are.  A law was pushed through that no vaccine manufacturer (or government agency) can be sued during the next three years (until 2025).  A surprising number of doctors anecdotally report auto-immune patients going from very mild to bad after taking the mRNA vaccines; perhaps 80% of the population is already auto-immune and most common diseases are actually auto-immune illnesses and the (cytokine) tie-in with Covid deaths is clear, extremely important and seldom discussed (more below)… so it is sort of a ‘catch-22’.  I’m sorry to say that the current “scientific” answer to this potential worsening of auto-immune conditions (post-vaccine) is to add high blood pressure drugs to the long list of drugs that the patient is already on.

 

• It sounds like you are against vaccines?  Absolutely not.  In my opinion, the theory around vaccine use is brilliant and I am NOT saying to avoid the Covid-19 vaccine.  In theory, the mRNA vaccine is great.  Past public backlash has forced the labs to gradually remove some of the worst toxic elements from some of their vaccines, so injecting vaccines has gotten safer with time, but many still contain thimerosal-mercury, formaldehyde, aluminum and/or MSG that can all damage brain & nerve tissue, so there is still work to be done to make them even less toxic.  I’ve studied a lot of Latin and medical terminology and even I can’t pronounce half of the ingredients in today’s vaccines.  And trust me on this, a vaccine really doesn’t need to have mercury in it (mercury causes extreme health problems in almost all organ systems even at very low levels) and the connection between aluminum and Alzheimer’s is very well established (aluminum is a heavy metal when in the human body and it has an affinity for brain tissue… aluminum accumulating in brain tissue is mostly caused by spending a lifetime drinking phosphoric acid loaded soft drinks from aluminum cans and from cooking in aluminum pots).   Anyway, vaccines absolutely do work on DNA viruses, which includes most viruses, and they obviously will work against RNA viruses until the virus mutates beyond the vaccine’s ability to help.  The problem is that once a lab finds a new variant (mutation) that sidesteps the vaccine and does all of the work to get the vaccine up to running speed and delivered to the public and then administered, the virus may have further mutated.  And while the new mRNA vaccine (Pfizer and Moderna) had difficulty in passing any animal studies because it was shown to cause liver & kidney injury in too many test subjects (Johnson & Johnson’s ‘old-style’ vaccine has caused severe but rare nerve damage in some current patients), my personal gut feeling is that these vaccines are relatively safe for the majority of people to inject, which is good since it is now being mandated around much of the globe.  From a risk assessment viewpoint and looking at a world population of almost 9-billion people, one’s current risk of dying from either Covid-19 or from the vaccine are extremely low.

 

• What is the path of future outbreaks?  All past pandemics involving RNA viruses (if not eradicated in the first few weeks) have eventually moved on to becoming a permanent part of the human experience, but more localized and less widespread and much less lethal; I assume that the same will occur with Covid-19.  Of course the vaccine manufacturers will take credit for it, but it will actually just be the natural progression.  DNA viruses like smallpox, measles and polio remained strong over time (since they do not mutate, they cannot become weaker) and that is why vaccines were so important for these DNA viruses (and we are fortunate that vaccines do work well with non-mutating DNA viruses).  The only DNA virus ever eradicated by vaccines was smallpox.

 

 

• Do masks help to stop the spread from one individual to another?  Yes, if they are tight enough to the face.  It is not the thickness, it is the tightness.  Social distancing will also help as will not touching your face with unwashed hands.  Personally, I don’t often wear a mask, but if I were in tight quarters, as on a commercial airplane, I would most certainly wear a mask.  In my opinion, these actions will not eliminate Covid-19 from the planet, it is too late for that.

 

• How can I cheaply test at home to see if I currently have or have recently already had Covid-19?  On September 21st, Orasure (a great company) announced that they have developed a quick, in home, saliva test for detecting recent antibody production (with the help of $300-million taxpayer dollars, but Orasure will keep the profits).  It will be on the market sooner rather than later.  Their other products are already sold in many pharmacies like CVS (and also sold globally) so there can be a fast and easy release through already established supply lines.

 

• Does Ivermectin horse dewormer help against Covid-19?  No, Ivermectin is not an anti-viral and it has a list of side effects as long as your arm.  Covid-19 is not a parasite, it is a virus.  But I’ve spent much of my life around horses and it works great in deworming horses and trust me on this, horses must be wormed.  If you’ve ever seen foot long worms as fat around as your finger pass from a horse, you won’t ever forget the sight.

 

• What are monoclonal antibodies?  These are antibodies cloned in a lab and injected into your body rather than being produced naturally by your body.  This treatment is approved by the FDA and it is currently being promoted by hospital administers.  (I have great respect for nurses… there is a reason why so many nurses refuse treatment of this type when they personally become sick.)  Let me just say this about monoclonal antibodies:  The known side effects of these ‘lab antibodies’ are dizziness, headaches, allergies, diarrhea, constipation, cough, fever, itching, back pain, fatigue, insomnia, anaphylactic shock, autoimmune thyroiditis, hypothyroidism, hepatitis, anemia, decrease in white blood cells, inflamed and swollen mouth, colitis, gastrointestinal perforation, severe destruction of the intestines, internal bleeding, blood clots, heart failure, cancer and death.  In their infinite wisdom, the powers-that-be ordered that this special monoclonal treatment be reserved for those who are the most sick or elderly amongst us.  Why am I cynical about this?  Roughly speaking, for every drug or procedure or device that is approved by the FDA, another previously approved one is pulled from the market because, oops, it actually can permanently and severely injure you or even kill you.  But they just keep on doing it.

 

• Isn’t the virus as deadly now as it was at the beginning?  No, not even close.  This following chart shows the progression of both ‘cases’ and ‘deaths’ during the three waves that we’ve experienced.  At the beginning, in early 2020, there were few cases but high death numbers and that was not good because it meant that the virus was very deadly.  One year later the case and death numbers were moving in sync, meaning that death numbers as a percentage of total cases had actually dropped.  (Of note, the high early 2021 case numbers accomplished the majority of their drop before vaccines were widely available so vaccines had little to do with the fall in case numbers or deaths.)  More recently, in mid 2021, case numbers jumped much higher again but deaths remained quite LOW which means that deaths as a percentage of cases had dropped significantly.  High case numbers and low death numbers means that the virus has become more contagious but much less lethal.  Since the vast majority of Covid-19 cases present with zero symptoms, the recent gap between high cases and low deaths may be even wider.  This drop in death numbers is good news.  This chart also shows that recent Covid-19 case & death numbers may have peaked and already begun their descent.

 

Daily Covid-19 death numbers for the U.S are shown via the gyrating dark purple line below and it is shown to be lower than or equal to most other routine sources of human death.  (Chart is courtesy of Statista and it is shown to July 1st of 2021, which is the last date that data is available for all causes of death.)  Covid-19 fatalities spiked slightly higher in August and September of this year, appear to be peaking now, and will likely be back to July levels (below) by sometime before the end of the year.

 

• What is an auto-immune disease?  [I’ve chosen to hyphenate the word auto-immune in order to emphasize the meaning of the word.  “Auto” means self… you attack yourself.]  Research suggests that 80% of all health problems in the United States (and globally) are actually auto-immune diseases.  An auto-immune disease is where the body’s own immune system attacks its own bodily tissues, often at the person’s weakest genetic link.  The research is absolutely clear; it is caused by your own health choices and there are (seldom used) blood tests that can pin down the cause and the relatively simple cure.  Auto-immune diseases run the gamut:  Alzheimer’s, tinnitus, fibromyalgia, MS, lupus, Parkinson’s, psoriasis, eczema, celiac, vitiligo, thyroiditis, Crohn’s, rheumatoid arthritis (osteoarthritis is not auto-immune, it is ‘wear-and-tear,’ often caused by chronically misaligned bony anatomy or sometimes from overused joints), scleroderma, asthma, etc, etc, etc.  True Functional Medicine practitioners (they can be life changing, but also very rare and difficult to find and many falsely claim the title) are the specialists that deal with this “cause/cure” scenario.  In a world where health has been replaced with pharmaceuticals, these doctors rarely prescribe drugs.  There are 100 commonly recognized auto-immune diseases which means that there are actually around 500.  The odds are that your personal manifesting illness is actually an auto-immune problem; you might have one even if later-stage symptoms or disease processes are not currently presenting.  Some early, pre-diagnosis symptoms:  Stiff?  Injure easily?  Restless sleep?  Itchy skin?  Rash or redness, especially on your face?  Stomach or bowel irritation?  Constipation or chronic loose stools?  Excessive gas production after eating beans?  Chronic phlegm in your throat that is worse at night or in the morning hours?  On-and-off runny nose?  Headaches?  Chronic fatigue (and “Long Covid?)?  Autism that “runs in families”?  Thought process forgetful or not entirely clear?  

 

• How do auto-immune diseases affect Covid-19 patients?  Auto-immune patients produce too many cytokines as part of their illness.  Obese people also produce too many cytokines, at a 10x greater rate.  Cytokines are sort of like little stupid, non-specific destructive missiles, sent out by the immune system, that are designed to kill anything that might need to be killed plus anything else that ‘gets in the way’ or that is in the general area (like lung tissue).  Covid-19 is a virus that sets up shop in the distal air sacs of the lungs, where you breathe and exchange carbon dioxide for oxygen.  Auto-immune patients (and obese people) send in truly gigantic amounts of these cytokines in an attempt to kill the (inflammation causing) coronaviruses with the unfortunate result that the excessive cytokines end up destroying the air sacs themselves, and then the person cannot breathe.  If you cannot breathe, you die.  The coronavirus usually does not kill the patient, the patient’s own immune system kills them via cytokine overproduction and resultant lung destruction.  Very clear research shows us that it was this excessive cytokine storm that killed almost 50-million people during the 1918 Spanish Flu pandemic.  Between auto-immune conditions and obesity, a lot of people are at risk of over-reacting to a Covid-19 infection.

 

• Do vaccines stop this excessive cytokine production?  No, not at all.

 

• Is there any easily available medicine that does temporarily halt the excessive cytokine production?  Yes.  As I started saying 1.5 years ago, Dexamethasone is an anti-cytokine steroid that is common, cheap, relatively safe and extremely effective.  The only side effects for usage of under two weeks are temporary stomach cramps and a temporary irritated state of mind in some rare cases.  When President Trump went to the hospital with Covid-19, he was much worse than the American people were told.  Some very smart doctors there gave him Dexamethasone and he improved so fast that he was released almost immediately.  But your doctor will not automatically give it to you.  Should you be bad enough to have to enter a hospital, you will likely have to request him/her to discuss it with you.  As I type, Pfizer, who makes Dexamethasone, is in the process of relabeling it as a “strong non-vaccine Covid treatment,” but with a much higher price tag (and a different name for the exact same thing).

 

• Is there anything safe & natural that can be taken as a Covid prophylactic?  Yes.  Natural curcumin supplementation halts excessive cytokine production and it can be taken safely by most people on a daily basis if used as directed.  This is sold everywhere including Amazon, WholeFoods and in most decent supermarkets and health food stores.  I personally take it along with high potency vegan DHA/EPA (Deva brand) and natural D-3 (not D-2!) from vegan sources (NOW brand, taken as directed).  And this may sound too simple to be true, but zinc lozenges sweetened with natural xylitol will often knock out any oncoming viral (or bacterial) respiratory infection if taken immediately before bedtime as soon as any symptoms develop. There is a reason why so many water purifier companies add zinc to their filters and why companies like Tom’s of Maine add xylitol sweetener to their natural anti-microbe mouthwash and toothpaste.  Zinc should only be taken in higher doses when feeling sick because if taken on an ongoing daily basis, it will eventually kill off even the good intestinal bacterial flora.

 

• Where can I learn more about Functional Medicine?  Most illnesses being self-inflicted auto-immune diseases means that most human diseases are preventable and correctable.  Yes, that’s correct.  Research tells us that humans have the ability to live for 125 years and to be healthy and vibrant and active until the very end, but it takes the proper choices and actions along the way.

If you want to know more than your doctor:  The few textbooks that are available are too difficult for lay people to get through, but there are five easy to read books, all written by Functional Medicine doctors, that the subscribers to this blog might find interesting (please read in this order):

1. The Autoimmune Solution… by Dr. Amy Myers
2. The Autoimmune Fix… by Dr. Tom O’Bryan
3. The Wahls Protocol… by Dr. Terry Wahls (read the first half)
4. The Scientific Approach to Intermittent Fasting… by Dr. Michael Vanderschelden
5. Why Isn’t My Brain Working?… by Dr. Datis Kharrazian

 

 

REVIEW… AND CONDENSED SUMMARY FOR LAZY READERS: 

1. Covid-19 is a coronavirus which is a type of mutating RNA virus that is found in mammals with each mammal having their own version, but it can sometimes jump species.  The common cold is also a coronavirus.
2. Although Covid-19 could have been eradicated at the very beginning when it first jumped from bats to humans, at this stage it is likely never going away. 
3. Vaccines & masks will not eradicate Covid-19 from the planet; the mRNA vaccine will help only until the RNA virus mutates beyond the vaccine’s ability to help. 
4. If you have had Covid-19 within the past 8 months, a vaccine is of no additional benefit until 8 months after the date of first contracting the virus (but that won’t matter if every single place that you want to go to and everything that you want to do mandates a continually updated vaccine card). 
5. The death rate is much lower than most people believe, with the vast majority of deaths having occurred during the first wave spike in early 2020. 
6. The risk level is much lower than most people believe; you are currently (or soon will be again) more likely to be killed by your car than by Covid-19. 
7. It is patients with auto-immune diseases that are much more likely to die from Covid-19; auto-immune diseases represent roughly 80% of all global illnesses and if you personally have a manifesting illness, it is likely to be a mislabeled or misunderstood auto-immune condition. 
8. Auto-immune patients (and overweight people) produce too many cytokines. 
9. Immune system cytokines are what actually kills the majority of Covid-19 patients by destroying the breathing sacs (alveoli).  If you can’t breathe, you can’t live. 
10. If you are really sick with Covid-19 and in the hospital, consider asking for Dexamethasone, which is an anti-cytokine drug with few side-effects if taken for no more than two weeks.
11. There are natural preventatives (that help to reduce the overproduction of cytokines) that can be taken as part of a daily health regiment (listed above), but it is important to find out why you are auto-immune in order to fix the cause of the condition.  Merely masking symptoms with drugs allows the auto-immune illness to progress and worsen over time.  If you do not understand this, then picture having a rotting tooth but just taking aspirin so that you do not feel the pain.  The aspirin literally does nothing to fix the actual CAUSE of your pain but it does allow the rot to continue.

 

 

BRIEF MARKET SUMMARY:  On September 20th, with the market down almost 900 points, I sent a rushed client Market Update email to clients stating that the market had JUST bottomed and that it would move higher at the end of day and then proceed higher over the next few days to fill the chart gap, sending the S&P-500 to at least 4450.  This was exactly correct.  Even my clients don’t understand how difficult it is to do this.  I used the drop to enter new client money into portfolio positions so that this new money also captured the three day major upside.  Our earlier projection to reach the 4600 area was also exactly correct and I said that the market might then take a pause and become volatile.  Guess what?  Also correct.  I then said that the volatility was likely not over but that the recent bottom was likely in.  We’ll see.  Now I’m saying that the S&P-500 naturally wants to meander up to 4700 by the end of the year (or early in 2022).  I’m not psychic… I’m just open to listening to what MarketCycle’s proprietary system of indicators is trying to tell me.

So, we remain in the early stages of a new multi-year cyclical bull market for stocks (that began in late March of 2020) within the confines of a prolonged (18 year?) secular bull market that began in late October of 2011, peaking in perhaps 2029.  As I keep saying, this is the stock bull market of our lifetimes.  And commodity & gold prices will be the next bull market, peaking in perhaps 2037.

 

Thank you for reading.  I’m sorry if anyone was offended by the material presented in this article; there certainly are strong opinions out there.

 

Consider becoming a client.  It does’t cost; it pays.  It’s simple to do and time’s a wastin’.  There is a contact tab on the banner of our website and I reply to all emails same day.

 

 

MARKET CYCLE  —  TREND FOLLOWING  —  DUAL MOMENTUM  —  LOW VOLATILITY  —  HEDGE FUND

 

I recently received this unsolicited and extremely nice email from Warren Buffett.  I feel really privileged to have received it and I felt quite lucky after reading its contents.  This is an exact copy of that email:

“Hi, my name is Warren E. Buffett an American business magnate investor and philanthropist am the most successful investor in the world.  I believe strongly in giving while living’ I had one idea that never changed in my mind?  that you should use your wealth to help people and i have decided to give {$2,500,000.00} Two Million Five Hundred Thousand United Dollars, to randomly selected individual worldwide.  On receipt of this email, you should count yourself as the lucky individual.

Your email address was chosen online while searching at random.  Kindly get back to me at your earliest convenience before i travel to japan for my treatment  ,so I know your email address is valid.Email me.

Thank you for excepting our offer, we are indeed grateful You can Google my name for more information:  Warren Buffet OR You visit my website at Wikipedia.

God bless you and Best Regard.  Mr. Warren E. Buffett Billionaire investor”

 

 

Obviously we all know that this wasn’t written by the real Warren Buffett, it was some slob in a coffee shop in some place far off the beaten path searching for a gullible American to exploit.  But that doesn’t mean that I don’t want it to be true.  Buffett would tell us that our brain latches onto what we want to be true, we anchor to it, and then we proceed onward from that point by searching out confirming information.  We do this in all aspects of our life.  In investing, we latch onto ideas that seem like they should be true and accurate but they are not.  As an example, I had a lot of people tell me that Covid would crash the economy.  The opposite happened.  Our absolute certainty about what is or is not true is always coupled with our uncontrollable emotions.  It can cripple us.

Because we ask the wrong questions, we always get the wrong answers.  Entire respected professions are built on asking the wrong questions.  This applies to relationships, religions, spiritual beliefs, healthcare, dietary choices, our stewardship over the environment, etc.  It baffles me.  This is at the root of all of our problems, only we can’t see that we always ask the wrong questions.  If you think that the world is a mess, this is why.

Markets are counter-intuitive so sometimes even asking the right question is problematic.  Most of our investing ideas (even for professionals) will be wrong and this is why so few stock pickers can beat the S&P-500.  None can do it over any length of time.  Most macro-traders look at global conditions to predict what will happen.  They are usually wrong.  They might ask if we are experiencing inflation concomitant with a panicked Federal Reserve?  If yes, then gold should absolutely go to the moon because it always does under these conditions… only it didn’t.

It took me several decades to put together MarketCycle’s system of indicators.  Indicators can remove emotion from the equation and they can show what is actually happening rather than what we believe should be happening.  Much of that time spent testing was used to eliminate those things that everyone else had falsely found to be true.  MarketCycle’s total system was tested and tested and tested and I repeatedly tried to kill everything in the system.  But like Frankenstein, it lives!

As an example, back in late March of 2020 with the globe still in the pits of deflationary despair over Covid, our inflation indicators said that inflation was about to show up in the economy in a big way.  About a year later, everyone else started to pick up on it.  Now it is the only thing that anyone is talking about.

MarketCycle’s indicators eliminate emotion and guesswork and only show us what is factually and actually happening.  It works.  It allows me to sleep at night.

 

 

U.S. taxpayer MONEY continues to flow toward investment MARKETS.  The same applies globally; the world is awash with money.

$5-trillion from the federal government

$4-trillion from the Federal Reserve in direct investment asset purchases

$50-billion to airlines

$1-trillion in PPP gifts to small businesses

Taxpayer rent forgiveness and a moratorium against eviction with taxpayers now footing the past-due payment to landlords

$600 per week ‘non-work’ allowance to just about anyone that wanted it

$300 per child per week

Increased unemployment benefits

Many people got free health insurance via Obamacare

5-million home buyers froze their mortgage payments and used the savings to buy stocks & bonds

Student loan forbearance and forgiveness

All of these many $-trillions listed above did and will rotate toward the markets and the economy.  It will have a lagging effect that will prop up the economy for quite some time to come… perhaps even another 2 full years?

 

 

MARKET SUMMARY:  Very early last week I sent out a private client Brief Market Update and stated that we were in for some volatility and we certainly got that all week.  Not too bad since the market gyrated up and down rather than just down.  Any new clients were only partially entered into account positions so that if the market dropped in a meaningful way, certain protective assets would eventually kick in.  We are still in a bull market for stocks and commodities and gold and select bonds.  Volatility never lasts forever, although in the near-term it might persist a bit.  Volatility and pullbacks and corrections are a normal part of all advancing bull markets.  We finally reached our repeatedly stated S&P-500 target of 4500 to 4600 and I now expect that the stock market will likely (eventually) slowly march up the top line of its trend channel, perhaps for another two years before any meaningful correction occurs.  I am actually looking forward to a bigger drop since that is where our client accounts usually make their quickest profits.

 

Thank you for reading!

Consider becoming a client.  It doesn’t cost, it pays… and time’s a wastin’.  

MARKET CYCLE  —  TREND FOLLOWING  —  DUAL MOMENTUM  —  LOW VOLATILITY  —  HEDGE FUND

This is a copy of the August 21, 2021 update for our MarketCycle Wealth REPORT website.

This month’s blog will show the daily thinking process that we go through at MarketCycle Wealth Management and also at our paid membership site: MarketCycle Wealth REPORT (link below).  Every year we post a free copy to readers of our blog.

But first, I’d like to review our predictions from over the past couple of years and what we got right and what we got wrong.  These predictions were taken from past blogs and private client market updates.

Our correct predictions:

1. We stated that the economy would NOT collapse following the ‘Covid pandemic panic’ and at the exact bottom (to the day) we stated that the economy would actually become even stronger, with a roaring bull market and rapid employment gains and we further stated that the U.S. would continue to lead in strength relative to all other regions and countries.
2. We stated that the USDollar would not collapse, as so many others were warning… and that currencies would basically drift sideways for a prolonged period.
3. We correctly called the bottom and top and correction of Bitcoin, almost to the day.
4. We said that although the Federal Reserve was already dumping its unprecedented 2020 ETF purchases, that they would announce that they would start to “taper” in 2021.  They announced such on August 18, 2021.  In the past year, the Fed has increased its Treasury-bond ownership from 15% of all T-bonds to 27% of all T-bonds.  It is STILL buying $125-billion worth of bonds per month and this is with record stock market highs, high employment, wage gains and palpable inflation!  
5. And we maintained our stance that there would be no rate hike. The Fed still says “2023” but MarketCycle’s indicators have predicted that, although there could be a rate hike in late 2021, we will likely get the first rate hike in 2022.
6. We saw inflation coming as early as the first week of April of 2020 and this is now the most important financial news story although inflation may now be peaking and even drifting somewhat lower, as we also predicted.  Inflation will remain at a relatively high level for some time to come since both manufacturing and retail inventories are totally wiped out, causing higher prices all around.  Coming wage increases will add significantly to inflation levels and as inflation rises over the next 15-ish years, wages will have to keep pace in a sort of self-reinforcing feedback loop… you will make more but you will have to spend more. Even U.S. Social Security payouts will be increasing, including for 2022.
7. So, we said that while inflation would eventually go to the moon in the 2030’s, that it would initially present with multiple parabolic spikes and their subsequent corrections.  The most recent (first) spike is already showing signs of backing off.
8. In very early 2020 we said that all commodities, including oil, would take off and present investors with opportunities.
9. We said that TIPs and gold were good portfolio assets although gold may lag other industrial and energy commodities.
10. We said that bonds would gyrate and that investors would, going forward, have to take a tactical approach (and that bond “buy & hold” would be dangerous for the next 15 years).
11. We said that India would lead China in relative strength and that it would do so by a wide margin; it certainly has.
12. We felt that while rising inflation should cause emerging markets (like Brazil) to beat developed markets ( like Germany), that in reality, developed markets would excel (but still lag the U.S.), and they did.
13. We said that the U.K. would show stronger relative strength than would Europe, although just this week we began to see some signs of weakness in the U.K. relative to Europe.
14. We said that convertible bonds would beat preferred shares.
15. Right at the bottom, we stated that the March Covid-crash bottom would present a major buying opportunity for highly discounted (and leveraged) Closed-End-Funds.  MarketCycle added roughly 20-25% to our client portfolios.
16. We felt that value stocks would catch a bid in 2020 but that growth stocks would (again) overtake them in 2021 and that large-cap momentum stocks were a good way to play this.
17. We felt that technology stocks would take a hit and then recover.  That said, we also now feel that stock, sector and factor selection will be of vital importance going forward and that stock indexes (like the S&P-500) will no longer outperform.
18. We very accurately called the tops and bottoms and pullbacks, usually to the day.  For the last pullback, one day before the occurrence we predicted a rapid 5% drop that would recover rapidly… it pulled back just shy of 5% and then did recover fully within a few days.

What we got wrong:

1. We (probably correctly) predicted that a bear market was coming in June of 2020, but the Covid-panic unexpectedly pushed the date forward by three months.  Black Swan (unexpected & rare) events cannot be predicted in advance but this one hit in an already weakening market, which we did foresee.  LESSON LEARNED.  The prior time that we had called an official “bear market” was in December of 2007 and this proved to be extremely important and correct and profitable for MarketCycle since we pre-moved to extended-duration Treasury-bonds for 15 months (and shorted the market for 11 months); we made a bundle when everyone else was getting killed by falling markets.
2. We felt that Chinese stocks would be somewhat stronger in 2021 than they currently are (but to still lag other emerging markets, especially India); we failed to foresee the Chinese government interfering to such an extent in its own markets.  LESSON LEARNED.  On August 18, 2021, CNBC (financial website & channel) ran the following headline:  “Hard lesson for global investors; Chinese companies do not make the rules in China.”   
3. Normally dangerous high-beta stocks were stronger than we felt they would be and because we started a brand new stock bull market only 1.5 years ago, we should have known better.  LESSON REMEMBERED.  Please note that today high-beta stocks are no longer either a safe or a good investment choice.  High-beta stocks are high-volatility stocks and in a new roaring bull market, volatility causes rising spikes of profits.  The correct pick now would be mid-to-large cap lower-volatility and quality stocks; lower risk stocks will now beat higher risk stocks.

 

Bull market?  A recent quote from Picton Mahoney about what would cause the bull market to continue:  “Households are now sitting on a mountain of excess savings, over $3-trillion, providing considerable resources for a consumer binge.  Consumer spending will likely be turbocharged for a number of years to come.  And wealth created by investment account gains will likely further support consumption levels as we approach a full economic reopening.” 

 

MarketCycle Wealth  REPORT

For August 21, 2021  

Important note about the REPORT signals:  The individual asset signals shown below are determined by combining the following 11 criteria…

1. The trend direction of the individual asset
2. Relative strength of the individual asset against all other assets
3. Relative strength of all regions and countries relative to their peers
4. Where we are in the current cyclical market cycle
5. Where we are in the longer-term secular cycles
6. Where we are in the inflation cycle
7. Global Central Bank activity
8. Global currency relative strength and trends
9. Accelerated inflation data
10. Accelerated economic data
11. How much measurable risk is currently in the market

 

STOCKS…

United States:  very BULLISH    

Developed markets (ex-U.S.):  weakly BULLISH

     Japan:  weakly BULLISH  

Emerging markets (mostly commodity producers):  CAUTION

     China:  CAUTION

     India:  very BULLISH

Leader in RELATIVE STRENGTH:  United States 

GROWTH or VALUE:  GROWTH

Strongest SECTORS:  consumer cyclicals, consumer staples, financials, healthcare and technology

Global private equity:  BULLISH

 

• SECULAR U.S. stock outlook (effective October 1, 2011):  Bull markets will be stronger than usual
• SECULAR Emerging market stock outlook:  Bear markets will be more severe than usual

 

 

BONDS…    

U.S. Treasury-bond, 30 year:  CAUTION  (can offer portfolio protection and hedging)   

U.S. Treasury-bond, 10 year:  CAUTION

U. S. fixed-rate corporate bonds:  CAUTION  

U.S. floating-rate assets (and TIPS):  BULLISH

U.S. high-yield corporate bonds:  BULLISH

U.S. preferred shares:  CAUTION

U.S. convertible bonds:  BULLISH  

Emerging market high-yield bonds:  CAUTION

• SECULAR fixed-rate outlook:  Bear markets will be more severe than usual. 

 

 

COMMODITIES…

Gold:  BULLISH   (can offer portfolio protection and hedging)

Oil & energy:  BULLISH

Industrial metals:  BULLISH

Lumber:  weakly BULLISH

U.S. home price appreciation:  BULLISH

 

• SECULAR commodity outlook (effective October 1, 2011):  Commodity bear markets will be more severe than usual 

 

 

CURRENCIES…

U.S. Dollar:  CAUTION 

Euro:  CAUTION

Yen:  CAUTION

Emerging market currencies:  CAUTION

Note:  All currencies are gyrating sideways and this could persist. 

 

 

RISK ASSESSMENT…  

• Calculated future U.S. economic-RECESSION probabilities (markets can correct without being in recession):  LOW
• Global (ex-U.S.) Economic Weakness Indicator:  BULLISH
• U.S. Federal Reserve’s Survey of Professional Forecasters:  BULLISH  
• Are energy costs HIGH enough to crush the economy?  NO
• Are energy costs LOW enough to stimulate the economy?  NO
• Hindenburg Double Omen within past 6 months:  Just had one but require a second one in September to confirm
• If post correction, does the VIX Rate-of-Change show that a near-term bottom may be in?  N/A
• High-yield to T-bonds – price divergence:  BULLISH
• High-yield to T-bonds – spread:  BULLISH
• S&P-500 to T-bonds – spread:  BULLISH
• Global (ex-U.S.) stocks to T-bonds – spread:  BULLISH
• Percent of S&P-500 stocks above-to-below the 200 SMA – divergence:  BULLISH
• S&P-500 Price to Momentum – divergence:  BULLISH
• S&P-500 monthly RSI – divergence:  BULLISH
• S&P-500 Advance/Decline Price Line:  BULLISH
• S&P-500 Advance/Decline Volume Line:  CAUTION
• Small-cap Advance/Decline Volume Line:  CAUTION  (as we move into the mid-cycle, we expect small-caps to show relative weakness)
• Small-cap direction of 300 day Simple Moving Average:  BULLISH
• Micro-cap to large-cap divergence:  CAUTION  (erratic behavior of micro-caps might be caused by the new phenomenon of “Robinhood Traders”)
• Small-cap momentum:  BULLISH
• Mid-cap momentum:  BULLISH
• Large-cap momentum:  BULLISH
• Dow Theory divergence:  CAUTION  (could be a false signal because of Covid related airline weakness)
• Home construction divergence (triggers early):  BULLISH
• Lumber price divergence (triggers early):  BULLISH
• Copper price divergence:  BULLISH
• Cyclically Adjusted Price-to-Earnings Valuation Ratio:  BULLISH
• Warren Buffett Valuation Metric:  BULLISH
• Q-Ratio Valuation Metric:  BULLISH
• U.S. 3-month:10-year interest rate yield-curve:  BULLISH
• Likely future direction of U.S. interest rates:  FLAT then UP
• 12 month trend of inflation levels:  INFLATIONARY 
• Inflation/Deflation Extremes Indicator:  BULLISH  
• Volatility trading-range:  BULLISH
• Un-employment trend (leads employment data):  BULLISH
• U.S. Leading Economic Indicators EXPANSION or CONTRACTION:  EXPANSION
• U.S. stock market combined SEASONALS (updated monthly):  CAUTION
• Is there too much BULLISH ENTHUSIASM in the stock market?  NO 
• ∗∗ Calculated chance of a multi-week stock market CORRECTION of >10%:  only slightly above AVERAGE 
• ∗∗ Calculated chance of a multi-month stock market RECESSION of >20%:  NONE  
• ∗∗ Calculated chance of a multi-year global DEPRESSION of >50%:  NONE 
• Minor OVERSOLD Indicator most recent buy-the-dip date:  March 23, 2020   
• Major OVERSOLD Indicator most recent buy-the-dip date:  March 23, 2020 
• U.S. SECULAR THEME… “MY” Ratio (investing demographics) is bullish until 2029
• U.S. very-long-term SECULAR THEME… inflation or deflation:  INFLATION 

 

 

S&P-500 shown as of Saturday, August 21, 2021… most likely path is to touch and then scoot along the new upper dashed line as it did in 2013-2014 when the Fed was last tapering, but we’re watching closely.

 

Thanks for reading!

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The LINK for the REPORT website:  https://MarketCycleWealthREPORT.com/

 

  

 

 

Graham & Dodd:  “The essence of investment management is the management of risks, not the management of returns.”

Ralph Wagoner:  “The market is like an excitable dog on a very long leash in New York City, darting randomly in every direction.  The dog’s owner, who ultimately determines the primary direction (trend), is walking from Columbus Circle, through Central Park, to the Metropolitan Museum.  At any one moment there is no predicting which way the pooch will lurch.  But in the long run, you know he’s heading northeast at an average speed of three miles per hour.  What is astonishing is that almost all of the market players, big and small, seem to have their eye on the dog and not the owner.”–

MARKET CYCLE  —  TREND FOLLOWING  –  DUAL MOMENTUM  —  GLOBAL MACRO  –  HEDGE FUND 

 

 

Thanks for supporting us…  Steph Aust