by Greg Guenthner
Daily Reckoning
You don’t need insider information, complicated algorithms, or a fancy math degree to find great trades.
In fact, some of the very best opportunities on the market stick out like a sore thumb. You just have to tune out the noise and open your eyes…
Today, I’m going to show you the market’s next big “sore thumb” trade. It’s a sector that most folks aren’t watching. Elections, Brexit fallout and summer vacation are a big distraction for investors right now. Yet stocks like I’m about to show you are breaking out right under their noses. And no one’s paying attention…
Check out this heat map of yesterday’s market action:
Good Day… And a Tub Thumpin’ Thursday to you! Finally! A good restful night’s sleep for yours truly! I wish I knew what I did to bring that on, for if I did, I would bottle it, and do the rinse and repeat every day! For I know that I did nothing different, ate my usual meals, and had the usual nap in the afternoon… Oh well, I feel refreshed this morning, and that’s a good thing because there’s a day game at Busch today… wink, wink… The Beatles greet me this morning with their song: We Can Work It Out… I heard a great old 70’s song on the radio on my way to work today… Dead Skunk In The Middle Of The Road… It’s a pretty funny song…
Britain faces a frightening array of economic risks if Parliament makes a mess of Brexit, but a sterling crisis is not one of them.
Dear Reader,
Two short months ago it was generally expected that US interest rates would rise for the balance of the year — a move made possible by steady economic growth and general global stability. Here’s a representative piece of reporting from early April:
Four new polls show comedian Beppe Grillo’s Five Star Movement (M5S) ahead of prime minister Matteo Renzi’s Democratic Party (PD) were an election held today.
Mark Carney is proving once again that he’s cool in a crisis. But the Bank of England chief’s best efforts probably won’t be enough to shield the U.K. economy from the worst of the Brexit fallout.
Not a great session for Japan or the Hang Seng with both down around 1.5% a piece. Shanghai managed a better performance closing marginally higher having spent all day meandering around unchanged. The main talking point in Asia was again BREXIT and the GBP under performance so far. Setting another 31 year low (1.2795) concerns grow as more property funds closed for withdrawals. Given the Nikkei’s fall the JPY rallied but fell short of breaching the psychological 100 barrier.
Stocks stubbornly resisted gravity on Wednesday even though they could have used a breather from the abnormally steep, post-Brexit bounce. Presumably, the stock market’s buoyancy was due to the fact that crude oil prices reversed and closed moderately higher after being down nearly $1 in the early going. Although energy prices have been leading the broad averages by the nose for months, the effect has been somewhat muted lately. Perhaps the markets were so lacking in inspiration that they simply went on autopilot, letting old habits take over for a day? The strange thing is, minutes from the Fed’s last meeting were released intraday but produced no discernible reaction. Perhaps Wall Street has finally come around to the obvious — that any real tightening is about as likely as a Martian invasion. This is something I’ve been shouting for nearly a decade, but even now, with the Fed quite obviously paralyzed by fear, mainstream opinion still holds that tightening will come — if not sooner, then later. This is rubbish, but perhaps it will take a global economic collapse to kill the idea completely.
China’s Silk Road Fund, a $40 billion pool set up to invest along the nation’s ancient trade routes with Central Asia, is discussing a joint bid for Glencore Plc’s gold mine in Kazakhstan, people with knowledge of the matter said.
The fallout from the Brexit vote continues to rock the European financial system. On Wednesday, the British pound dropped to a fresh 31 year low as confidence in the currency continues to plummet. At one point it had fallen as low as $1.2796 before rebounding a bit. As I write this, it is still sitting at just $1.293. Meanwhile, the problems for the biggest banks in Europe just continue to mount. At one point on Wednesday Credit Suisse hit an all-time record low, and German banking giant Deutsche Bank closed the day at an all-time record closing low of 12.93. Overall, Europe’s Stoxx 600 Bank Index closed at the lowest level in almost five years. What we are watching is a full-blown financial meltdown in Europe, but because it is not personally affecting them yet, most Americans are not paying any attention to it.
Bond-buyback miracle-nonsense flops. Shares, CoCo bonds plunge.
Now that the precious metals’ five year cyclical bear market is acting like it’s been replaced by a vibrant bull run in the opposite direction (up!), many analysts who chided the ongoing rise in the mining stocks and metals that started in December 2015 are begrudgingly changing their “outlook” so they don’t get left behind.
Chinese wholesale gold demand, as measured by withdrawals from the vaults of the Shanghai Gold Exchange (SGE), reached a sizable 973 metric tonnes in the first half of 2016, down 7 % compared to last year.
Our friend, Grant Williams, produced this new video last month for publication on his excellent service “RealVision TV”. It’s now publicly available and it’s a MUST WATCH, particularly with today’s FOMC minutes and Friday’s pending BLSBS sparking again all of the ridiculous “rate hike” nonsense.
Two of the biggest names in investing agree with what we’ve been saying for months…