So how are you finding the market? Heres our brief take on things we are watching closely…. U.S. Markets are being squeezed higher over the past few weeks and we think it could either be short lived if the price action is anything to go by. However, it could keep pushing onto and perhaps the S&P’s may reach 2300. Although some areas of the U.S. economy suffered in this months data, slight upticks in some of the data also suggested some balance to the U.S. economy, however we do feel these are temporary and we are looking for more consistency. We are watching markets closely as many of you will be doing over the coming months. The $DXY seems to be tearing and then pulling back seeming as if it’s being kept on a leash for now. Reports on the bond markets are looking increasingly creaky with negative rates and many are saying this environment is tuff as traders seek yield long term. We should also say that we have heard reports that if things start to turn they will likely show in the bond market first. The table listing the countries with negative real rate countries is scary and it could easily grow so keep your eyes peeled on the increasing war with rates in these ZIRP and NIRP zones throughout the world as $12 trillion of global debts embraces negative yielding territory. Especially US yield curves! Gold has been doing amazing things of late making moves from the lows of 1100’s and now holding these newer more recent highs of 1300-1350. We’ve also heard some compelling cases from the likes of Jim Rickards and Brett Johnson (just to name two!), on why gold should be considerably higher, like much much higher around 15,000 oz or multiples of. But! Could that be the day we see the end of our financial system (this time) or the day central bank and governments actually let markets find price naturally and we finally get a recession? We’ll be watching gold closely from here. For now, there are too many ticking time bombs to mention that could give us that event because things are so pent up. Two potential problems that we do feel are worth mentioning from an equity point-of-view are Deutsche Bank (EU) and Citi (US). These two banks ( and there are others) as some of you may or may not of heard, have got trillions in derivatives on their books which pose a very real systemic threat should anything “untoward” happen, a great piece was written by Michael Lewitt here on Citi. You can google around for many recent DB stories an make your own assessment. Please remember we are not recommending these trades, we are just divulging some things we’re looking at closely at GT Trading. Enjoy, good luck and please feel free to comment.
