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Commentary May 2008
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Rebate checks are going out over the next few weeks, representing almost 1% of annual GDP, to be injected into the economy over a short period of time. This translates into about a 4% GDP annualized infusion over the short term. The US equity market is responding positively to this, lower interest rates and some degree of relative calm in the sub prime mortgage market. Europe and Japan are nipping at a buy signal, ( Ed note: new buy signal for Europe on May 1st and Japan on May 2nd) CRB is consolidating from an overbought condition, and bonds, with interest rates likely bottoming, are a sell. Real Estate Decline...Light At The End Of The Tunnel?...A quick look at the chart below reveals that resets of adjustable rate mortgages are currently hitting their peak at the present time, and then rapidly decrease for the rest of this year and 2009. It will still take at least a year to work off back inventory and the foreclosures that this current round of rate increases will produce. However, late 2009 looks hopeful for the residential real estate market to begin to find its footing, (especially in places that had huge run ups, with subsequent depression like Stockton, Riverside County California, Arizona, Florida and Nevada)
US Energy Policy Threatens Starvation For Millions...
Reluctance of reasoned, progressive and sound development of
our own plentiful internal US oil resources, stubbornness against
nuclear energy and the foolish pursuit of alternative fuels like
ethanol, now threaten starvation for millions in the third world,
who live at the margin.
Ethanol, as this newsletter pointed out last year, is not a more efficient fuel than oil, when net energy cost is considered. It lacks the same amount of energy output , gallon for gallon, by more than 25%. It cannot be transported by pipeline, and taps into our agricultural output. Subsidy has created the Proverbial law of unintended consequences. As a result of ethanol production, farmland has converted over to corn growing. This has raised the price of wheat and other cash crops by more than 250%! Furthermore, there are severe water shortages across the nation and world, which limit ethanol from ever becoming a viable fuel option. Food riots have erupted in recent months in Guinea, Mauritania, Mexico, Morocco, Senegal, Uzbekistan and Yemen. This issue is potentially more dangerous to the world picture than Al Queada when taken on a macro world view. If ever there was a time for our nation to fully embrace all out nuclear development, it is now. Sound use of our bountiful oil reserves in Alaska , Montana and North Dakota as well as full development of shale and oil sands should be taken on immediately. Realize that Energy = Food. It will literally be a matter of life or death for many. Remember, it is not about "how much you make" that allows you to be a successful investor, but rather the ability to avoid and minimize losses that protects long term profits. Keep an eye on our page each day to keep posted on our signals, or sign up for the free subscription by pressing the icon above and we will email our signals "as they happen" to you free of charge!
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NDX 100 S&P 500 Japanese Equity Index European Equity Index US Bonds Real Estate Investment CRB
Commodity Index
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We always submit our market opinion to the overall mathematic intermediate trend following signals posted here without ever second guessing them. Check this site daily for the mathematically defined trend following signals. Trust us for empirical, mathematical, computer tested trend following entry and exit points. Eliminate emotions, hunches and "seat of the pants" guessing for market decisions. NOW MORE THAN EVER, REMEMBER AND COMMIT TO STRATEGY, PATIENCE, & DISCIPLINE!
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