Let The Good Times Roll! Or as they say in French in the Big Easy, Laissez Les Bon Temps Rouler! I just walked off the stage at the New Orleans Investment Conference after moderating the economics panel with a formidable group: Peter Boockvar, Chief Market Analyst with The Lindsey Group and a principal of Bookmark Advisors; James Grant, founder of Grant’s Interest Rate Observer; Peter Schiff, CEO of Euro Pacific Capital; and Mark Skousen, Ph. D., editor of Forecasts & Strategies and the producer of FreedomFest, “the world’s largest gathering of free minds,” which meets every July in Las Vegas. I am planning to attend FreedomFest in July 2017.
Last night I closed the opening session with a short presentation entitled “Election Perspectives from 50 Years on Wall Street,” followed by a workshop on “Tactical Investing And Sector Rotation: Avoiding Traps And Profiting From Trends” Shoot us an email if you’d like a copy of the slides. After mingling with attendees and other speakers in the morning, I took the stage after lunch with the mission to corral this assembly of bright yet potentially long-winded market analysts.
I shared our outlook that the typical correction in the two months before Election Day this election year has set up a quintessential October Buy for a post-election, yearend rally and the Best Six Months. He noted that the market being up about 4.5-5% year-to-date indicates the market is expecting another Democratic President. I informed the room that while post-election years have been worse under new Republicans and midterm years have been worse for Democrats, either way the next bear market is likely to transpire over 2017-2018, setting up our Super Boom Forecast.
Then we went down the line with outlooks from the panel and dove into the discussion. To sum it up, Boockvar, who contends that the long term bull market in bonds is officially over, backed up our bear call for the next two years after the Best Six Months and the first 100 days of the new President, saying that a bear market will likely be triggered by the imminent rise in long term interest rates and weaker economic growth.
Skousen was arguably the most bullish on stocks mostly due to the increase in the money supply, but is bearish on gold since his gold indicator recently gave a sell signal. (We are seasonally bullish on gold and own some GLD, as well as bullish on stocks for the next six months, unless the wheels come off.) We also discussed how his Gross Output (GO) metric is a better economic indicator than GDP and is indicating a slight weakening in the economy.
Mr. Grant maintains that it is not the level of money supply that is the issue, it is the rate at which it moves that matters most; hence the velocity of money, and that this whole negative interest rate environment is unhealthy and is likely not to end well. Grant, who is bucking for Fed Chair, is a firm believer that we should end the war on price discovery and leave it to the bond market to determine interest rates.
Peter Schiff asserted that the Fed may not even raise rates again in December and feels that even if they do; they will ease again real soon. Schiff is also concerned about the Fed’s talking-up-the-economy rhetoric. If the economy is so strong, why not raise rates more and sooner and faster?
We covered a great deal more on the economic and market prospects over the rest of the year and beyond including inflation and what the Fed and other central banks need to do to set things right and put us on better path to growth and a more robust economy. Thankfully the whole panel was recorded and will be available to stream or order online in the next week or so at http://neworleansconference.com/ or you can call them at (504) 837-3033 to pre-order.
The market is likely to continue to waffle until after the election as the country and the world is a little on edge with this year’s unique circumstances. But after that we expect an upside move in November and through the Best Six Months and the first 100 days of the new President with some weakness in the first half of December and a January/February profit-taking break, save some longshot election result or a delay in the decision that derails the stock market.
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