Economic trends persist as history repeats itself. Markets go up, and markets go down. Right now the US markets are in a downtrend. Allocate with caution.
The Federal Reserve’s balance sheet ballooned astronomically over the President’s time in office. Inflation would help the situation – for both the US government and the Federal Reserve. We’re not going to see inflation in the near term. And if Japan’s developed economy is any sort of predictive indicator, as many economists have suggested, we might not see inflation for a while.
To make matters worse – China exports deflation. As air is let out of the Yuan, risk managers everywhere should be looking for shelter. This is a currency war. A strong dollar, while great in theory, isn’t great for domestic economic growth as other countries find our goods more expensive and demand less of them. China’s growth-rate is trending lower. In order to combat this stagnation, the PBoC has devalued the Yuan to stimulate Chinese economic growth – exporting deflation to the rest of the world’s currencies and putting major downward pressure on their stock markets in the process.
Shelter in this market for The Brewer Group looks like getting out of the main indexes like the S&P and Dow Jones Industrial Average until we see a reversal in trend. If we see a flush downward in the major indexes, a “margin-call Monday” could come into play and exacerbate the move downward as people are forced to sell. Right now we’re buying the strength in the dollar, and 30-year treasuries might make a nice move upward in a market sell-off.
Keep your head on a swivel...