I’ve discussed the end of the refinancing cycle. And while I don’t agree with President Trump on a number of issues, I do agree with him on one: the Powell Fed is WAY too tight. Of course, this raises a more fundamental problem with central planning of interest rates but I’ll save that diatribe for another day.
In addition, if you do believe the President, you must also believe that the economy is much more fragile than He himself has made it out to be, and what I have observed to be the general view among investors. No gray area folks, these are mutually exclusive items.
And of course if that is the case, that old adage from Warren Buffet comes to mind…something about tides going out and swimming naked, is it?
In an earlier post, we mentioned that crazy things happen when global PMIs fall below the 50th percentile. Corroborating that view are a handful of other factors we analyze (like industrial company valuations), but perhaps one of the more interesting data points is the trend of Copper versus Gold. Much has been written about the explanatory power of Copper:Gold, but I don’t think anyone has produced the chart below, where I highlight every crisis that followed a long-term trend change in Copper vs. Gold.
Indeed, Murphy’s Law is a bear and not a bull market phenomenon. Enjoy:
All data for this post was sourced from Stockcharts
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