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.