07 April 2017 – no more draining the swamp?

I missed the rally in oil prices after prices sank to $47.50. An oil rig count increase week after week, rising oil inventory pushed the prices down, OPEC deal extension was under question as well. Now it seems OPEC is eager to extend the deal beyond May.  The US first direct strike on Assad regime also gave a boost to oil prices. Oil prices are following the long term bullish trend. I will jump into the trade after more careful analysis.

Gold traded up or down since my previous blog (29 March) now stays at the level where it was before. I jumped into gold a bit late but now I will hold on to that for the near future. The market got ahead of itself since Trump was elected. A couple of days ago, Paul Ryan’s statement on tax cuts was not what many expected. It seems it will take quite long time to have taxes been cut. I think the market will slowly understand how incompetent Trump is. He has still not figured out how to run White House. Everything he does is a TV show reality for me. I do not think he is up for the task of being the president. I had doubts before but was not sure. Now, I am becoming more certain of it. His push to repeal Obamacare failed miserably. Tax cuts are not on the horizon. The only thing that has changed is the market sentiment that everything “will be alright”. When market participant realize that from both economic and political point of view nothing has been improved then we will see a market turnaround and I don’t think it will be a good one. A couple of days ago, Trump ordered a direct military attack on Assad regime after many people were killed by use of chemical weapons. It seems, Trump might take the country to the next war like Bush but that is still uncertainty.

British government triggered article 50 to leave EU at the end of March. Next 2-year uncertainty began for pound sterling as well as for euro. I do not have a strong conviction on currencies yet as I do not have time to analyze them deeper.  FED finally made a statement on reducing its $4.5 trillion balance sheet. So we begin the end of the crazy stock market rally that continued since 2008 crash. No more reinvestment by FED will reduce its balance sheet over many years. That is a good approach compared to selling bonds in hands. Instead, they will wait for them to mature and will not replace them with new ones. That will take a panic out of the market.

My portfolio went up slightly after I jumped into buying lots of gold. I am still long on gold as mentioned earlier but will take a closer look into oil later. I do not have any idea how it might play out. Stocks are the ones I am more cautious about.  I have one large position only in Apple and have kept a small short position in bonds but it seems bonds are playing against me. yields have no interest of rising even after FED rate hike. There are lots of cash corporates are sitting on and money is not spent in business reinvestments but in stock buyback and treasuries to sit tight on cash.

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I love Economist cartoons. So, I will be posting them as well.

 

 

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