Every week I go through my chartbooks and think about what should be highlighted as our "Chart of The Week", something that speaks to a theme that people need to know about.
Sometimes I have trouble choosing just one chart, but this week it's a no brainer in my opinion.
Today we're updating our outlook for global markets and providing ideas to profit in the second half of 2019.
Part 1 of this playbook will provide our perspective on all four asset classes and update our views on the major themes within India that we're paying attention to.
We've all heard about "Dr. Copper's" ability to gauge global economic growth. What is not discussed as much is that Copper is very highly correlated with Emerging Market stocks, not so much developed markets. With Copper right now setting up for a potentially outsized move, the implications of its direction will likely impact stocks throughout the emerging markets space.
This is one of my favorite things to do: Forget everything that happened in the first half of the year and start from scratch. It doesn't matter what we did or how we felt in early 2019. It's irrelevant. We're moving forward. This is my Q3 2019 Playbook.
Monthly charts force us to take a step back and identify the direction of the primary trend. By erring in the direction of these trends, we are increasing our probabilities of success. Markets trend. That's why Technical Analysis works. This process at the end of each month is arguably the most valuable part of all the work I do. I can tell you that from the bottom of my heart.
One that definitely stands out here is the Dow Jones Industrial Average going out at new all-time monthly closing highs. This is the highest monthly close in the history of the stock market:
Another interesting one is Gold going out at new 6-year highs:
Here is the video from my BNN Bloomberg interview this week. We talk about the implications of a weaker US Dollar, including what that would do to stocks, emerging markets, metals and others. I've been waiting for it all year. But think about it. We've already seen some of the things we would expect to see in a weaker Dollar environment. Gold strong, for example, and an inability for the Euro to go lower. So for me, I think this Dollar fall is just getting started.
A lot of the jokes in my community begin and end with gold bugs. I can't think of any group that has been so wrong for so long. You could have literally been in anything else the past 8 years and made money. It's all good though. What goes around comes around. Gold will have its day again, and I think it could be around the corner.
The US Dollar has been a big focus of ours all year (see here, here and here). The implications of the US Dollar's next move will be felt worldwide. I've been in the camp that the US Dollar Index below 98 is positive for stocks and that a drop in the Dollar will most likely coincide with a rotation into emerging markets and european equities. While the Dollar has remained below 98, it’s been more of a sideways range that anything else. But we may have just seen the beginning of this collapse.
