Politic Toc

US30 Weekly

As sure as summer turns to autumn, the market domination by economists and monetarists gives way to party political supremacy. Regardless of affiliations we are grateful for the volatility we receive.

It is popular to speak out against the leader of the free world. Dick’s Sports is now anti-NRA and assumed to line up with the Democrats. This may lead to a red/blue wall of quotes alongside the familiar red/green. It isn’t hard to imagine Republicans boycotting Dick’s, where will they go? Has a niche opened up for an enterprising Republican gun seller? Perhaps that market is already saturated but the principle extends. We don’t yet have Republican doughnut shops or Democrat stationery stores. Opportunities abound.

The anticipated Whitehouse exodus is in full swing. The new hires are mouthy populists with no substance, experience or credibility. That is the consistency. Other consistencies may be more tradeable:

Brent Monthly

Republicans will push up oil prices to benefit their fracking and drilling wing. The USA has become a net exporter and is on target to pass Russia as the biggest oil producer this year. The next step will be the failure to sign off the annual Iran paperwork in May, then sanctions against Venezuela.

Gold Monthly

Gold market bulls have been hoping to cash in on volatility but the payday hasn’t come. Impending inflation often drives people to Gold but that isn’t a factor yet. We haven’t returned to pre-crisis lows either, it may still be inflated. Downside risk is Indian and Chinese attempts to get people to put money in banks rather than in gold. Jewellery and private investment makes up 68% of the world market. Upside risk would be a serious economic downturn, caused by trade wars perhaps. However, most analysts are only looking for market corrections at this stage.

US10Y Monthly

Bonds can only continue downwards, Central banks have been the biggest buyers for 10 years, now the only question is how aggressively they will sell. It is a buying opportunity for pension funds and the like, cheap AAA+ assets don’t grow on trees. The questions is, do they have the nerve to buy in falling market? ‘Nerve’ isn’t traditionally the hallmark of a pension fund manager.

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