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Stock-Markets / Stock Markets 2016 Nov 22, 2016 - 06:16 PM GMT

By: Chris_Vermeulen

Stock-Markets

Eric Balchunas, ETF Analyst for Bloomberg Intelligence, stated that "Financial ETFs are on fire, but the center of the heat is really banks, which will benefit from rising rates more than other areas of the financial sector,".

Is the strengthening of the dollar merely "temporary”? Is this recovery an illusion, which will precede an inevitable crash? I have maintained all along that there has been no real recovery and that the FED will not raise interest rates soon, contrary to common widespread beliefs.


The strong U.S. dollar seems to put extreme stress on China and other emerging market currencies. In the past, this has led to liquidity shortages which have eventually bled into the U.S. stock market, and the People’s Bank of China does not appear to be finished with the latest round of yuan devaluation.

John Engler, President of the Business RoundTable said “We see tremendous opportunity for economic growth, trade and immigration. I see a silver lining”. “The Republicans understand,” he said, “that they’re on the spot to produce results.”

The new Trump Administration favors the other side of ‘Keynesianism’ which tends to favor fiscal expansions driven by tax cuts. The Obama Administration favored increased government spending through Quantitative Easing. Foreign and domestic investors will continue to buy U.S. government paper as it is still regarded as the ‘safe-haven’ in an unstable world. This fiscal expansion is going to move towards the “normalization” of short-term interest rates in government bond yields

The US citizens desire this shift as they have suffered from the long period of extremely low interest income. The country would benefit from the stimulatory effects of the fiscal expansion. The expansive monetary policy should have reached the end of the road in the Eurozone. Fiscal expansion in Germany would be a significant step to returning to the norm. The U.S. is about to rebalance fiscal and monetary policy, as the Eurozone continues its’ current madness towards more Quantitative Easing and NIRP.

Sector Rotation

The main category looks for those that gained favor as money flowed from sectors that were previously favored to those expected to perform better in the new post-election environment. Previously, the leaders were defensive growth stocks that became expensive based on price to earnings ratios. Now, the advantage goes to cyclical stocks and sectors, financials and industrials, that are less expensive but should be able to increase earnings if GDP growth improves. However, large capitalization multinationals will most likely find tough going against rising interest rates and a higher dollar. Accordingly, the advantage should be with smaller domestic companies.

Based upon the first few days, it looks as though the election will become a market "game changer."

With stock market bullishness at extreme levels and the gold perma-bears out in force, a sharp rally in gold will certainly catch almost everyone by surprise. So, could a rally be coming in the days ahead? Perhaps you should just keep your eyes focused upon the yuan as it may once again be foreshadowing what is yet to come!

The combination of expectations for an interest rate hike by the FED, next month, along with the potential of higher inflation upon implementation of new fiscal policies, imply rising interest rates and a stronger dollar. There are several ways to position oneself for future rising interest rates and future declining bond prices…

Follow my lead at www.TheGoldAndOilGuy.com where I trade ETF’s and recently close UNG for a quick 2.6% profit and GDX for another 5% profit in a couple days.

If you prefer more potential gains like EDZ 20.7%, NUGT 11%, UGAZ 36%, VUZI 25% then join us at www.ActiveTradingPartners.com

Chris Vermeulen

Chris Vermeulen is Founder of the popular trading site TheGoldAndOilGuy.com.  There he shares his highly successful, low-risk trading method.  For 7 years Chris has been a leader in teaching others to skillfully trade in gold, oil, and silver in both bull and bear markets.  Subscribers to his service depend on Chris' uniquely consistent investment opportunities that carry exceptionally low risk and high return.

Disclaimer: Nothing in this report should be construed as a solicitation to buy or sell any securities mentioned. Technical Traders Ltd., its owners and the author of this report are not registered broker-dealers or financial advisors. Before investing in any securities, you should consult with your financial advisor and a registered broker-dealer. Never make an investment based solely on what you read in an online or printed report, including this report, especially if the investment involves a small, thinly-traded company that isn’t well known. Technical Traders Ltd. and the author of this report has been paid by Cardiff Energy Corp. In addition, the author owns shares of Cardiff Energy Corp. and would also benefit from volume and price appreciation of its stock. The information provided here within should not be construed as a financial analysis but rather as an advertisement. The author’s views and opinions regarding the companies featured in reports are his own views and are based on information that he has researched independently and has received, which the author assumes to be reliable. Technical Traders Ltd. and the author of this report do not guarantee the accuracy, completeness, or usefulness of any content of this report, nor its fitness for any particular purpose. Lastly, the author does not guarantee that any of the companies mentioned in the reports will perform as expected, and any comparisons made to other companies may not be valid or come into effect.

Chris Vermeulen Archive

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