Traditional Markets
One of the strongest sectors for a number of years is now showing the weakest performance. IT stocks fell yesterday erasing the entire post-mid-term election rally. The tech-heavy Nasdaq is now firmly below its 200 day moving average.
In this interview, famous investor Ray Dalio puts us near the end of the financial cycle and says that a downturn will likely happen sometime within the next few years, but that this next downturn is going to be very different.
Ray’s new book is all about bull runs and bears and how setting the US Dollar as the global reserve currency exacerbates how the cycles function. What’s interesting though is that he doesn’t paint the buck as the villain of this story; he says it actually it helps to preserve the balance.
One person who did seem to influence the cycle yesterday is US President Donald Trump. Yesterday we discussed crude oil’s support at $60 and the Saudi attempts to defend that level.
Around lunchtime in the USA, Trump launched another offensive with this tweet…
The time of the tweet is circled in purple on the graph below and as we can see, within the hour the $60 support was obliterated.
Today we’ll watch out for earnings announcements from two of the largest players in the cannabis industry. Cronos will be reporting before the opening bell and the legendary Tilray will be after the market closes this evening.
It will be incredibly interesting to see these earnings reports as this new industry is still a bit mysterious to the average investor.
A Mountain of Debt
As Dalio wrote about debt, I feel it prudent to mention another debt milestone that happened recently. The Bank of Japan has been by far the most aggressive central bank in the world and though the USA and Europe have mostly wound down their QE printing programs, Japan continues to pump money into its economy by buying financial assets at an alarming pace.
