“C’mon man, you know the thing…,” as America’s invisible President used to say.
The fact is the American electorate is worried about two things: the economy and mass illegal immigration. Another fact is that Vice President Kamala Harris is extremely weak on both issues. However, that doesn’t mean Trump will automatically win the election, so we still need to be very careful in our approach to the markets.
You don’t have to work at McDonald’s to know that the burger you receive with your order never reflects the one you see in the window or on the menu. Likewise, you don’t have to be a rocket scientist to know that what you’re told before an election rarely materializes afterward (especially if a professional politician wins).
Some readers say they don’t want to hear political views when it comes to talking about the markets, but how can you ignore what’s happening?
I was watching CNBC Monday morning and heard a great comment during a discussion on the rise in Bitcoin (BTC). The expert guest was discussing the positive effect that macroeconomics were having on BTC values when the host suggested that Trump’s positive support for BTC might actually be a negative, because “nobody trusted Trump!”. The phrase, “damned if I do, damned if I don’t,” immediately came to mind.
I bought some BTC during the collapse in early August, shortly after Kamala threw her hat in the ring, because the outlook had changed, and Trump was no longer guaranteed to win. That wasn’t the only reason I bought it, but the collapse gave me a chance to pick up the digital currency at a decent level.
I am not a raging bull when it comes to crypto, but it does make sense to own some BTC exposure as part of a diversified portfolio. I was happy to add it to my Gold position.
While owning Gold and BTC has helped me a lot, not everything went according to plan. I was long on the dollar against the Euro, expecting Trump to beat Biden, which I thought was a sure positive for the U.S. economy. When Biden stepped down and Kamala became the candidate, the outlook for the USA became less certain, and the dollar weakened, triggering my stop on EUR/USD and costing me a figure on the trade.
I have no problem taking a hit for any reason, but when people claim that politics shouldn’t be incorporated into our views on the markets, I call “bullshit!”
I like to be realistic about what’s happening for my readers, but sometimes it’s difficult to make solid assessments because the environment we work in is so fluid and fast-changing. A good example of this was my recent assessment of the oil market.
There was a knee-jerk rally in oil prices because of increased tensions and escalating military conflict in the Middle East. This rally was great for short-term speculators, but I needed to warn traders that if they jumped on the rally too late, they might regret it. The subsequent decline in oil prices proved my point.
I don’t know what will happen in the Middle East, but I do know that Trump’s economic policy relies heavily on drilling and pumping oil, and his stated goal is to cut fuel costs by 50% to reduce inflation. Again, we don’t know what will happen with the election, but the outlook for oil will be heavily influenced by who the next occupant of the White House is.
As you know, over recent weeks I have strongly advocated reducing long-term risk and focusing on short-term speculation until this election is over. In the coming weeks, I am happy to double down on this advice. Moreover, since financial instruments are more susceptible to political influence, I have been using various commodity markets for speculative purposes and have been reasonably successful buying non-ferrous metals and grains on dips and taking advantage of subsequent rallies.
In the weeks leading up to the election, although the markets now seem to indicate a Trump win, nothing should be taken for granted.
I like the stimulus measures China is introducing to solve its internal problems, and overall, I still like commodities in the longer term. But we need to be careful when taking positions in our markets for longer than a week.
Facts you can hang your hat on are few and far between at the moment, so whatever you do, be careful out there!
The post Buy on the rumour, sell on the fact. But what is the fact? first appeared on JP Fund Services.
The post Buy on the rumour, sell on the fact. But what is the fact? appeared first on JP Fund Services.
The post Buy on the rumour, sell on the fact. But what is the fact? first appeared on trademakers.