After a long summer break, the markets are starting to return to normal, and opportunities are plentiful.
Sure, we experienced some unusual and unpredictable movements during the summer, but now that the suntan lotion is back in the cupboard, we can begin to take advantage of what the markets have to offer – and hopefully start generating consistent returns on a daily and weekly basis.
The weakness of the U.S. dollar is currently supporting most assets. As I write this, we are still awaiting the Federal Reserve’s announcement, but I do not expect any major surprises or changes in the overall direction, especially with the Presidential race remaining so close.
It feels like we’ve all been trying to outguess the Fed for some time now, and quite frankly, I’ll be relieved once the announcement is made so we can shift our focus to other stories.
At the moment, I don’t have a strong position in the FX market, but following yet another reported assassination attempt on President Trump, it’s difficult to say just how far the Democrats will go to ensure Kamala Harris reaches the White House. If she does, I’m not too optimistic about the future of the U.S. dollar or the economy.
Many are now discussing the strength of the equity market and are broadening their bullish views beyond just the AI sector. Few people are as excessively optimistic as a stockbroker during a rally. That said, whilst everything might look and sound promising, I see little to suggest that any rally from this point will be sustainable in the long term. The massive American debt is not going to disappear overnight.
I maintain my position that hard assets, particularly commodities, will continue to strengthen, and much of this could be driven by a weaker dollar. Oil has been a bit of a laggard in this regard, but I still prefer buying on dips rather than selling on rallies. This might change if Trump, with his “Drill, baby, Drill” policy, manages to win the election, but we still have plenty of time before the polls close. Whether you’re bullish or bearish on energy, there will be good opportunities in this sector – just be sure not to hold onto losing positions for too long.
As for the commodity sector overall, I remain optimistic for the coming months. However, if commodities do perform well, we are likely to see an uptick in inflation, and it will be interesting to see how this is managed.
Despite what I hear or read, I don’t buy into the low-inflation outlook. For less experienced market participants, a return to low interest rates might seem like a return to “normal” conditions.
However, in my view, the last 10 years of low inflation and low interest rates have been anything but normal. I fully expect inflation to re-emerge next year. Politicians and central bankers may try to do what they feel is necessary, but in my opinion, competence at the elite level is in decline. The only certainty we have is that at some point, they will make a mistake.
Considering all of this – and despite holding my commodity positions for a while now – I believe the current market conditions are far more suited to short-term swing traders than long-term investors.
The key is to get in, get out, and keep locking in profits. It’s time for active speculators to make their money.
On a personal note, the Old Man’s wife is taking me away for a short vacation next week, so there will be no report. Enjoy the peace and quiet – it doesn’t happen often!
The post The sun might have gone, but the good times are back! first appeared on JP Fund Services.
The post The sun might have gone, but the good times are back! appeared first on JP Fund Services.
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