Outlook for July 2018

The dog days of summer are here. Here in Ottawa Canada, we’ve been setting records of sweltering heat…on Canada Day (July 1st), we hit 47°C with humidex!! More importantly, the hot stock market in the US continues its streak with no letdown in sight. While Tech grabs all the headlines, its the Consumer Discretionary that topped the returns for the first half of 2018. The following return charts are courtesy of Novel Investor.

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Outlook for June 2018

A bit late since I’ve had to travel for work last few days. Work has been extremely busy, so I haven’t had a chance to keep up with the markets and the steady flow of drama/news, which has actually been refreshing. I knew that I was consuming too much news and have cut back over the course of year or so, but last couple of weeks have shown that I am still consuming too much financial/social media and need to cut back.

I will keep this post really short and put a current snapshot of my portfolio as of May 31, 2018. Not much has changed as for the outlook and I still maintain a fairly defensive stance on the overall market.

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Outlook for May 2018

One third of 2018 is done and the markets just keep getting more and more interesting by the day. The stock market is rallying hard and billions are added to individual networths (Jeff Bezos) overnight as if the numbers mean nothing. This is the reality that we live in when your cost of capital is zero for a decade. Capital has concentrated to an extremely small segment of the population, who control immense amount of wealth and continues to divide the nation/world more deeply. However, with the yield curve getting close to the 3% mark provides an interesting inflection point as investors watch it closely.

The smarter of the two, bond market, is signaling a coming recession (possibly in 2019), while the equity market keeps shrugging things off. It’s all well and dandy until it isn’t. The central bankers have painted themselves into a corner and will trigger the next economic crisis, as the end of the 30-yr bond bull market nears.

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Outlook for April 2018

Well, Q1 2018 is in the books and the markets are starting to seem pretty interesting day-by-day. The pillars of the market – the FAANG stocks (before the recent decline, the 5 stocks made ~14% of total US market) are starting to see pressure as the public has started revolting against the platforms socially. Most of all, the Facebook debacle was just a matter of when, not if, when the user’s trust would be broken and everyone woke up to realize what they were signing up to. The users have now started questioning the same for other platforms too, with an increased call to regulation – which will be interesting to see follow.

Some interesting developments over the last week in the oil market occurred, with China deciding to price and trade oil directly in CNY instead of US$. This is a massive overt move against the US hegemony, which will be extremely interesting to watch. The days of US$ as the sole world reserve currency are numbered, as China puts on the pressure with its traders to accept CNY. This is never going to be an overnight move of course, but something that will take years and decades to play out.

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Outlook for March 2018

The first tremors are appearing in the stock market, with volatility making a huge comeback. Earlier in Feb, the market saw a correction and volatility jump after being depressed to record levels for years. Of course, shorting vol was something that traders were taking lightly ignoring the risky nature, and has wiped out their working capital overnight.

Turning a more wider view, the new Fed chair has taken command and it appears that he is taking a different approach.  As I mentioned in my Outlook for 2018 post, the US$ will be the most interesting asset to observe in the investing universe. The moves are already pretty apparent as the slide has accelerated since the start of the year. The US budget deficits are getting more media attention, the US government saw a brief shutdown — only to kick the can down the road for a short while, interest rates are rising while the currency is sliding — the US market is now behaving like an emerging market!! These are interesting times, no doubt. I will be keeping a very close eye on the US$ and continue to position myself to protect my purchasing power as the world’s reserve currency continues down the devaluation path.

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