Today’s Reckoning will be a short one. A jealous and angry Gaia is taking out her/his/its fury on the eastern seaboard of the United States. Stock markets in the US were closed on Monday. It’s a big storm.
To some people, everything is about power and therefore everything is political. Thus, it won’t be long before the big storm of 2012 turns political. It will happen before all the power lines are back up and the basements drained of flood water. The storm will probably be blamed for low voter turnout. There’s conceivably even some situation in which the election could be…extended…to allow for the disruption that the storm is sure to cause.
Speaking of the US election, it’s next Tuesday. That will be Wednesday Australian time, of course. Make some popcorn and sit back and watch the craziness unfold. To do our part, we’ve offered to record a short presentation on how the US Electoral College works and key things to watch for next Wednesday. If you have a particular question you’d like answered, send it via email to email@example.com
How will the financial markets react to a physical storm? Well they may not react at all. But out of curiosity let’s take a look at the US dollar index. Ever since 20007, the dollar index has been a pretty good barometer of sentiment. Paradoxically, the more fearful investors get, the more they turn to the dollar and dollar denominated investments.
We say ‘paradoxically’ because the dollar hardly seems like a safe haven, at least if you base these things on America’s $16 trillion deficit and huge unfunded entitlement liabilities. But liquidity (cash) has a quality all its own in a deflationary crisis. Let’s look at the chart then.
This is a year to date chart so it’s not going to reveal anything earth shattering. But taking a page from Murray’s Slipstream Trader playbook , you’ll see the 10-day moving average in blue and the 35-day moving average in red. When the 10-day crossed the 35-day going up, you have the beginning of a short-term bullish trend. That’s if we have Murray’s method down correctly.
It’s not the kind of move you’d bet the farm on. But in the last week before the American election, with a storm having a’ come, it wouldn’t surprise us to see the USD rally a bit more. As long as it pushes precious metals and platinum group metals (PGM) stocks down a smidge, we’ll be happy. We’ve written about the PGMs in our new issue of The Denning Report, published later today.
for Markets and Money
From the Archives…
Investment Horizons – Introducing the Hubble Market Theory
26-10-2012 – Nick Hubble
The Big Fall in the Stock Market is Still to Come
25-10-2012 – Murray Dawes
A Safer Than Super Investment?
24-10-2012 – Nick Hubble
The Lost Generation in the US Economy
23-10-2012 – Bill Bonner
NAB and Australian Banking is Oversized and Under Pressure
22-10-2012 – Dan Denning