Riding out the Storm

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 dr@marketsandmoney.com.au

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.

Source: StockCharts

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.


Dan Denning
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

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.

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Dan is insinuating that a low voter turnout is already locked in.

It appears that some in Chicago agree with him …


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