March 27, 2017, 4:00pm EST                                                               Invest Alongside Billionaires For $297/Qtr

This will be an interesting week.  We had almost three months of optimism priced into global markets following the November 8th elections.  And then the tide turned when Trump gave his speech to the join sessions of Congress.

This is the buy-the-rumor sell-the-fact phenomenon we’ve discussed.  People bought on anticipation of a big policy shift.  And now they’re taking profit (raising cash) waiting to see it all executed — the prove-it-to-me phase.

I think we’re beginning to see the same phenomenon unfold in the Brexit saga.  Brexit came before Trump, but the cycle has been slower and longer.  Much like the Trump trend, the Brexit news started with an initial “sell everything” on the fear of the unknown, but soon thereafter, the “buy on anticipation of something better” prevailed. But it’s looking very vulnerable now to a turn in the tide.

On Friday, we looked at this next chart. This trend higher in UK stocks looks much like the Trump trend in U.S. stocks – a nice 45 degree climb from June of last year.

But as we discussed on Friday, the “prove-it-to-me” phase looks set to arrive this week in the Brexit story.  With that, here’s what the chart looks like today …

This nine-month trend line in UK stocks gave way today – in part because of the softening in expectations about Trump policies, but largely because the UK Prime Minister is expected to officially notify the European Union on Wednesday, of the UK’s exit from the EU.  Again, this would start the clock on the two year wind-down of the UK constituency in the EU. And the official negotiations will begin, on what the UK/EU relationship will look like – namely, on trade.

Expect the negotiations to be ugly in the early stages.  Why?  Because there is a lot to lose if it looks too easy.  The future of the European Union and the common currency (the euro) hang in the balance on these negotiations.  The most important job of EU officials, at this stage, is keeping other EU members from hitting the eject button, following the lead of the UK.  A domino effect of exits would kill the EU and it would be the end of the euro.  And that would have huge, destabilizing global ramifications.

With all of this in mind, it’s very likely that after long period of ultra-low volatility in markets, things will be a little more dicey in the months ahead.  That should keep pressure on yields and should keep the correction in U.S. stocks intact.

In our Billionaire’s Portfolio, we’re positioned in a portfolio of deep value stocks that all have the potential to do multiples of what broader stocks do — all stocks owned and influenced by the world’s smartest and most powerful billionaire investors.  Join us today and we’ll send you our recently recorded portfolio review that steps through every stock in our portfolio, and the opportunities in each.  ​

March 13, 2017, 4:15pm EST                                                                                           Invest Alongside Billionaires For $297/Qtr

This week will be a huge week for markets. Stocks continue to hover around record highs. Rates (the 10 year yield) sit at the highest level in three years.

This snapshot alone suggests a world that continues to believe that pro-growth policies “trump” all of the risks ahead.  At the very least, it’s pricing in a world without disruptions.  But disruptions look likely.

Here’s a look at stocks as we enter the week. Still in a 45 degree uptrend since the election.

But if we take a longer term look, this trendline looks pretty vulnerable to any surprise.

Let’s take a look at the disruptions risks:

There was a chance that the official execution of Brexit may have come as soon as tomorrow — the UK leaving the European Union by triggering Article 50 of the Treaty of Lisbon. That looks unlikely now, but could come in the coming weeks.  To this point the Bank of England has done a good job of responding and promoting stability which has led to financial markets pricing in an optimistic outcome.

We have the Fed on Wednesday. They will hike for the third time in the post-financial crisis era. We don’t know at what point higher interest rates, in this environment, might choke off growth that is coming from the fiscal side.

This next chart looks like rates might run to 3% on the 10-year.  That would do a number on housing, IF tax reform and an infrastructure spend out of the White House come later than originally anticipated (which is the way it looks).

We also have the Bank of Japan and Bank of England meeting on rates this week. Let’s hope they have a very boring, staying the path, message. That would mean extremely stimulative policies for the foreseeable future 1) in the case of Japan, to continue to promote global liquidity and anchor global yields, and 2) in the case of the UK, to continue to promote stability in the face of uncertainty surrounding Brexit.

Keep this in mind:  The Bank of Japan’s big QE launch in 2013 is a huge reason the Fed was able to end QE in the first place, and start its path of normalization.  The BOJ launched in April of 2013.  Bernanke telegraphed “tapering” a month later.  The Fed officially ended tapering on October 29, 2014.  Stocks fell 10% into that official ending of Fed QE.  On October 31, 2014 (two days later), the BOJ surprised the world with bigger, bolder QE (a QE2). Stocks rallied.

Finally, to end the week, we have a G-20 finance ministers meeting.  This is where all of the trade and dollar rhetoric from the new administration will be front and center. So the news/event outlook looks like some waves should be ahead.  But any dip in stocks would be a great buying opportunity.

In our Billionaire’s Portfolio, we’re positioned in a portfolio of deep value stocks that all have the potential to do multiples of what broader stocks do — all stocks owned and influenced by the world’s smartest and most powerful billionaire investors.  Join us today and we’ll send you our recently recorded portfolio review that steps through every stock in our portfolio, and the opportunities in each.