Why this tiny company is flying high

  • 99 degrees and rising…
  • Remember the future
  • A tiny company flying high

From Bloomberg:

Since the Reserve Bank of Australia’s last policy decision on May 2, market bets on an interest-rate cut by the end of this year have doubled. While that chance is still only about 20 percent, swaps traders see Australia as one of just two developed economies where cuts are possible in the coming year after data during May pointed to [anaemic] growth in the first quarter.

The only other developed economy with chances of a rate cut is Switzerland. That’s it.

In the US, the likelihood of a rate rise is high, even though the jobs market is slowing. Over the weekend, the US Labor Department said the economy had added 138,000 jobs in May, much lower than the forecasted 185,000 figure. The unemployment rate is still the lowest since 2001, at 4.3%. Wage growth has also stayed stagnant, at an annual rate of 2.5%.

Over here in Australia, more than half of the 26 surveyed economists from the Bloomberg article are expecting the cash rate to remain unchanged until at least the middle of next year, and only six are predicting a rate rise by then.

The most likely scenario is that the Reserve Bank of Australia (RBA) will be keeping rates on hold tomorrow. Yet with weak consumption and non-existent wage growth, they may have to change their policy.

More on this after the markets.

Markets

Over the weekend, the Dow Jones Industrial Average gained 62.11 points, or 0.29%.

The S&P 500 is up 9.01 points, for a 0.37% gain.

In Europe, the Euro Stoxx 50 is up 24.80 points, or 0.70%. Meanwhile, the FTSE 100 gained 0.05%, and Germany’s DAX index advanced 1.25%.

In Asian markets, Japan’s Nikkei 225 is up 22.33 points, or 0.11%. China’s CSI 300 is down 0.48%.

In Australia, the S&P/ASX 200 is down 46.22 points, or 0.80%.

On the commodities markets, West Texas Intermediate crude oil is US$47.98 per barrel. Brent crude is US$50.27 per barrel.

Gold is trading for US$1,280.33 (AU$1,719.48) per troy ounce. Silver is US$17.55 (AU$23.57) per troy ounce.

The Aussie dollar is worth 74.46 US cents.

99 degrees and rising…

Bloomberg continues:

For now, a mixed picture means Governor Philip Lowe will likely hold the benchmark rate at a record-low 1.5 percent on Tuesday. While reports since the RBA’s last meeting show strong employment gains and a surprise rebound in retail sales, construction has been soft and wage growth stagnant. Signs of a cooling housing market could also give the central bank leeway to ease down the track, after prices dropped in May for the first time in 18 months.

The truth is that it looks like the property market is cooling. Construction has dropped by 0.7%, and there are even talks of a technical recession this quarter.

According to the Housing Industry Association (HIA), home sales picked up in April, driven by NSW, Victoria and South Australia. Yet total sales were still 3.3% lower than a year earlier.

As HIA’s senior economist Geordan Murray told The Australian Financial Review:

In terms of the HIA New Home Sales, the housing cycle peaked back in mid-2015. The modest increase in new home sales during April will not negate the ongoing downward trend

HIA’s forecast already projects a decline of around 10 per cent in new home starts in 2017/18.

Clearance rates in Melbourne and Sydney were also down from last weekend.

Bubble fears and eye-watering prices caused asset manager Phil Parker, from Altair Asset Management, to close up shop and give money back to investors. In a letter to investors, he explained he was returning their funds at an ‘overvalued and dangerous time in this cycle.

As he told the ABC, ‘…in the last six to eight months, the investment committee of Altair have felt, to varying degrees, that the property market was heading into bubble territory. The massive leverage that you’re seeing in terms of people’s exposure to property will then flow over to other liquid assets.

We are starting to see a slowdown in the housing market, but lower interest rates could start fuelling prices again.

Wouldn’t it be nice to have a crystal ball!

Remember the future

What if you could have a crystal ball? What if there is one Universal Law? One equation that holds all the cards of the universe? One equation that could explain every market movement, including the housing market?

An equation that could explain and make sense of all market events, but…not just that.

One that allowed you to forecast precisely what could happen.

Think about it. You would see any big crisis before it happens, allowing you to adjust your investment strategy accordingly.

There is a lot of fear and instability around the world, with a possible war between North Korea and the US, Brexit and excessive global debt levels.

Such an equation would mean no surprises.

No panics from upcoming Brexit negotiations, no downside from the end of the Trump effect or the tensions with North Korea. It would even mean knowing where the Australian housing market is going.

Well, there is one man who believes such an equation exists.

This man understands that history repeats itself in the markets with small variations, and he can see things others can’t.

He believes the market can be explained by the following equation: 18 = 14 + 4.

But it doesn’t just predict the real estate market. It can predict every cycle in the financial world, from real estate to stocks. He calls it the Grand Cycle.

It will modify the way you look at markets and human behaviour.

What will happen in the next decade? How can you prepare for it? How can you improve your wealth?

You’ll find everything you need to know here.

A tiny company flying high

Cars are getting a lot of press lately. And no, I’m not talking about self-driving cars…or Tesla for that matter.

I’m talking about flying cars.

Cartivator, a start-up group made up of 30 volunteer engineers, has developed a flying car aptly named ‘SkyDrive’. The small company started out in 2014, and is aiming to make their flying vehicle the world’s smallest electric car for use in cities by 2025.

Their flying car travels around 10 metres above ground; it has a projected top speed of 62 miles per hour (100kph).

Financed by crowdfunding and supported by Toyota, Cartivator has one hope: That SkyDrive will be lighting the Olympic flame at the 2020 Tokyo ceremony.

It is still early days, but they are hoping SkyDrive will complete its first piloted drive by the end of next year.

As amazing as this sounds, Cartivator is an industry laggard.

The truth is that there are more than a dozen start-ups racing to develop flying cars. Even Uber is trying to initiate a flying taxi service by 2020.

Another start-up, Kitty Hawk, has already developed a prototype for the ‘Flyer’. Last April they accomplished the first piloted flight. The Flyer will be available by the end of this year — no pilot licence needed.

Cartivator shows that small companies can accomplish big things.

Tiny stocks

Speaking of tiny companies, last April, Kris spent a bucket load of money flying microcap expert Sam Volkering to Melbourne to co-host a special summit.

Why did he bring Sam all the way from London? To discuss his microcap stock strategy.

Sam has already used this strategy to make extraordinary gains of 1,160% and 2,000% on two single trades.

Of course, not all of them work out as hoped. It could be that only one in three stocks goes on to make a huge gain. But Sam is on the lookout for the one that pays off. And when it does, you’re not likely to find better gains on the market.

Microcap stocks are potentially one of the most exciting, high-octane and most PROFITABLE trading opportunities in the market. But they’re also incredibly risky, and not for the faint of hearted.

We rarely open the doors to Microcap Trader — usually once a year. And when we do, numbers are strictly limited. Keep an eye out on your inbox on Wednesday for more details on this.

Regards,
Selva Freigedo