These stars are aligning for next market rally

Wednesday, 18 April 2018
Melbourne, Australia
By Bernd Struben

  • ‘Words I never thought I’d utter…’
  • A united Korea?
  • Did you secure your early bird discount yet?

Competition has been shown to be useful up to a certain point and no further, but cooperation, which is the thing we must strive for today, begins where competition leaves off.’

Franklin D. Roosevelt

Franklin Delano Roosevelt — FDR — went head to head with Republican President Herbert Hoover in the 1932 US elections.

And FDR, a Democrat, swept the incumbent president away in a landslide.

He took office in 1933, in the midst of The Great Depression. And he held office for a record four terms, until his death in 1945.

He’s widely known for his New Deal policies. These saw the government step up its involvement in and regulation of banking and private industries.

The record number of unemployed Americans were also offered increased assistance. And perhaps most notably, FDR launched massive federally funded infrastructure projects that put thousands back to work.

Big government, in other words.

Yet the major cash splash and interventions did begin to pull the US out of its worst economic depression in history.

FDR is also well known as the sitting president during the Second World War. And for his famous speech following the Japanese attack on Pearl Harbor.

What he was less well known for is that in his early 40s a crippling disease left him paralysed from the waist down. By the time he entered the White House he was wheelchair-bound.

Although this was no state secret, FDR didn’t feel it was the right image for the president of the United States. (This was the 1930s, after all.)

And the press at that time respected his wishes not to be photographed in the wheelchair. Most images had him seated behind a desk, or with a blanket wrapped over his legs.

Remarkable.

We’ll get back to that after the markets.

Markets

US markets enjoyed solid gains after earnings reports from some of the biggest companies beat expectations. Amid signs that the US economy is gaining strength and that the US corporate tax breaks are lifting profits, investors piled back in.

Overnight the Dow Jones Industrial Average closed up 213.59 points, or 0.87%.

The S&P 500 rose 28.55 points, or 1.07%.

In Europe the Euro Stoxx 50 index finished up 36.87 points, or 1.07%. Meanwhile, the FTSE 100 gained 0.39%, and Germany’s DAX rose 194.16 points, or 1.57%.

In Asian markets, Japan’s Nikkei 225 is up 319.71 points, or 1.46%.

In Australia, the S&P/ASX 200 is up 21.45 points, or 0.37%.

On the commodities markets, West Texas Intermediate crude oil is US$66.85 per barrel. Brent crude is US$71.91 per barrel.

Gold is trading for US$1,346.02 (AU$1,732.78) per troy ounce. Silver is US$16.77 (AU$21.59) per troy ounce.

One bitcoin is worth US$7.919.07.

The Aussie dollar is worth 77.68 US cents.

‘Words I never thought I’d utter…’

As mentioned above, the media in the 1930s retained a certain level of respect for the office of the US president.

As did the president’s political opponents.

Not that they treated each other with kid gloves. But there was a certain sense of cooperation for the good of the nation.

Fast forward to the 21st century.

From The Australian:

Former FBI Director James Comey says he thinks it’s possible the Russians have compromising information on President Donald Trump, that there is “some evidence of obstruction of justice” in the president’s actions and that Trump is “morally unfit” for office.

Comey has rushed a book to press detailing his unbridled dislike of Trump. A Higher Loyalty: Truth, Lies and Leadership promises to be a lurid read. And one which will surely present Trump on the proverbial wheelchair on every page.

Also from The Australian:

“The President is unethical, and untethered to truth and institutional values,” Comey writes. “His leadership is transactional, ego driven and about personal loyalty.”

Comey tells of Trump’s fixation on unproven allegations that Trump watched prostitutes urinate on each other in a Moscow hotel in 2013, allegations that Trump also denies…

When asked in the ABC interview whether he believes the prostitute story is true or whether the Russians have something on Trump, Comey replies: “It’s possible. I think it’s possible, I don’t know. These are words I never thought I’d utter about a president, but it’s possible.”

Are you feeling a little sickened yet?

Me too.

Not because of the whole pee thing — distasteful as that may be.

But because so much energy has been spent on this vitriol. Uncovering it. Reporting it. Reading it. Rehashing it.

At the end of the day…who cares?

Trump’s opponents should remember the American people elected him to the most powerful office in the world…popular vote or no…to do the job. He’s got a lot of work on his plate. Yet he’s being hamstrung at every turn.

While Trump’s, erm, unconventional and unapologetic style has rattled many and caused initial domestic and international divisions, the bigger picture looks very different.

If, that is, Trump’s detractors can stop bashing the man long enough to consider cooperation over competition at all costs.

A united Korea?

You won’t find many willing to credit Trump’s tough unilateral sanctions and ‘fire and fury’ rhetoric with this.

Yet North and South Korea are closer to ending their dangerous conflict than any time since 2007. That’s when South Korean President Roh Moo-hyun and the North’s Kim Jong-Il agreed to pursue peace and eventual reunification.

Those talks broke down in 2008 over the North’s continued nuclear ambitions. Specifically, Jong-Il’s refusal to allow international inspectors access to his nuclear facilities.

But now, for the first time ever, Kim Jong-un may be willing to make that crucial concession. Last week the White House reported that, ‘The US has confirmed Kim Jong-un is willing to discuss the denuclearisation of the Korean peninsula.

And Trump looks set to be the first sitting president to meet with a North Korean leader. This could be a crucial step towards ridding the North of its nukes…and perhaps bringing the two Koreas together.

From The Australian:

CIA director Mike Pompeo reportedly met with North Korean leader Kim Jong-un in Pyongyang at Easter, in a top secret mission to negotiate terms between Donald Trump and Mr Kim…

Speaking alongside Japanese Prime Minister Shinzo Abe at Mar-a-Lago, Mr Trump’s Florida resort, the president said the US and Japan were “very unified on the subject of North Korea.” “We’ll be having meetings with Kim Jong-un very soon,” Mr Trump said. He said the meeting would take place by early June “assuming things go well.” He added: “It’s possible things won’t go well and we won’t have the meetings, and we’ll just continue to go on this very strong path we have taken.”

Importantly, China is also on board to do what it can to see Jong-un abandon his nukes. And ironically, Trump’s trade tariffs have seen relations between China and Japan improve following eight years of frosty diplomacy.

As Bloomberg reports:

The foreign ministers of China and Japan agreed to work closely to push North Korea to abandon its nuclear program, in the latest sign of improved cooperation between Asia’s two largest economies.

“To get North Korea to abandon its nuclear weapons and missiles in a complete, irreversible and verifiable way, we agreed we must enforce the relevant Security Council resolutions and work closely together,” Japanese Foreign Minister Taro Kono told reporters Sunday in Tokyo after a meeting with Chinese counterpart Wang Yi.

With China joining Japan alongside the US and its Western allies, the heat is on for North Korea. And this unprecedented cooperation could well bring a belated peace to the Korean peninsula.

Also from Bloomberg:

South and North Korea are discussing plans to announce an official end to the military conflict between the two countries that are still technically at war, the Munhwa Ilbo newspaper reported, citing an unidentified South Korean official.

At next week’s summit between South Korea President Moon Jae-in and North Korea leader Kim Jong Un, the two neighbors may release a joint statement saying they will seek to ease military tension and to end confrontation, according to the report.

What does all of this mean for investors?

A peaceful resolution between the Koreas should see global stock markets soar. While the negotiations are likely to take some time, I expect Trump to move far quicker than standard diplomacy dictates.

Months, rather than years.

After all, Trump wants this matter sorted before the 2020 presidential campaign begins heating up in 2019.

2018 may have started with bellicose threats and legitimate fears of a nuclear exchange. But rather than a bang, I expect the year will end on a sigh of relief. And with company earnings on the up and the global economy chugging along, the current pause in the bull market will likely be just that. A pause.

Get ready for the next run up.

Did you secure your early bird discount yet?

You won’t hear from me in tomorrow’s Port Phillip Insider. I’ll be at Port Phillip Publishing’s last ever blockbuster conference.

(You can find out why it’s our last one here.)

It’s called ‘The Paradox of Prosperity: How to Navigate Your Wealth Through the Perils and Opportunities of the Second Gilded Age’. And it’s taking place at the Grand Hyatt in Melbourne tomorrow and Friday.

But as I mentioned yesterday, tickets for the event were only made available to Alliance members.

Don’t worry though. We have another, arguably better, way for you to ‘attend’.

We’ve hired a professional film crew to record the entire event. That includes the presentations from keynote speakers like Marc Faber, aka ‘Dr Doom’, and Jonathan Pain, author of The Weekly Pain Report. As well as other top international speakers and some of our own star players, like Vern Gowdie, Sam Volkering, Greg Canavan, and Phil Anderson.

We’ll also record every breakout session, plus the one-on-one interviews I’ll be conducting with the speakers following their presentations. And we’re providing a complete typed transcript of the entire event.

The video package officially goes on sale over the weekend.

But if you pre-order now, you’ll receive a 20% early bird discount. That discount is only available until midnight on Friday.

This grand finale promises to be Port Phillip Publishing’s best conference to date. For all the details, simply click here.

And finally, this from The Australian Tribune:

Religion Says No to Adani Mine

Whenever something happens, especially to do with environment or politics, everyone wants to put their two cents in.

Many outside of religion and politics believe the two should never mix, but that hasn’t stopped religious groups from announcing their stance on the Adani mine.

More than 50 religious leaders have…

If you’re fed up with sanitised, politically correct dogma cut and pasted from one mainstream source to another then The Australian Tribune is for you.

And it’s absolutely free.

Sign up here to get The Australian Tribune delivered free to your inbox five days per week.

You can visit our website at https://www.theaustraliantribune.com.au/ to read the complete article above now.

Cheers,
Bernd