Why 2019 could see these assets boom
Tuesday, 18 December 2018
By Bernd Struben
- Santa? Hello…?
- ‘Next Governor-General More than Just “Another White Man”’
Global stock markets took another drubbing overnight. At time of writing, Aussie and Asian markets are joining in the retreat.
Bitcoin and gold bucked the trend, both gaining ground.
We’ll get back to that below.
But first, I want to alert you to Port Phillip Publishing’s final Webinar Series of 2018, ‘Beyond Crypto — 2019’.
The special three-part series is free to our paid-up subscribers. If you’re reading this…that’s you.
As the name suggests, the online seminar aims to answer the question that investors all over the world are asking themselves as 2018 draws to a close. And that is, what asset class might replace cryptos in 2019 to produce similar gains to what top cryptos delivered in 2017.
You know. Gains like 1,861% for bitcoin. Or even better, 9,162% for ether.
Could there be a comeback for digital assets?
What other potential hyper-gaining assets are out there?
How do you identify and analyse them?
And what are the risks?
Over three days, ‘Beyond Crypto — 2019’ dives into all of these issues…and more.
Hosted by publisher Kris Sayce, the series started yesterday and runs through Wednesday, 19 December. Don’t worry if you missed the first day.
Click here and you’ll be able to access Monday’s broadcast, as well as tuning into today’s and tomorrow’s series.
Remember, it won’t cost you anything. And what better way to finish your year than with the latest investment insights from our team here at Port Phillip Publishing?
As always, what you choose to do with that advice is up to you.
Now let’s have a look at those tumbling markets…
Overnight, the Dow Jones Industrial Average closed down 507.53 points, or 2.11%.
The S&P 500 lost 54.01 points, or 2.08%.
In Europe the Euro Stoxx 50 index finished down 28.95 points, or 0.94%. Meanwhile, the FTSE 100 fell 1.05%, and Germany’s DAX closed down 93.57 points, or 0.86%.
In Asian markets, Japan’s Nikkei 225 is down 346.06 points, or 1.61%. China’s CSI 300 is down 1.22%.
In Australia, the S&P/ASX 200 is down 52.77 points, or 0.93%.
On the commodities markets, West Texas Intermediate crude oil is US$49.33 per barrel. Brent crude is US$59.61 per barrel.
That puts WTI down 3.98% since I wrote to you yesterday. The US crude benchmark touched US$49.01 in overnight trading, a price last seen in September 2017.
Regular readers should know why the price is in freefall. I’ve been banging on it about it since March.
If you need a reminder, here it is: SUPPLY! Oodles and oodles of supply.
‘Crude settled below $50 a barrel in New York on Monday for the first time in more than a year and continued falling in after-hours trading. The slide began after data provider Genscape Inc. was said to report growing inventories at the biggest American storage hub and intensified as the U.S. Energy Department forecast higher output in the country’s shale plays.’
You can see the soaring inventory (blue bar lines) and the tumbling crude price (white line) below:
Source: NYMEX / US Energy Department / Bloomberg
Click to enlarge
OPEC is still hoping to cut global production enough to send prices higher. That may work, but not nearly to the extent it did historically…in the days before the US became the world’s number one oil producer.
And let’s not forget that the House of Saud owes Trump a big favour for his support in the wake of the horrific execution and botched coverup of journalist Jamal Khashoggi. And Trump likes cheap energy. If Saudi Arabia engineers too big a cutback, Crown Prince Mohammed bin Salman may find US support evaporate overnight.
Barring unforeseen events — of which there could be many — I don’t expect to see WTI back above US$60 anytime soon.
Turning to gold, the yellow metal is trading for US$1,246.10 (AU$1,735.52) per troy ounce. Silver is US$14.67 (AU$20.43) per troy ounce.
One bitcoin is worth US$3,514.29. That’s a gain of 10% since this time yesterday. Is this a short-term bounce, or the sign of better days ahead for the world’s largest crypto? You can stay atop all the latest crypto investment advice here.
The Aussie dollar is worth 71.80 US cents.
With only three full trading days left before Christmas, the much hoped for ‘Santa rally’ looks to have given 2018 a pass.
The Santa rally, if you’re not familiar, refers to the often strong stock market performance in December.
Some pundits say it’s driven by greater retail, tourism and leisure spending in the lead up to the holidays. Others say the holiday season and end of calendar year tends to lift investors’ animal spirits.
There’s likely truth to both explanations. Not to mention the old self-fulfilling prophecy. Meaning if investors believe markets go up in December, they’re more likely to buy than sell.
JP Morgan strategist Kerry Craig, for one, had been keeping an eager eye on his chimney. Only to be disappointed. As quoted by the AFR, Craig says, ‘We were expecting a Santa rally but it’s more a case of Frosty the Snowman.’
Indeed, following yesterday’s 2.3% loss, the tech-heavy NASDAQ is now down 17% from its August peak. While here in Australia, the ASX 200 is down 12% from its 29 August high.
Fears over slowing global growth, peak debt, and rising interest rates are copping the blame for the selloff. And brave investors hoping to ‘buy the dip’ have largely been burned.
From The Australian:
‘“It’s a treacherous market right now,” said Paul Brigandi, managing director and head of trading at Direxion, who added investor sentiment has shifted.
‘“The ‘buy-the-dip’ mentality used to work really well, and prior downturns were short lived. This time it hasn’t happened.”’
The US Federal Reserve Board concludes their final meeting of the year on Wednesday (early morning Thursday AEDT).
Rate hikes for 2019 are looking more doubtful. But analysts widely expect the Fed to raise rates by 0.25% one more time this year. That would bring the official US interest rate into the 2.25–2.50% range.
Indeed, according to our friends over at the US Daily Reckoning, markets put the odds of a rate hike at 76.6%.
The majority may be right. We’ll find out here on Thursday morning. But I believe that Fed Chair Jerome Powell will blink and keep rates on hold.
First, Powell and his fellow board members know the perilous state of the markets. That should give them pause.
As Bloomberg notes:
‘[W]ere policy makers to follow through with their widely expected hike Wednesday, it would be the first time since 1994 they tightened in this brutal a market. Right now, the S&P 500 is down over the last three, six and 12 months, a backdrop that has accompanied just two of 76 rate increases since 1980.’
The second reason I think the Fed won’t raise rates on Wednesday is Hurricane Trump. Trump’s winds have been blowing against another rate hike at category five levels.
You can see his latest tweet below:
Click to enlarge
If Powell is cowed into holding rates steady by the ongoing market selloff and the ire of the man who appointed him, that could yet deliver a brief Santa rally.
Though it’s going to take a lot more than two days of holiday-inspired animal spirits to reverse the recent run of losses.
Of course, not everyone bemoans a falling market.
Over at Crash Market Investor, Kris Sayce and Selva Freigedo have been preparing their portfolio for a hefty downturn all year.
Here’s what Kris wrote about his premium investment service earlier this year, as the bull market still raged:
‘Our plan is for you to not be a victim of the next crash. To make sure you are prepared for it in advance, unlike so many investors in 2007.
‘More than that, though…
‘To give you the tools, strategies and opportunities to actually exploit this transition from historic bull market to what we believe could be a record-busting bear market.’
Finally, here’s the latest in Aussie politics from The Australian Tribune:
‘Next Governor-General More than Just “Another White Man”’
‘The politically correct brigade didn’t take long to vent their moral outrage over the selection of David Hurley to be the Australia’s next governor-general.
‘Where once Australians could hold their head up proudly to have served in the military, the far-left would have you believe this honour has become dubious. Not to mention that Hurley is burdened with the stigma of…’
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.