One Debate That Could Change Your Fortunes

Monday, 29 April 2019
Albert Park, Melbourne
By Bernd Struben

  • A slowdown before the big bounce…or an epic crash?
  • Colossal downside potential
  • ‘Great Escape: 1,300 Migrants Flee Mexican Detention’

There’s nothing like a good debate to help wrap your brain around life’s big issues.

In saying that, bad debates can easily devolve into little more than name calling, leaving you none the wiser.

I’ll reserve judgement as to which camp tonight’s leaders debate falls into until after the fact. It’s the first of what will likely be three debates between Scott Morrison and Bill Shorten.

The two men are upping their efforts to paint the election as a black and white choice, rather than one between similar shades of grey.

Undoubtedly, there’ll be plenty of finger pointing, accusing the other party of creating all of Australia’s current woes. But hopefully there will be some thoughtful policy proposals thrown in. Along with some good debating tactics to rattle their opponent.

Even political veterans can get rattled during live televised debates. That’s what makes them worth tuning into. And it’s one of the reasons Aussie politicians avoided televised debates for so long.

In fact, the first televised leaders debate in Australia wasn’t until 1984. That was between Bob Hawke and Andrew Peacock.

Living in the US state of Virginia at the time — and having just gotten my driver’s licence — I admit I missed that one. Back then, I couldn’t even have told you who Bob Hawke was…let alone Andrew Peacock.

I could have told you a fair bit about John F Kennedy and Richard Nixon, though. Among their achievements, the two larger than life characters were the first to participate in a televised presidential debate in US history.

That was back in 1960. And there wouldn’t be another televised presidential debate for 16 years.

According to blog.debate.nyc:

So impactful were the debates between Kennedy and Nixon, that they left a void of volunteers willing to take on political opponents in front of the camera. Following the four-part series between Kennedy and Nixon, there wouldn’t be another televised presidential debate until Gerald Ford agreed to debate Jimmy Carter in 1976, a full sixteen years later.’

In the 21st Century you can no longer shy away from debating on live TV. Or the internet, for that matter.

I don’t expect Morrison and Shorten will come close to matching Kennedy and Nixon’s impact. But if you’re at all in doubt about how you’ll cast your vote, tonight’s debate just might tip the scales.

Of course, there’s a far more important debate developing on the horizon. One whose outcome could have a lot more impact on your future wealth than either of our prime ministerial hopefuls.

We’ll get back to that right after a look at the markets…

(Or you can click here now for details.)

Markets

Over the weekend, the Dow Jones Industrial Average closed up 81.25 points, or 0.31%.

The S&P 500 closed up 13.71 points, or 0.47%.

In Europe, the Euro Stoxx 50 index finished up 8.49 points, or 0.24%. Meanwhile, the FTSE 100 fell 0.08%, and Germany’s DAX closed up 32.58 points, or 0.27%.

In Asian markets, Japan’s Nikkei 225 is closed for Showa Day (formerly Greenery Day). China’s CSI 300 is up 0.78%.

In Australia, the S&P/ASX 200 is down 29.95 points, or 0.41%.

On the commodities markets, West Texas Intermediate crude oil is US$62.92 per barrel. Brent crude is US$71.72 per barrel.

(More on oil below…)

Turning to gold, the yellow metal is trading for US$1,285.01 (AU$1,823.74) per troy ounce. Silver is US$15.05 (AU$21.36) per troy ounce.

One bitcoin is worth US$5,150.72.

The Aussie dollar is worth 70.46 US cents.

A slowdown before the big bounce…or an epic crash?

If you’re only going to watch one debate this year, I’d skip tonight’s event. There may be some interesting or amusing moments. But odds are long either Shorten or Morrison will provide any truly new ideas.

The same can’t be said for our cycles gurus, Phil Anderson and Harry Dent.

Both men have eerily accurate forecasting track records. And both rely on historical cycles repeating in predictable patterns to make their forecasts.

Yet looking ahead to the next five years their forecasts diverge wildly.

One scenario sees Australia’s economy and markets slowing temporarily only to launch into another multi-year run higher. The other sees the current slowdown and house price falls as the harbinger of far deeper pain to come.

Obviously they can’t both be right this time.

Now Phil and Harry are gearing up to meet face to face in their first live debate. Port Phillip Publishing will air that on Tuesday 14 May at 7pm AEST.

I don’t expect either man will change the other’s mind. But they might well change your views. I know I’ll be keeping an open mind during their debate.

Backing the right forecast, after all, could make a tremendous difference to your wealth.

To secure your virtual seat at no cost — and for the full debate details — click here.

Colossal downside potential

Getting back to the oil markets, WTI crude is down 4.7% since I last wrote to you on Wednesday. But following crude’s longest bull run in 13 years, oil traders remain staunchly optimistic.

From Bloomberg:

Hedge funds have increased bullish sentiment on U.S. crude prices for the last nine weeks, the longest such run since 2006, according to data released Friday. Almost 14 times as many bets have been placed on prices going up as on a decline, as investors see supply threats multiplying around the globe.

You can see the rising optimism on long bets (black line) in the chart below:

Chart of bullish bets
Sources: CFTC, NYMEX, Bloomberg

I’m not saying oil traders are wrong in piling into long positions. I’m just saying I think they’re wrong.

You’ll notice in the chart above that the last time the ratio of long bets was this high compared to shorts was just weeks before the oil price crashed in October. The bullish herd was wrong then…and there’s every reason to expect they’ll be wrong again this time.

Why?

Because the 2019 price rise only came on the back of OPEC+ managing to cut production at the same time that supplies from Venezuela, Iran and Libya came under fire from US sanctions and internal issues.

But OPEC+ is looking a lot like the little Dutch boy with his finger in the dike. The cartel can only stem the flood of oil waiting to be released to market for so long. And I expect their June meeting will see the member nations’ resolve to maintain production cuts dissolve.

Donald Trump is again on the warpath demanding lower energy costs from allies (Saudi Arabia) and foes who want to be allies (Russia) alike. On Friday, Trump said Saudi Arabia ‘and others…all are in agreement’ to increase oil flows.

Now Vladimir Putin appeared to throw cold water on that statement on Saturday. From Bloomberg:

“We have agreements within the OPEC+. We fulfill our agreements and we don’t have any news, any information, from our Saudi partners and any other OPEC member, that they are ready to exit these agreements,” Putin told reporters in Beijing on Saturday…

Asked about Saudi Arabia possibly compensating for shortfalls of Iranian oil on the global market, Putin said he hoped that wouldn’t happen.

These sorts of reports will likely bolster the oil bulls’ euphoria. But look closely and you’ll see Putin is only committing to sticking to the current deal, which ends in June.

No new agreements have been reached for output cuts in the second half of 2019.

And while Putin said he hopes the Saudis won’t fill the void on any missing Iranian oil, he added that Russia would be willing and able to meet China’s demands for oil. China is Iran’s largest oil customer, importing over half a million barrels per day in 2018.

Putin also boasted of Russia’s idle capacities. While reiterating the importance of sticking to the current OPEC production agreements, he stated, ‘We can produce even more. We have colossal potential…

Russia’s powerful oligarchs aren’t going to be happy sitting idly on that colossal potential forever. And the Saudis will almost certainly move to assuage their good buddy Trump’s ire.

Adding it up, while oil could bounce around current levels or even go higher in May, I expect big falls are on the cards for June.

Finally, here’s the latest from The Australian Tribune:

‘Great Escape: 1,300 Migrants Flee Mexican Detention’

They never intended to settle in Mexico. They certainly had not planned to languish in a Mexican detention centre on their way to illegally enter the US.

And on Thursday, some 1,300 migrants took their chance to break out of a detention centre in southern Mexico, according to local authorities.

It’s another sign of the...’

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Cheers,
Bernd