Clown Parade Continues

On Twitter and www.investfortomorrowblog.com I have been fairly aggressive in calling out the so called “masters of the universe” in their widespread and uniform calls for a stock market collapse… for months. To me, it’s like a parade of clowns who have continued to lose credibility.

Being early is the same as being wrong. And as I often like to say, it’s okay to be wrong, but it’s not okay to stay wrong. That’s coming from someone who has made every mistake possible over the past 28 years and I know I will make many more before my career ends down the road. The markets have a way of humbling everyone from time to time.

I am talking about George Soros, someone who was once a legend and unfortunately, pulled a Michael Jordan and should have stayed retired. His once protege, Stan Druckenmiller, Sam Zell, Marc Cuban, Marc Faber, Carl Icahn, Bill Gross, Jeff Gundlach, Larry Fink, Steve Auth, RBS and even Donald Trump. With a little research, I am sure I can find a few more.

My point is that it is highly unlikely that the bull market will end with so many high profile pundits predicting it.

U.S. stock market – If there has been a bigger bull than yours truly, I would like to meet him/her. Maybe Jeff Saut comes close. For years, people laughed and scoffed when I forecast that the Dow would hit 20K before the bull market ended. I kept saying that the run wasn’t ready yet, but that all changed after the Q1 decline when we saw readings that only occurred before stocks blasted off. That was reconfirmed during the two-day BREXIT decline where short-term panic shook out as many investors as you would normally see during a 20% decline.

Stocks are overbought and have been overbought. Declines should be shallow and buyable until proven otherwise. Leadership continues to rotate from defensive groups like utilities, staples, REITs and telecom into more aggressive sectors like semis, software, materials, discretionary with the “left for dead” banks and transports even showing life.

Election – 70% likelihood that Clinton is the next president. If Trump was a tradable security, I would forecast a big move from here. Up or down you ask? YES! He either just hit bottom and will rally into the election or panic is about to set in and the bottom falls out.

Either way, as I have mentioned before, I do not believe the election will have any meaningful or significant impact on the stock market. By that, I mean that the typical post-Labor Day, pre-election bout of weakness should be limited to single digits unless some exogenous event hits.

Fed – Although I said for the past 8 years that the Fed should not raise rates until the other side of the recession after the Great Recession, I did think the Fed would make the mistake of raising rates too many times in 2016. At this point, the only real “live” meeting is December.

Economy – Same old, same old. Since 2009, I have called this your typical post-financial crisis recovery which is very uneven. It sometimes teases and tantalizes and occasionally terrifies. We won’t see sustained trend growth until the other side of the next recession which should be mild and originate offshore.

Side note. I do love it when the bears take a single weak report like the recent GDP and call for collapse, but totally explain away a stronger report like the employment report.

Europe – Crisis coming by 2018. French and German election more important than U.S.

U.S. Dollar – Long-term projection of 110, 120 and possibly higher remain firmly intact. Not a short-term play.

Gold – I thought gold would have pulled back much deeper than it has so far. Long-term projection of $2500 by 2020 remains intact although I wanted to see a strong correction by year-end.

Euro – Par (100) still on tap on the downside followed by all-time lows by 2020.

Pound – Long-term projection of par (100) by 2020 in motion thanks to the BREXIT.

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