Market Summary for Week of February 22, 2019
This week we are keeping it short.
We remain bullish on the U.S., and on several foreign markets.
The U.S. market is still a buy, in our opinion. Breakouts of the type we have recently seen offer opportunity for higher U.S. stock prices for several months even through there may be intermittent corrections limited to a few percent. We suggest that readers use any corrections as buying opportunities.
The U.S. and World Economies
The U.S. and world economies are fine and strengthening. Most major world economies, with the exception of parts of Europe, are strengthening. The U.S. economy is doing fine, and the Federal Reserve continues to make dovish pronouncements about interest rates. Trade negotiations will be stretched out and the U.S. may get a partial victory in this area. We are also hearing dovish sentiments from the European, Japanese, and Chinese central banks, among the big ones. In essence, most world bankers are aware that world economic growth is important to keep things moving ahead, and they are trying to keep growth on a positive track. In some countries, parliaments are cooperating with the central bankers, and in others, they are trying to slow growth.
In Our View, There are Investment Opportunities In the U.S., Brazil, Japan, India and China
Our favorite countries for investment, in addition to the U.S., remain Brazil, Japan, and India. We are getting more bullish on China, which we believe will be rallying hard in the second half of 2019, and we are taking initial positions there. We are also looking at several other emerging markets in Asia, primarily countries that will benefit from Chinese growth, either because they function as Chinese outsourcing workshops for low-margin products, or because they supply raw materials to China. Stay tuned.
Currencies
We believe that the Japanese yen will rise versus most currencies, including the U.S. dollar. We also believe that the British pound can rally. Did you notice that eight Members of Parliament from the British Labour Party quit the party and three conservative members quit their party to form an independent group? If Labour does not ascend to the leadership of the UK, we believe that the country will do well even with a messy Brexit.
Gold
Although gold has appreciated, we continue to be bullish, and we will continue to hold it for all of the reasons we have stated in previous letters. Huge and growing government debt worldwide, and the fact that many governments are beginning to increase their gold holdings, certainly add to its appeal as do many other arguments.
Thanks for listening; we welcome your calls and questions.
