Everything Is Working “This Year”

by JC Parets  -  October 7, 2019

Think about how well everything is going this year! The S&P500 is up almost 20%. Bonds are up 22% and even Gold is up 17%! Heck Bitcoin has more than doubled! Can things get any better than this???

Truth Is..

Data mining like this makes it easy to fit any narrative. Give it a shot! Do you have a point to make? Go create your chart with the most favorable starting date.

The truth is that, as well as some of these assets have done “this year,” you have to zoom out to really see what’s going on. The market is a continuous flow of funds and doesn’t care what you celebrate on Dec 31st! What’s really happening, in fact, is that the majority of stocks are actually down since early 2018:

Bonds and Gold

US Treasury Bonds are making new highs all year as interest rates get slammed, but zoom out. It’s taken 3 years just to get back to where they were after their collapse in 2016.

So while, yes, bonds have had a great 2019, they’ve been flat for 3 years. If US 10-year yields are breaking down below the 1.30s, then we’ll talk.

Gold? Where do I even start. Gold had been the laughing stock around the world for a long time. In fact, precious metals are still nowhere near former highs. But they had an amazing first 3 quarters of 2019.

It’s funny, Commercial Hedgers were net long in the 4th quarter last year. They nailed it. Last month was the exact opposite, record net short positions. Do you think Hedgers are selling so much Gold because they think prices go up?

We’re sellers of Gold for now.

Bitcoin

And Bitcoin? Yea it’s more than doubled this year. But zoom out, this has been a mess for a while. After breaking down from this consolidation, it’s now in an even worse state.

I think if it’s below 9550, there is no reason to own Bitcoin at all. Let it be for now.

This is how I see things. The YTD numbers are cute. But the real story is being told by zooming out.

Don’t Miss This!

As I’ve been mentioning, I’m going to be speaking in Washington D.C. October 10-12 for this year’s Irrational Economic Summit. Fortunately, if you can’t make it there this time, we’ve got you covered!

Don’t miss this opportunity to sign up for the live stream of the event, which includes a host of speakers that will absolutely be worth your while. Sign up here now.