It seems like everyone is always fighting the last war and a fear of financial meltdown has been the number one prediction driver for more than six years. Here are a few predictions for the third quarter and the months ahead…
- No Go – The U.S. Interest Rate Hike prognostications will continue to dominate markets. The exhaustive conversations over WHEN, not IF, a boost will be announced fails to focus on the fact of how the market will react. Most likely the impact will be none when it is actually done.
- Earnings Recovery – The first two quarters of earnings data are bad on the books, but better than the analysts had predicted. A pattern has developed over the last few years with expectations tamped down then the low bar is overcome with 70% of companies beating Earnings Per Share. The post Fourth of July start of fun will again provide a positive surprise.
- Market Melt Up – The continued combination of low rates and near record corporate profits make the U.S. equity market the best in show winner in the search for yield performance. A full recovery in the S&P 500 of 300 points from the February lows puts the measured move technical target at 2400.
- Go, Go Gold – A four-month consolidation from $1200 to $1300 in Gold saw a failed test of the bottom of the trading range and then a bounce. A stalled Dollar removes the headwind with Gold making another run above $1300, with $1450 the larger objective as the halfway mark of the fall from the 2011 top.
- Summer Heat Up – Hot summer temps give Natural Gas a boost with increased electricity demand for air conditioning. Half of utilities’ electric power is now produced by NG – one of the last commodities sectors to see the upturn.
- Beans in the Teens – The bearish crop numbers in May put in a bottom for Corn and Beans. The snap back from the extremely overdone sell-off slump has begun. The scorch of the summer sun gives grains a bump.
- Oil’s Well – The Oil slide stopped when stocks stabilized or vice versa for those highly correlated markets. A bottom base developed when nobody was left to be long. While it is more likely that Crude tracks sideways after the epic recovery, the $65 a barrel mark is the midpoint of the two-year decline.
- CRASH AVOIDED – Somehow calling for an inevitable stock collapse has become the new normal for pundits. Fear mongering has largely gone unpunished as false predictions are often ignored.
It seems some are ideologically invested in the end… Even if THE CRASH happened, bigger problems would dominate than how to cash in.
