Bear Market Rally, Summer Doldrums...Nothing New

We''re on the last two weeks of August. If "summer doldrums" means anything, you'll find it now. 

In the past, these two weeks were traditionally vacation time for many or us. The President of the U.S. typically takes off for wherever. 

DC, traditionally sweltering in August encourages a general exodus. We used to visit family in August. It brings back memories of humidity and sweat. Thankfully, it was great being with family. Besides, air conditioning in their especially big house meant you could - on a really bad day - have a fine day indoors.

News gets lighter than usual. Nothing really happens. Even when the news wasn't as phony and slanted as it is now, nothing happened. Back then I was following the news more consistently than I do know, but the last two weeks in August was a good time to take a break. You didn't miss anything.

I'm not sure if this year will follow the pattern. The Mess imposed by pandemic lock-downs, forced jabs, vaccine "passports" and all the rest has screwed up a lot of things. And not everything has returned to what it once was - to say the least. But I'd put my money on doldrums anyway.

So these two weeks coming up beg, even scream, for taking some time off. I'm listening. I hear it.

Nevertheless, markets - while unlikely to make a huge splash (but you never know) will chug and churn with probably light volume as traders take time off, in keeping with the spirit of the season. As they do, they leave us with a Bear Market rally in Stocks, another frustrating faux upturn in Gold, and a rather jarring jump in bond yields across the board: jarring because rates had turned down over the last month and looked to be heading even lower. We'll be watching rates closely, despite the doldrums. We've got bonds that were supposed to bolster our frazzled portfolios.

Meanwhile, here are some notes from some of our Brain Trust that we studied and noodled over last week:

- 4 or 5+ big events all happening at once: inflation, recession, likely stagflation, biggest financial bubble ever now popping, stong USD, war in Ukraine, divisions everywhere

- China: facing liquidity crisis, could be imploding: could technically fuel global deflation

- Bonds and PMs poised to rise

- Mortgage rates may have peaked

- Stocks: Major trend remains down – 9 Major Dow Bear Markets since 1960s: bet 14% - 53% - Current is 10th, down 19%, has much farther to go. – Stocks still expensive – But PTI looks pretty good, basically neutral.

- Interest Rates: Long-term down since June 15th, short-term up, but thinks short-term will be turning down soon. Fed will likely ease – Hold onto bonds for now,

- Will be a lag before we see mortgage rates respond – Should decline medium to long-term.

- USD strong > 105, even > 97 – If rates slow down/reverse, USD appeal lessened. China selling USD quietly and/or could be using to prop up their banking system – USD technical indicators cause for concern – So could decline sooner rather than later.

- Gold price has to clearly stay > 1800 before we might see trend start up again – Hit high 2020, low 2020, so basically has moved sideways

- Gold set to outperform Crude – Silver set to outperform Gold

- Manipulation of Gold Price: Now by BIS, openly. Could be part of plan to downplay inflation by keeping gold price suppressed.

- Using a 7/8 year cycle, gold price could bottom late this year/early next – maybe as low as 1675.

- If Gold rises > 1825, A Rise will be in place – If breaks < 1750 D decline still in process.

- Crude and Natural Gas may decline reset of 2022

- Resource Sector “coming alive”

- Bitcoin poised to rise to $40,000 

Take all this with several grains of salt. No one's always right. But some of this might spur some thinking that leads to a brilliant move or two in your portfolio. If you come up with anything, please let us know. We could use a brilliant move or two.