AG TIME – Something for Everyone

John Walsh Currencies, Energy, General Commentary, Grains, Stocks

A little bit different approach today. Variety is the spice of life. As they say. There is so much going on I thought I would comment on many of the things I look at although perhaps do not offer trading suggestions. “Jack of all trades, Master of none.” is hard to live by. But sometimes pays dividends. Food for thought.

CURRENCIES – It is my belief the domestic monetary policy is a key component to all things market related. All administrations favor a certain dollar stance (relative to other currencies). The Trump administration, in my opinion, favors a strong dollar. It is my thought he sees the dollar as representative of the US position in the world. It is my position he will seek to gain dominance relative to other currencies solidifying the US as the reserve currency to the world. Let’s not forget three years ago there was a thought China would make a move on this position (not going to happen). The US dollar position in the world acts like a global tax on all things traded, in my opinion. We set a relative price. This is so very important.

INTEREST RATES – The Bonds have topped, in my opinion. This is a long term outlook. The 5yr, the 10 yr will gain on the 30 year over the long haul. This means rates are going up. I don’t care how fast or slow. The trend has changed. We can argue as to the WHY. The reality, since Trump took office, the economic activity, the economic confidence has exploded. The growth now is in an active mode. This could continue for some time.  Look at rallies as opportunities to sell.

ENERGY – It is my belief that there is more than an ample amount of crude oil available in the world. The political atmosphere has kept crude overpriced for some time, in my opinion. The US has turned to a net exporter and a major player in the world. The US energy stance is one of strength and power and will continue for some time, in my way of thinking. I do believe rallies in crude should be sold. I will preface this with the thought that crude is only for those with very deep pockets. The trend has been up. Let’s see if that changes before year end.

STOCKS – I have a bit of a different look on stocks. Those who have sought to sell stocks for years are left in the ruble. It is a losing game on a macro basis. The US economic activity is at unprecedented levels. Having said that, it is my belief a reasonable correction can occur at ant time for any reason. This would be welcome and a positive. The US could be in the beginning of one of the largest protracted growth periods in history ( my thought). I have been wrong before and will be wrong again. However, there are many positives. The one thing that could cool the stock market is the cost of capital. Moderate increase are fine. This should be monitored.

AGRICULTURE – Lets put this in perspective. We have just come out of a 12-15 year run in agriculture built on demand mostly fueled by China. But, certainly the whole world has grown as their demand has. It is my thought this is stagnating, not falling apart, just moving sideways. This could have implications to the row crops the most. The production has expanded exponentially. As has the gross revenue. Due to this, the whole world now is producing soy and feedgrains. This will increase global competition and act as a limit to the upside. This is not to say we won’t have years where we have big moves to the upside. We will, as always. It is just they may be a bit more spread out and shorter in duration. Think of this as a macro outlook. There is still good opportunity. A person should have a well defined plan.

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