Option Queen Letter By the Option Royals Jeanette Young , CFP ® , CMT, M.S. and Jordan Young, CMT 4305 Pointe Gate Drive Livingston, New Jersey 07039 www.OptnQueen.com [email protected]February 14, 2016 Happy Valentine’s Day! Today's headline “Trump, Sanders are they killing the market?” Seriously... on the front page of Barron’s magazine? Let's get real people... No, they are not killing the markets. What we are witnessing right now are the effects of intermarket relationships at play. A strong US Dollar is a great thing during a time of extreme inflation but, during a weak economy it can be rather dangerous. A combination of inflated prices for products produced at home together with suppressed wage growth creates demand for cheaper imported products while placing a recovery in jeopardy by creating deflation pressures (by the way that is why a strong US Dollar is important to combat inflation). In short, today's strong US dollar hurts US exporters and US producers that are competing with cheaper imports. Further, cheap oil has virtually shut down US production of oil and has hurt the Canadian economy as well. The transportation index blossomed with petroleum transports but when cheap oil impacted the oil fields and rig shut-downs began, the transportation index retreated. Why, because the prior increase in traffic was attributable to the rail transportation of petroleum and related products. In many ways, Trump and Sanders are a byproduct of this environment rather than the cause. Trump and Sanders represent many things. They reflect a growth in populist movements on both sides of the isle, perhaps signaling that a shrinking middle class has finally had enough. Perhaps, more than anything, they are the products of social media and constant buzz word news. In a day when single words rule the headlines and news is old seconds after it has been released, these two marketers have been able to reach the masses in a way like never before, gaining fuel through the masses, something feared by many of our founding fathers. Most of all, these candidates are a sign that Americans are sick and tired of a do-nothing government that is run by people constantly seeking re-elections, pandering to those receiving entitlements…including themselves. Our economy cannot continue on its current path and that is what the market is broadcasting loud and clear. Although this country is in awful financial condition, we are the best of the worst and until another country emerges as better, you had better keep you bucks here! As to negative interest rates; not a bad idea if and only if, it relates to bank deposits at the Fed. Why do we say that? Because that gimmick would force banks to lend money rather than to
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Option Queen Letter By the Option Royals
Jeanette Young, CFP®, CMT, M.S. and Jordan Young, CMT