|Dow||+305.36 to 17,666.40|
|S&P 500||+29.18 to 2,050.03|
|Nasdaq||+51.05 to 4,727.74|
|10-YR Yield||+0.107 to 1.78%|
|Gold||-$15.40 to $1,261.50|
|Crude Oil||+$2.92 to $52.49|
Everything from the Dollar to Oil to Foreign Stocks and Select Bonds Are Firming Up!
More than 24 percent. That’s how much crude oil futures gained from the intraday low on Friday through today’s high.
The euro currency? It was trading for a smidge over 1.11 a week ago. Today, it climbed as high as 1.154.
What about the Market Vectors Russia ETF (RSX), the leading ETF that tracks the country’s equity market? It plunged to around $12.50 during the depths of the Russian panic back in mid-December. Today, it’s going for around $15.70 — more than 25 percent higher!
Or how about the SPDR Barclays High Yield Bond ETF (JNK), one of the two benchmark ETFs that track junk bonds? It sank to just over $37 in December amid fears of massive energy sector bond defaults. Today, it’s going for around $39.
|Currencies, bonds and stocks of nations whose fortunes are tied more closely to commodities — particularly oil — are rebounding.|
Are you seeing a pattern here? Because I sure am! Virtually all the asset classes that investors hated for the better part of the past year are now starting to firm up. It’s like everyone is adopting a “The last shall be first” style of investing.
So the question is: Should you?
Well, I’ve been talking about the potential for a Big Reversal in a lot of investments for a few weeks now. I flagged the euro as wildly oversold on a couple of occasions, and I said energy stocks looked more attractive now than at any time in the last three decades!
Those calls are looking right on target now. Indeed, we just closed out a home run trade in the euro in Safe Money Report.
I wouldn’t be surprised to see oil take a breather soon, considering it has already rallied $8 a barrel in just three days. Energy stocks may pause for a bit, too.
But we’re talking about a commodity and a group of stocks that lost 60 percent, 70 percent or more just since late summer! They got the most oversold in 30 years. There’s nary a long-term bull to be found, with everyone and his sister leaning the other way.
|“I wouldn’t be surprised to see oil take a breather soon, considering it has already rallied $8 a barrel in just three days.”|
What does that tell me? That if this is truly the Big Reversal, as I think it very well could be, it’s only just starting! These investments could rally for months and months on end before they’re overbought and expensive again.
You could say the same thing about deeply oversold foreign currencies, foreign bonds, and foreign stocks, too. That’s especially true of nations whose fortunes are tied more closely to commodities — particularly oil.
I know I’m doing some bottom fishing here, and you may want to do the same.
So are you? Do you think it’s still too risky? Are these major inflection points for the dollar, oil, and emerging market stocks and bonds? Or is more pain lurking? Definitely head over to the website and weigh in on these very important topics!
|Our Readers Speak|
Will anything come of President Obama’s budget proposals? Will we be better off if it does — or not? Those questions got the discussion going at the website overnight.
Reader Tommr said: “I’m all for a lot more infrastructure spending. These things badly need improvement! And this type of spending is an actual investment in America’s future, as opposed to just a lot of frivolous giveaways.
“We are also desperately in need of significant tax cuts on corporations! The encouragement of even more R&D is another area of sound investment that needs this encouragement!”
Reader Arve also weighed in positively on Obama’s education spending push, saying: “The community college proposal is a bargain and solid idea. Many community colleges have great job-ready programs, at affordable costs. $60 billion over 10 years — lower than I thought it would come in!”
But Retired W. isn’t very optimistic about those ideas actually being put into practice. The comments: “Obama is presenting his ideals on what he wants and how to finance them. The Republicans will not go for much of that except for cutting corporate taxes. Obama will not go for that unless he gets some of his political agenda. Therefore, with possible minor issues being passed, I look for political stalemate.”
We’ll hear much more out of Washington in the coming days, as these ideas get batted around the halls of Congress. So definitely stay tuned — I’ll let you know which proposals appear to be gaining momentum, which ones aren’t, and what that means for investors like you! And as always, you can share your thoughts right here on the website.
|Other Developments of the Day|
The Financial Times tackled a theme I’ve been highlighting recently — namely, that the rising dollar is going from help to hindrance in Corporate America!
Consulting firm FiREapps estimates the dollar’s rise crimped sales at U.S. multinational companies by a whopping $12 billion in the fourth quarter alone. Increased griping over that “tax” is one reason why policymakers may soon push back, helping take the wind out of the dollar’s sails.
The game of chess between Germany and Greece continues. Greek Prime Minister Alexis Tsipras is trying to extract all the concessions he can out of German Chancellor Angela Merkel in negotiations over Greece’s debt load, and it seems like hardly a day goes by without rumors of another deal or agreement.
Just about the only thing that IS certain? The soap opera will likely drag on for weeks or months, pushing the markets to and fro in the process!
On the corporate front, reports suggest office supply retailers Office Depot (ODP, Weiss Ratings: C) and Staples (SPLS, Weiss Ratings: A-) could be pursuing a tie-up. ODP already swallowed up OfficeMax two years ago, a deal driven by increased competitive pressure from other online and offline retailers.
ISIS militants have reportedly killed Jordanian air force pilot Moaz al-Kassasbeh, rather than made a deal for his release. The method of execution: Burning him alive in a cage. Repulsive.
Until next time,