VRA Update: The Next Catalyst for stocks, DOW 40K and the Trump Infrastructure Plan
/One of the advantages this week of waking at 3am has been watching the events at the annual Davos World Economic Forum (Switzerland), where the global warming/global cooling/climate change establishment billionaire elites take their fuel guzzling private jets to meet each year to remind us peons that “they got this”. But man oh man, are this years meetings different from the previous 8 years. Nationalism is sweeping the globe…and the elites aren’t happy about it.
This morning the head of the World Bank said “with Brexit and now Trump, we may even be forced to cut the EU and World Bank budgets this year”, he proclaimed, with shocked face and deep sigh, as the Bloomberg moderators nodded in sad amazement. And Trump is only now arriving at Davos…this should be fun.
Yesterdays meetings produced Treasury Secretary Mnuchin’s statement that “the Trump Admin. wants a lower US dollar”. VRA readers were not surprised…we’ve nailed the lower dollar trade all year (plus this was not new policy from Trump, as we’ve covered here often).
Precious metals are loving Davos. Gold soared $20/oz to $1357, silver even more, with a 3.8% gain, wile both copper and oil spiked sharply higher as well (3.8% and 2.4%). Remember, this is just the beginning of the reflation/inflation move higher. We still want to see gold break $1370 to confirm the breakout technically…trading at $1358 this morning.
Oil is ramping…but this is only the beginning of the move
I’ll have more on this soon…here’s my tweet from last night.
But know this; when I say “animal spirits are in full force” I mean that I have not heard company heads this excited in many, many, many years. They are charging forward, with more money than they know what to do with, backed up by the view that a global dynamo of an economy is directly ahead. Again, our biggest risk is selling too soon, certainly in our favorite natural resource names.
From Trumps tax reform to killing overly burdensome regulations to his upcoming infrastructure bill…just…wow. Folks, we have a president that understands how a free market capitalist system is supposed to work. And he’s just getting started.
Next Catalyst for Stocks; Trumps $3 Trillion Infrastructure Bill
As I read the leaked draft report, it confirmed one of the next major catalysts for US growth/earnings is directly in front of us. While the biggest winners are co’s like Caterpillar (CAT) and John Deere (DE), this is also how the US gets back to 4%+ GDP. I’ve been expecting a $1 trillion plan…this leaked document blows that estimate away.
And remember, to build/rebuild all of these roads, bridges, airports, schools, etc., it will require basic materials to do so (copper, lead, aluminum, silver). Just another reason to own the miners. This group will be the next big group to move.
BIOTECH Breakout
This is the technical formation we’ve been keying off of (XBI). Here’s the cup and handle chart I posted on January 11th. High probability technical formation.
138% ETF Gains In Two Months
VRA Portfolio
Strong start to 2018 for VRA Portfolio. S&P 500 is up 5.2% to start 2018…but we’ll take our 14.4%, which annualizes to 192%. Way too soon to be counting chickens…just confirmation that we’re on the right track and in the right stocks/sectors (and on the right side of the Trump Bull Market).
Here’s my BIG PICTURE tweet from over the weekend…this market is nowhere near topping out.
And the markets do just fine during a government shutdown (but yes, we are trading at Extreme Overbought Levels today, on the VRA System).
This past week saw a a fresh $58 billion pour into equities. This is what we’ve been expecting…this is what happens at the beginning of the melt-up phase…just wait and see what this chart will look like when the DJ is hitting 35,000–40,000 in 2019–2020.
Finally, My radio interview with the great @RealWayneRoot Trump bull market. Tax reform, deregulation, infrastructure bill & range expansion taking Dow Jones to 40,000.
Until next time, thanks again for reading..
Kip
To receive updates like this Daily sign up to receive two free weeks from the VRA at www.vrainsider.com/14day
