![]() ![]() On the other hand, while he sees the prospect for a temporary correction after recent gains, Zac's base case from a technical perspective is that the bottom in gold equities ( GDX) is already in. The energy supply side is tight, but if demand is weakening too, then that can take time to work itself out. I view the US and the rest of the world as being in a disinflationary cycle, as part of a larger structural inflationary period that will stretch through much of the 2020s decade.įor example, Exxon Mobil is cheap, but there aren't necessarily a lot of catalysts to help it reach a new leg higher, until there is a renewed economic growth period (i.e. While I'm perhaps not as bearish as him as I look at the tightness of the energy supply side, I can certainly see the case for softness in energy equities for the next 6-12 months for cyclical reasons. An outright full-on recession, however, could delay the PMI bottom until late 2023 or into 2024. Here's his Exxon Mobil ( XOM) chart, for example:īased on normal PMI cycles, his estimated timeframe is right in line with where a potential PMI bottom is likely to be, sometime in the late spring of 2023. However, he sees this likely continuing with a bullish trend in late 2023 or into 2024. ![]() Zac from Stock Waves has been rather technically bearish on energy equities ( XLE) in recent months, pointing towards a lower low in 2023. A lot can happen in a year, including geopolitical events and policymaker decisions. The timeframe can of course be refined as more data come in. Most indicators suggest that the economy will worsen into 2023, and probably have a bottom somewhere in that year. However, due to a supply squeeze and high inflation, bonds did way worse than they normally do in a decelerating economy, and energy equities did way better than they normally do in a decelerating economy. This was mostly true for 2022, with healthcare, tobacco, consumer staples, and other defensive equity sectors like that holding up better than more cyclical or expensive sectors. Normally during a decelerating economy, defensive assets hold up better than aggressive assets. ![]() This is perhaps best captured with the ISM manufacturing purchasing manager's index, which tends to ebb and flow through roughly three-year cycles.Īs has publicly shown, the China credit impulse tends to lead the US ISM PMI cycle: This means that it still has generally positive growth, but the growth is slowing towards a potential contraction. Throughout the second half of 2021 and all of 2022, the US economic growth rate has been decelerating from a high level. Lyn Alden The Economy Continues To Decelerate This issue focuses on gold and oil markets, and their respective equities. These pieces complement some of my deeper and longer-form work on the fundamentals, and thus can be used more tactically. Several times per month for Stock Waves, I publish short-form piece called "Where Fundamentals Meets Technicals" that looks for intersections where the fundamentals and the technicals align, and occasionally I make one of them public. Between the two going into the first half of 2023, gold likely has the advantage on its side. I am fundamentally bullish on both gold and oil with a long-term perspective from current levels. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |