March 17, 2014
Weekly Market Outlook
By Keith Schneider
This week, out here in the high desert of Santa Fe, New Mexico amid the downdraft in the market, I got chill down my spine. I wasn’t sure whether it was an actual misdirected Artic Blast or something nostalgic, like the chills one might have gotten during the Cold War, while hiding under a school desk for practice on surviving a nuclear attack. Or it could just have been the recent market action.
The old cold war players seemed to be bracing for a showdown. A referendum will take place this weekend as to whether Crimea stays part of the Ukraine or becomes part of Russia. Of course the real question is whether or not the Ukraine gets a big Russian bear hug.
Relax though, back in the days of the real cold war there was no Russian stock market and Putin and his Oligarch subjects live too well to put that in jeopardy. In fact, Russia has already taken control of certain towns with strategic points of interest in Crimera.
China in a rare move, abstained from voting in a UN resolution to condemn Russia for its actions. This is highly unusual behavior, so my guess is that what Russia has done so far has to be pretty bad for its old comrade to turn a cold-war shoulder to it. Either that, or China is so desperate to bail out its de-accelerating economy that it is even willing to throw out a symbolic gesture to the US. After all, China does need to keep its cash flow from the US going strong, while it’s facing major headwinds and retooling.
The persistent rise in Gold and Volatility Levels has been a tell. The crash in Russian stocks and its currency, along with a slowing Chinese economy adds to my concerns that a more lengthy correction is underway.
One positive, however, is that the Russian market looks like it might have a bottomed. If the Russian equities can maintain a rally from current levels this could be a positive indication for the global stock markets. If all this sounds confusing and contradictory, well it is, and this is where reading the short term patterns becomes an important element to successful speculation in the markets. This is especially the case when major geopolitical events are playing out.
Let’s go to this week’s video to where some inflection points lie.
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