US Stocks, Federal Reserve, European Central Bank!

Dear Reader,

US stocks wobbled during the last several trading days. I think the US stocks rally is still intact. As evidenced by the nonfarm payrolls report from today the US economy is doing well.

I still think the Federal Reserve could do two Federal Funds Rate hikes in 2017, which is still a lot. If the Fed hikes twice, I forecast the US GDP growth rate year on year will fall below 1.00%. If they hike three times or more the US economy could go into a recession.

Many market observers interpret the ECB's President Mario Draghi press conference this Thursday as hawkish. On the contrary, I think it was actually quite dovish. He spoke hawkishly, but acted dovishly. I think deeds speak louder than words in this case. I expect the yield on the ten year German governent bond to fall close to zero in the next several months.

My prediction that oil could fall to 45 USD WTI seems to be coming true. The fracking costs per barrel are now close to 30 USD, so the price could fall to 35-40 WTI USD even. Oil stocks could get hurt. If the Fed hikes rates aggressively this would hurt high yield bonds issuers as the fracking companies and topple the US economy in recession.

I think the price of gold could find a bottom at 1150 USD pre troy ounce.

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Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!


Kind regards,
Petar Posledovich