The catalyst for European equities? Simple. More cowbell. Not growth—cowbell.
You need to be very careful right now. A lot of the things that have been working for us (and could continue working like oil and gold) could go down considerably if Mario Draghi devalues the Euro tomorrow. The U.S. Dollar would go straight up on that.
As our European analyst Matt Hedrick pointed out in this morning’s Early Look:
…We continue to point out that European equities have been bombed out (the German DAX is down over -20% since April = crash), in-line with our 3Q15 Macro Theme of #EuropeSlowing. At the meeting, we wouldn’t be surprised to see Draghi 1) talk down the euro (in the near past, European equity markets have acted favorably to a weak EUR/USD – Germany in particular with 46.5% of the economy levered to exports – and 2) suggest more QE may be in the pipe (an increase in monthly purchases above the original target of €60B/month).
The volatility that is trending higher is most likely here to stay. Take a look around the world. Right now you have the Chinese, Japanese, Europe and the United States all in a mad race to the bottom. (Case in point: Check out what happened in Brazil on Friday.)
Make no mistake: This currency crisis is the epicenter of the central planning crisis.
600 some odd rate cuts… a failure to create the economic growth which they promised, etc, etc. It’s just going to be a continuing series of one panic after another.
That’s why we’re recommending you keep a lot of cash on hand. Tactically, when the opportunity presents itself, you’re going to be able to take that cash and buy stuff when it’s oversold. And short that stuff when it’s overbought.
This is how I am operating in the midst of this global mess.
My team here has been doing a damn good job navigating our subscribers through all of this I might add. And I’m not going to apologize for it.