With continued uncertainty in global markets, today the Godfather of newsletter writers, 90-year old Richard Russell, covers everything from peace of mind, to gold and the erratic world stock markets. Russell also takes a close look at the importance of January in determining market direction for 2015.
Russell: “This is the January with a thousand opinions. My guess is that the US markets are backing off in order to get a running start on the new year. The new Bloomberg Business Week magazine titles its recent edition, “The Good Business Issue.” The latest Economist magazine, under the category of United States, titles it, “A Happy New Year.” States The Economist, “Growth is likely to be robust in 2015 and will start to benefit ordinary families.”
It continues, “Consumer sentiment has grown jollier in recent months — as jolly as it has been since before the recession, according to the University of Michigan. For several reasons, the good mood is likely to last into 2015. One is the composition of recent growth: it is the result of solid household spending, the most important component of demand. It grew at a 3.2% annual rate for the third quarter, and may grow 4% or more in the current quarter, reckons Morgan Stanley, a bank.”
The Economist adds, “Thanks to cheaper oil, the Federal Reserve now thinks inflation will end next year around 1.3% …” Furthermore, “The Fed promises to 'be patient' about tightening monetary policy.” Thus the background is building for the third phase of the bull market to express itself.
The only game on the planet is the improving US economy. Money around the world is pouring into the US dollar, US bonds and US stocks.
As I write one hour before the close, the Dow is down 339 and Transports are down 233. The NASDAQ is down 78 and the NYSE index is down 239. If The Economist is to be correct in its view of the US economy, the stock market should start with a clean slate. Today’s action so far should provide a sold out platform for the stock market.
As I write, gold is trading at 1204.70, up 14.90 for the day. … I’m impressed too, particularly with gold rising in the face of an ascending dollar. If gold closes today at 1201 or better, I would call it a technical triumph.
It’s strange that in the face of the erratic stock market, holding physical gold has given me peace of mind. At this point, I’m guessing that many big money investors have been knocked out of gold. And perhaps knocked out of the stock market. They say that as January goes, so goes the stock market. That means we have 25 more days to fret and toss about the month of January.
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On a completely different subject, I want to return again to the concept of peace of mind. In my opinion, peace of mind trumps all other aspects. Without peace of mind, wealth becomes secondary. Without peace of mind, living becomes a burden and joyless. Perhaps this is why God created gold. Gold is the ultimate platform of wealth. It is one of the three items that the wise men presented to the infant Jesus.”
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