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Jim Cook

 

RUNAWAY SOCIAL SYMPATHY

Every once in a while I switch the TV channel from Fox to CNBC to see what the liberals are saying.  After listening awhile I get a deep sense of hopelessness and foreboding for our country.  The most important thing for the left is giving money to people.  They are happy to see the growth of food stamps, disability payments, housing subsidies, free healthcare and all the other welfare benefits.  They utterly fail to see the damage it is doing to the recipients.  Whole cities that once flourished have deteriorated into rotting eyesores populated with shambling hulks of chemically dependent drones.  These people are no longer employable.  They have become incompetent and helpless and the liberals can’t see that it’s their doing.

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The Best of Jim Cook Archive

 
Best of Puru Saxena
September 19, 2012
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QE3- An overview of the markets


On Thursday, the Federal Reserve initiated QE3 and this prompted a big rally in risky assets.  As you know, we were expecting Mr. Bernanke to unleash ‘stimulus’ but even we were taken aback by the extent of the easing.

During his press conference, Mr. Bernanke stated that the Federal Reserve will buy $40 billion worth of agency mortgage-backed securities every month until the U.S. job market improves.  Furthermore, he confirmed that the Federal Reserve will continue with its Operation Twist 2 program, keep interest rates at near zero until mid-2015 and maintain an accommodative monetary policy well into the economic recovery!  When a reporter asked Mr. Bernanke whether he could elaborate until when the Federal Reserve will continue to create $40 billion every month ‘out of thin air,’ he evaded the question.

There can be no doubt that the Federal Reserve’s move is unprecedented and it is astonishing that the American central bank is openly debasing its currency!  More importantly, if the U.S. job market does not improve soon, it is probably that QE3 will continue for several months or even years!  In terms of morality, the Federal Reserve’s latest policy initiative is questionable at best because an open ended QE will diminish the purchasing power of money and penalize savers.  Nonetheless, from an investment perspective, QE3 will probably trigger a massive rally in global stocks and commodities.

For our part, we have allocated capital to some of the strongest companies and sectors which are in an ideal position to benefit from QWE3.  Furthermore, we have also re-invested capital I precious metals and it is our belief that both gold and silver will appreciate significantly over the following months.

Turning to the stock market, it is notable that major U.S. indices have climbed to multi-year highs and it is conceivable that the S&P too Index will confirm the next primary uptrend.  In terms of sectors, as long as QE3 is in force, consumer discretionary, technology, biotechnology, financials and precious metals miners are likely to outperform and the defensive industries will probably underperform the broad market.

Looking at commodities, the CCI Index has climbed to a multi-month high and hard assets are likely to inflate over the following months.  It is notable that both copper and crude oil have reclaimed the 200-day moving average and this is a bullish development.  From our perspective we continue to believe that industrial commodities will continue to underperform precious metals.  Accordingly, we are not initiating any positions in the industrial hard assets.

Over in the precious metals arena, both gold and silver are soaring and at the very least this rally is likely to continue until next spring.  On Thursday, silver was the big beneficiary and we believe that over the following months, silver will outperform gold by a wide margin.

Puru Saxena
Website – www.purusaxena.com

Puru Saxena is the founder of Puru Saxena Wealth Management, his Hong Kong based firm which manages investment portfolios for individuals and corporate clients.  He is a highly showcased investment manager and a regular guest on CNN, BBC World, CNBC, Bloomberg, NDTV and various radio programs.

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