The Chinese New Year's starts off with a Big Bang!

February 10 2023

Weekly Column with The Contrarian

Happy Valentine's to everyone! Give yourself a loving hug!

This week we saw more mixed signs on the economy. Depending on how you interpret it? It appears to me the markets are acting more like they are playing a game of chess instead of forecasting economic direction. Market bulls read statements from the Federal Reserve Chairman and other high ranking board members as Dovish. Bulls believe the next move by the Fed will be the Pivot after one more .25% rate hike in the Fed Funds in Marches meeting. Market Bears (I'm in this camp) read the same statements as Hawkish and believe rates will go higher and will stay higher for a longer period of time through 2024.

China/U.S. relations hit an all-time low this past week with the shooting down of a Chinese weather balloon which strayed off course, so said the Chinese Government. The U.S. disagrees on all counts and shot down a second object off the coast of Alaska two days after downing the air balloon. The war in Ukraine has reached its one-year anniversary, but there is nothing to celebrate. Putin is building up for another spring offensive while Zelensky is pleading with EU Members to give him fighter planes so his country can defeat Putin's spring offensive. The U.S. said they would not because of the extreme amount of training required to fly these aircraft. I get it. Each plane cost millions of tax dollars to build and the technology is too important to give up if it fell into the wrong hands.

The Central Bank of Peru stopped raising rates there because of the number of protests and rioting by the citizens of Peru. Current Interest rates are at 8%. Inflation is running hotter there as well. Inflation is a destabilizing force that can overthrow parties that are in power. The U.S. will stay the course on interest rates. Our Fed knows what happens if they stop rate hikes too early. Their play book is from the early 1980's. Anyone can look up the effects of cutting rates too soon had longer on the economy back then. If investors don't believe it can happen again just look at the inverted yield curve as of the close on Friday. You have to go back forty- one years ago for this bad of an inversion.

MY Vision Continued.

Two Worlds - In my previous blogs I expanded on the difference between them.

I can see signs of this happening today. Just look at all the places on the planet where populations are on the move. There are a number of reasons for this, i.e. Global warming, War, resources, etc. I try to look at both sides of any situation. That's why I'm the Contrarian. Let's look at a current issue in America, The border.

My 2 World Vision.

I see the busing of hundreds of young people and families every day from the border throughout America. I don't know how many have been sent so far, but the numbers grow every month. Like it or not this is happening. Over the next ten years the people will filter into society and the job market. This new labor will bring down the number of job openings and the demand for higher wages. Companies will see this and adjust down the pay. Worker's productivity will suffer until the new workers are educated and trained. In my Two Worlds the Americas will become one region with Europe and Africa, and India. The other region will be made up of Russia, China, and the Middle East. The work force will come from the younger populated countries, the money and direction will come from the superpowers. And the resources will come from every country in the alliance. I see companies moving manufacturing closer to home and closer to the labor market. I can see Mexico becoming a big winner in manufacturing plants and jobs coming into this country. When this happens the current migration patterns will change. I know I have simplified things here but it is only my 2 World Vision. Manufacturing is coming home and away from China. Technology has become a weapon to fear and protect.

Stay Tuned!

Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.