Playing Kerplunk with Trust – Will Commodities Join Crypto Party in 2018 in the ‘Flight From Crazy’

The year 2017 was like watching a game of drunk Kerplunk.

Every day someone in the Trump administration pulls a stick from the wall of trust knowing the marbles will eventually spill out.

Today, the disguting Scott Pruitt named a ‘barred for life‘ banker to head the Superfund. It is almost impossible to get barred for life from the brokerage or banking industry.

The stock market does not care because as Josh Brown says (in a great post today):

We no longer take a single word any of these organizations say at face value; we’re questioning their motives and communiqués before they’re even finished speaking. Fingers pointing from every direction.

Our faith in the conventions of American government and these institutions isn’t just fading away. As in the Gaiman story, it is being transferred. We still have faith, that part of human nature doesn’t go away.

Our new beliefs are making one thing happen, relentlessly – we’ve selected a new Pantheon. We have more faith in their ability, their capacity to learn and improve, their adaptability, than we have in the President or in Congress or in the courts.

Here are a handful of the very large stocks making new 52-week (and, in many cases, all-time) highs right now: Amazon, McDonalds, Google, Apple, Salesforce, Visa and Netflix.

These are not brand new companies, and in many cases they are not selling a brand new product. Rather, they are institutions that have earned the trust and devotion of millions of customers, shareholders, employees and managers. We believe in their products and services, we have faith in their durability, their competitive advantages, their vision of what the future looks like and how they’ll fit into it.

En masse, we have decided that, come what may in Washington, these are the entities that will find a way to thrive. They will not merely survive the future, they will be responsible for shaping it.

There’s an element of blind faith at work here, and of self-fulfilling prophecy. Because the larger these stocks become, the larger their weight in the index funds that investors have taken to deifying. Vanguard is a Mecca for money, and as it draws in more adherents, by extension the market caps of these companies draw in more invested dollars.

Howard here again…

While Trump was taking credit for the stock market, what really unfolded was a continuation of a trend set in place from the financial crisis of 2008. A continuation of money flowing into the institutions that Trump and his band of creepy knuckleheads can’t do much to slow down, let alone stop. In fact, the tax plan helped the largest and most profitable corporations and may accelerate their growth.

The tax plan will also set off some new mega trends in 2018 which we will start seeing in the charts of new stock market leaders as 2018 begins.

The money that the administration really got moving in 2017 was into crypto which I would call ‘the flight from crazy‘.

As ‘crazy’ and negligence continue, I go into 2018 wondering if as a group commodities start getting more love.

Look at this chart showing how commodities have plummeted to all-time lows relative to stocks.

One bet I am looking to make is that this gap shrinks in the coming years.

One sure thing the ‘experts’ agreed on was gold would have a good year. It did not.

At one point in 2017, Gold did look to be on the verge of a breakout, only to keel over again.

But as 2018 ended, commodities perked.

Copper was up 31 percent and up 16 days in a row to end the year.

The ‘oil vey’ trade is back on as Crude crossed up past $60 for the first time since 2015.

Palladium (not the nightclub) was up 51 percent in 2017, at prices not seen since 2001.

Lithium (not the drug we wish Trump took daily) and Cobalt are lit.

Even gold finished 2018 strong. Greg Harmon has a great technical roundup of gold going into 2018.

The rage right now is to charge 2 and 20 to manage money in the crypto and token space.

A lot of cold money will be trying to time a trade on that stock and commodity gap shrinking.

I am excited for the calendar to turn.


Also published on Medium.