The Markets – What Happened In The First Half of 2019…and Investing For a New Cold War

The first half of 2019 was a blur.

I continued to ride the ‘software is eating the world’ trend to some pretty good results, but outside my world of software startups and technology stocks, the world did turn and even in my world there were some massive surprises.

Let’s begin:

The S&P was up approximately 20 percent…

Within the S&P Xerox (wtf!) and a host of other names you have never heard of led the way:

Remember Snapchat…snubbed by everyone but my son Max, the stock is up 176 percent so far in 2019, double that of S&P 500 leading Xerox.

Note to self and all you – the markets work in wonderful and mysterious ways!

On a monthly basis, technology stocks are pennies from all time highs…NOT bearish:

They told me the internet was dead back in 2012, but here she is in 2019 at all-time highs on a monthly basis…that’s NOT bearish:

75% of stocks in the S&P 500 are now above their 200-day moving average, the most since February 2018:

Despite all the strength in the economy and the records in stocks – the market is still pricing in a 100% probability of a Fed Rate Cut on July 31st:

A gold bug and a Bitcoin bull might YELL right about here that ‘NO WONDER GOLD IS AT 6 YEAR HIGHS AND BITCOIN WAS UP HUNDREDS OF PERCENT IN THE FIRST HALF OF 2019‘ and I would say ‘damn straight’!

I would also raise my hands to the sky and like a old grumpy man and point to the fact that $10,000 invested for 30 years in Swiss government bonds will grow to $9,856 at maturity 2049 (note: assumes interest rates reinvested at @ current 30-yr rate of -0.05%):

Confused yet?

Let’s continue…

While the gold bugs and Bitcoin HODL’rs rejoice… the most interesting crypto chart of 2019 so far is how the altcoins (shitcoins) have been relatively obliterated:

With all that in mind, what are some guesses for the rest of the year?

The easiest extrapolation is to keep riding what’s working and I plan on that.

I also have a gut feeling that select biotech stocks will continue to perform well in this risk on environment.

If the dips stop getting bought, Fat Nixon will blame the Fed andf the immigrants and I will blame Fat Nixon.

I could go on and on but I will stick with the simple stuff that has been working.

Finally, it would be irresponsible not to talk about the US and China trade war, so I will end with this good read titled ‘Investing For A New Cold War‘. For you lazies…the conclusion:

Assuming that the US-China standoff is not merely a trade war but the start of a new cold war then the shift in the US-China relationship will cast a long shadow over financial markets. As reviewed above, the new cold war could end up being:

Bearish for US technology stocks
Bearish for the US dollar
Bullish for Russia
Bearish for Chinese growth
Bullish for renminbi bonds

In short, for a world that may be going through a dramatic shift, one wants to be long the assets that no-one today owns, like Chinese and Russian bonds, and underweight those that everyone and their dogs are overweight like the US dollar and US technology stocks.