Commodities are strong because of China. The dollar is weak because of China. The unemployment rate is high because of China.
Nonsense. Those of you who follow my business cycle work know about "feedback". This is how it works.
- Cheap money causes the economy to strengthen.
- The stronger economy causes demand for raw materials to increase.
- The increase of commodities eventually reduces the purchasing power of consumers.
- Consumers cut purchasing.
- Inventories rise because business did not expect a slowdown in sales.
- Business cuts production.
- Commodities decline because business needs less raw materials.
The business cycle works because it reflects the decision of business people. This is the reason markets always win.
George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked second best gold timer by Timer Digest
To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.
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2 comments:
I like business cycle theory and it really works if you have an eye to see it.
All assets classes (stocks, bonds and commodities) have already setup for doomsday. Just wondering about USD index, it is still going down. It reflects the fed reserve still cutting the money lose or atleast not tightening up.
What do your think?
Asset price are going up because the economy is strong without inflation.
The USD is weak because of the reduced competitiveness of US indstries in the global markets.
GD
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