The World Bank cut its global growth forecast amid weaker outlooks for the U.S., Russia and China, while calling on emerging markets to strengthen their economies before the Federal Reserve raises interest rates. The Washington-based lender predicts the world economy will expand 2.8 percent this year, compared with a January projection of 3.2 percent. The U.S. forecast was reduced to 2.1 percent from 2.8 percent while outlooks for Brazil, Russia, India and China were also lowered.
Chart from Robert Lamy at Advisor Perspectives
This is not shocking to us, of course. I just gave a Live Futures Trading Webinar (replay here) yesterday afternoon where our trade ideas were Dow Futures (/YM) short at 16,920, Russell Futures (/TF) short at 1,171 and Oil Futures (/CL) short at $104.40.
Already this morning (7:40), the Dow Futures are down to 16,870 and the 5-contract trade we were looking at paid $1,250 on the 50-point drop and the Russell is already down to 1,163 – an $800 per contract gain while oil is stubbornly holding $104.40 but I just re-iterated our short below the $104.50 line for our Members in Chat.
That's why we do these Futures trading webinars. Where else can you get paid thousands of Dollars while you sleep? Even better if you don't sleep as that World Bank news came out midnight and our indexes didn't start dropping until Europe opened at 3am.
I was up and posting at 2:30 in our Live Member Chat Room and, while we were already bearish and this simply confirmed our position – if you were caught too bullish in your portfolio – knowing how to trade the Futures would allow you to put on some quick hedges and save you the pain of a dip.
While we're CONCERNED that there will be a major sell-off, we're not planning on it (also discussed in yesterday's Webcast) and we discussed 4 of our 29 long trade ideas from the Buy List (Members Only) in yesterday's post and we added TASR as a long play in Member Chat as under $15 is just too cheap for our Stock of the Decade.
Chart from Finviz
Even if you don't have access to the options play our Members do (using our trademarked system for buying stocks at a 15-20% discount, of course), you can still play this stock at these low prices and make those boring old equity returns on the move back up. Our trade idea using options spreads gave us a $500 credit with a $7,500 upside potential over the next 18 months (1,500%) so it's a trade that has the potential to make over 80% per month if it goes well – we'll check in once in a while to see how it's going.
Now, back to oil. Bloomberg reports that China has been buying 600,000 barrels a day (10% of that country's imports) to stockpile their Strategic Reserves. This has been going on since January and that's about 150 days x 600,000 barrels = 90M barrels of false demand on the Global markets.
We were discussing the effect our own SPR-filling had on World oil prices back in the Bush administration and we can't blame China for wanting a reserve of their own – just be aware of that this week as OPEC talks about "Global Demand".
Chart from Dave Fry
Oil inventories should be exciting this morning at 10:30 – we'll keep an eye on the Dollar (now 80.85) as a nice signal. If the Dollar goes over 81, the Nikkei will be happy (14,990 at the moment on /NKD), but it will put downward pressure on commodities.
If you remember, from last week, we discussed Silver as a good inflation hedge at $18.80 and gold at $1,245. Silver hit $19.30 this morning and that's a .50 move at $50 per penny per contract (+$2,500) and I would suggest a non-greedy exit for now because, if the Dollar gets back over 81 – both gold (now $1,265) and silver should dip back quickly – with silver having much more to lose.
Still, we are remaining "Cashy and Cautious" and more watching the market from the sidelines at the moment. We're hoping for a better sale on the stocks from our Buy List but, as with cases like TASR, if some of them get too low, we're happy to initiate a position, especially in our almost all cash Long-Term Porfolio and TASR is definitely a stock we intend to own for the long-term!
The material presented in this commentary is provided for informational purposes only and is based upon information that is considered to be reliable. However, neither Philstockworld, LLC (PSW) nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such.less