Any good trader knows that goverment stimulus policies have created bubbles in stock markets. Anticipated rallies could continue towards year end until a big sell hits markets. Until then the only long position that I hold in stocks is in pharmaceuticals that have performed very well on the back of depleted stockpiles of influenza drugs during the onset of the Southern Hemisphere flu season. So Governments will be buying up big to try and replenish low inventories of two of the major influenza drugs Tamiflu and Relenza. As the Northern Hemisphere prepares for winter, rallies in pharmaceutical stocks should continue. I would say that it would be sensible to close off positions on banks and consumer based stocks, apart from food and energy based stocks. Technology stocks are dead in the water. With the Asian export markets literally dead in the water, I suspect the only real price deflation will be on technology goods as inflation will start to take hold very quickly into the later months of 2009. Similarities are emerging to the 2008 inflation spike (March 2008) on food when Northern hemisphere crops reported low rain and drought conditions, we now have the beginnings of price inflation on food based commodities with sugar now at a 26 year high due to weak monsoon conditions occurring in the biggest sugar exporting country, which is India. India has now become a net importer of sugar (an attempt at price stabilization). So if the northern hemisphere goes into a bad drought throughout summer food stocks will spike again, with the current bellwether being high sugar prices.
So oil, food and pharmaceutical stocks, engineering/infrastructure stocks, gold stocks/warrants and physical gold. Potential sells on the Brazilian Real, Australia Dollar and Canadian dollar towards year end. No shorts yet on indices (who got short squeezed on the S&P 500 hey? After US Job data came out on the positive!)
SUGAR PRICE 07 Aug 2009
White
$/tonne up 537.20
07 Aug 2009
Raw
¢/lb up 20.81
*morbius glass doesn't give investment advice, trade at your own risk
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