Our latest article, authored by renowned strategist Martin Pring, dives into the evolving dynamics of inflation, commodity prices, and interest rates. Despite recent rate cuts, the bond market appears to be echoing Martin's earlier warning. The business cycle is moving toward a critical stage—one that historically signals a surge in commodities and potential shifts in CPI inflation.

The article explores why the Federal Reserve might face pressure to raise interest rates rather than lower them in 2024, contrary to conventional expectations. It delves into the current phase of the business cycle, particularly focusing on the bullish trend for commodities and its implications for inflation.

The article explores potential parallels between 1968 and 2024, specifically in the context of the stock market and economic trends. It delves into the concept of secular trends, emphasizing the importance of considering inflation-adjusted stock prices to comprehend the potential impact on portfolios.

The article explores the current state of the bull market, offering insights from Pring Turner Capital. The author discusses indicators supporting optimism for a second leg of the bull market, citing economic, monetary, and technical factors.

In February this year we wrote an article entitled A Funny Thing Happened on the Way to the Recession. Fast forward to the current situation, where opinion has shifted away from recession in favor of a soft-landing scenario. Does that same contrary analysis mean a recession is now more likely? The simple answer is no, not yet anyway!

If 2022 was the zenith of the post financial crisis bull market, the intervening year and a quarter is a relatively short period from which to conclude that a turn in the secular tide has taken place. That said, several indicators have already begun to signal a change in trend.

The US economy has reached a crucial juncture point, as several leading economic indicators are on the edge of signaling a recession.

Growing Evidence the Secular Trend in Stock Prices May be Reversing! We can’t be sure that the equity secular bull market for stocks is over, but it’s quite apparent that several reliable indicators are moving in that direction. Many others are on the brink of a sell signal.

In March of last year, we wrote an article entitled “Timing the End of the Tech and Bitcoin Bubbles”. Our conclusion for Bitcoin was that it was indeed in a bubble but that there was insufficient technical evidence at the time indicating its bursting.

In an October 2021 article, we made the case for a new secular commodity bull market and concluded that this environment would likely spill back into the economy and stock market.

We are in uncharted waters on many fronts, so no one can really answer that inflation/deflation question with any degree of certainty. We can however, look to the technical condition of commodity markets for guidance, since they have usually, acted as a barometer for more generalized swings in inflationary and deflationary pressures. Commodity prices look poised to signal a new secular bull market, which would likely broaden out to result in the highest more generalized inflation rates since the 1970’s.

A better appreciation of the history of market bubbles should help advisors and their clients sidestep some of the carnage when they inevitably burst. It is our intention in this article to take a more clinical approach by quantifying what we mean by a “bubble” solely in terms of market action. In that way, it is possible to compare conditions between individual markets and arrive at a rough standard. There are of course, many other aspects to bubbles and manias, several you can read about here.

We see five independent areas providing evidence of a commodity bull market. They are, commodities themselves, the economy, and the bond, stock and currency markets. Let’s consider them in turn to see if this time commodities can fulfill their promise.

After a wicked stock market decline into late March and impressive 60% advance off the low, it seems a stretch to expect still higher equity prices. However, a major extension to the post March rally is definitely supported by the five reliable long-term indicators featured in this research note. Their current position is far more consistent with a major long-term buying opportunity than a selling one.

Putting it all together, it seems likely that we are dealing with a short but sharp recession. The resultant recovery will initially look strong from a momentum point of view. That’s because the economy will quickly open up, egged on by the positive effects of record monetary, fiscal stimulus and over time with the reshoring of manufacturing jobs.

Always being alert and anticipating the next inflection point in the business cycle can help you actively manage your investments while taking advantage of emerging profit opportunities and more importantly protect your wealth from the inevitable cyclical declines. This exceptionally long business cycle appears set to emerge from its third growth slowdown and has now reached the stage where a cyclical bull market in commodities can be expected.

Even though we have already experienced the longest expansion on record, the latest data suggest the possibility of a resurging level of business activity as the economy emerges from its third post 2009 slowdown. As a follow-up to our July article, Recovery or Recession? Ask the Stock Market Stupid!, here’s our latest business cycle update.

Even though there has been no recession for 10 years, students of the business cycle know that it is still alive and well. Instead of a full-blown contraction in business activity, the last decade has seen the US economy experience two mid-cycle growth slowdowns and subsequent recoveries. A third slowdown has been underway for the last year, begging the question of whether it will morph into a recession or transition into a fourth growth phase of this extended economic expansion.

There is little doubt that the US economy is in a state of slowdown. The big question, is “How will the economy emerge from this slowdown?” Will it be with renewed growth like 2016? or Does it fall into a full-blown recession a la 2007? The answer to that question is unknowable at this point in the cycle.

Holy cow! This economy is on fire; witness the second quarter U.S. GDP growth rate of 4.1%. Is it sustainable or a just a temporary spurt? It’s often said that the Copper price has a PHD in economics, because of its widespread use in many diverse industries. That use ranges from homes, factories, and electronics, to power generation and transmission and much more.

July 2018 will mark the 108th month of the economic recovery, making it the second longest expansion in history. Another 12-months or so and it will be the longest ever. Moreover, the consensus of economists foresees little trouble ahead.

Stocks are most vulnerable when optimism is at an extreme and its long-term trend reverses. This is when careless investment decisions are exposed, as well. Right now, the P/E is well above its 48-month MA and secondary up trendline, and is showing no signs of weakness.

In the fall of 1981, the twenty-year US bond yield peaked slightly above 15% and has been zig zagging down through each successive business cycle since. During the last one hundred and sixty-years or so, the average secular, (very long-term) trend in rates has lasted around twenty seven-years. After thirty five-years of declining rates, the current secular bear is getting long in the tooth. 

Anyone thinking that we may get a repeat of the spectacular 2001-2008 and 2009-2011 rallies in commodities may have to think again, at least that’s what’s being hinted at by many of the long-term technical indicators. You could say it depends on what the definition of the word “is” is, to quote a well-known Clintonian expression. In this case, it all depends on what the direction of the secular trend is, as we explain later.

A major anxiety amongst stock market participants revolves around two key factors that appear to be on a collision course. The first is an overvalued stock market. The second, is an emerging trend of rising interest rates.

The purpose of this article is to make the case for a primary trend rise in yields. If this assumption turns out to be correct, it is within the realm of possibilities that this same rally may also be a turn in the tide for the initial advance in a new, very long-term or secular uptrend.

History shows that the business cycle, which has been with us since recorded economic history began, experiences a set series of chronological sequences. The calendar year progresses through seasons, one of which is literally ideally suited for making hay. The business cycle also has seasons or phases, where certain sectors of the economy fall in and out of favor. For investors, the key lies in the fact that the cyclical turning points of bonds, stocks and commodities are all part of the business cycle progression.