THIS WEEK: A NON-SHORTING SHORT STORY
The Well-Timed Strategy for Week Ending June 20, 2008
by Peter Navarro, Ph.D.
June 16, 2008

The Markets

Half the time, it feels like the post-tech bubble period and half the time, it seems like the 1970s (without the disco).

The post-tech bubble d�j� vu is a downward trending market with pockets of false hope � like the end of last week -- that a lot of people repeatedly mistook for a market bottom.

The 1970s d�j� vu is the increasingly obvious stagflationary pressures wracking the planet. Asia is on inflationary fire, with Vietnam at around 25% and China putting out fake stats that dramatically understate the underlying inflation. Europe is getting ready to raise interest rates while countries like Hungary outside the eurozone are stuck in a wage-price spiral.

It�s really hard to conjure up a bull market move out of any of this, particularly as we move into the dog days of summer. Yet I don�t have the conviction to short. Ergo, this is a good time to remain on the sidelines. Except, of course, if you want to play some stocks outside the business cycle, (e.g., the options position I�ve got on VRTX which is developing nicely.)

Presidential Politics

The big debate now is over how much of the Clinton vote is going to defect to McCain while attention turns to the VEEP choices. The two issues are not unrelated.

Quick Takes

1. I found a nice new toy to play with on my public speaking gigs. I used an �audience response system� recently and am totally sold on using these things. They really seem to engage the audience. If any readers have any experience with these systems, ping me and let me know what you think.

© 2008 Peter Navarro

“Any trader or investor who ignores the power of macroeconomics over the world’s financial markets will, sooner or later, lose more than they should and if they are trading on margin, perhaps more than they have.”-- If It’s Raining in Brazil, Buy Starbucks

Peter Navarro is a business professor at the University of California and the author of the best-selling investment book If It's Raining in Brazil, Buy Starbucks and The Well-Timed Strategy. His latest book is The Coming China Wars: Where They Will Be Fought, How They Can Be Won.

Contact Information

Peter Navarro Irvine, California USA | Email | Website | Editorial Archive