Russian Commander Issues Ultimatum

By: Chris Ciovacco | Mon, Mar 3, 2014
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Ultimatum Reported By Reuters via Telegraph

The following information was posted on telegraph.co.uk this morning:

Telegraph.co.uk posting

There are a lot of moving parts to any geopolitical crisis, and thus, things can change quickly and dramatically. Therefore, it is important that we remain flexible and make decisions based on hard evidence, rather than fear.


ECB Has Key Meeting This Week

While the events in Ukraine will grab most of the headlines this week, the ECB has a get-together scheduled. As we outlined on December 4, central bankers are terrified of deflation. From MarketWatch:

Deflationary Spiral

A prolonged period of low inflation in the euro zone may derail the currency area's fragile economic recovery and must be fought with additional monetary stimulus, International Monetary Fund chief Christine Lagarde said Monday. Lagarde, who was speaking at a conference in Bilbao, northern Spain, said that while the European Central Bank already has taken a number of strong measures to help the euro area, "even further accommodative policies and targeted measures are needed to address low, below-target inflation and achieve lasting growth and jobs." Annual inflation in the euro zone was 0.8% in February, according to European statistics office Eurostat, well below the ECB's target of just below 2%. The ECB will meet Thursday to decide on interest rates for the area.


Buffet: Best Days Lie Ahead

While it is nearly impossible for individual investors to gather scuttlebutt in the same manner Warren Buffet does, the markets understandably take note when the Oracle of Omaha offers his opinion on the state of the economy. From MarketWatch:

Though we invest abroad as well, the mother lode of opportunity resides in America," Mr. Buffett wrote in his annual letter to shareholders, released Saturday along with Berkshire's fourth-quarter and annual report. The "dynamism embedded in our market economy will continue to work its magic," Buffett wrote. "America's best days lie ahead."


Investment Implications - Watching Geopolitical Developments

As regular readers know, our personal opinion regarding the conflict in Ukraine is of little value from an investment perspective. However, the aggregate response to geopolitical developments this week is very important. The tweet below sums up our approach:

Ciovacco Tweet

Our market model relies heavily on weekly outcomes. Therefore, the look of weekly charts on Monday is not nearly as significant as how they look on Thursday or Friday. Our rules do allow for incremental allocation adjustments during the week, which means we are open to reducing risk if the observable evidence calls for it. The glass half empty Monday is our U.S. stocks (SPY) and technology stocks (QQQ) were having a difficult session. The glass half full perspective looks at gains in our bonds (TLT) and gold-related position (GDX). TLT was up 0.67% midday and GDX had tacked on 2.47%. The S&P 500 chart below shows some areas where buyers may become interested if the situation in Ukraine continues to spook the markets.

$SPX S&P 500 Large Cap Index INDX

As covered in detail March 1, the weight of the evidence continued to support the bullish case as of the close on Friday, February 28. Just as we needed to see hard evidence of a bearish turn before overreacting to the 1929 parallel, it is important that we stick to our discipline during times of increasing fear and uncertainty. If the Ukrainian situation flips the markets to a risk-off stance, observable shifts will begin to appear.

 


 

Chris Ciovacco

Author: Chris Ciovacco

Chris Ciovacco
Ciovacco Capital Management

Chris Ciovacco

Chris Ciovacco is the Chief Investment Officer for Ciovacco Capital Management, LLC. More on the web at www.ciovaccocapital.com.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Investment recommendations may change and readers are urged to check with their investment counselors and tax advisors before making any investment decisions. Opinions expressed in these reports may change without prior notice. This memorandum is based on information available to the public. No representation is made that it is accurate or complete. This memorandum is not an offer to buy or sell or a solicitation of an offer to buy or sell the securities mentioned. The investments discussed or recommended in this report may be unsuitable for investors depending on their specific investment objectives and financial position. Past performance is not necessarily a guide to future performance. The price or value of the investments to which this report relates, either directly or indirectly, may fall or rise against the interest of investors. All prices and yields contained in this report are subject to change without notice. This information is based on hypothetical assumptions and is intended for illustrative purposes only. THERE ARE NO WARRANTIES, EXPRESSED OR IMPLIED, AS TO ACCURACY, COMPLETENESS, OR RESULTS OBTAINED FROM ANY INFORMATION CONTAINED IN THIS ARTICLE.

Ciovacco Capital Management, LLC is an independent money management firm based in Atlanta, Georgia. CCM helps individual investors and businesses, large & small; achieve improved investment results via research and globally diversified investment portfolios. Since we are a fee-based firm, our only objective is to help you protect and grow your assets. Our long-term, theme-oriented, buy-and-hold approach allows for portfolio rebalancing from time to time to adjust to new opportunities or changing market conditions.

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TRUE MONEY SUPPLY

Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/