Weekly Report -02/06/2018-

After losing $20 bucks betting that the Patriots would win the Super Bowl, I sat down in my coach and wondered how that last pass was not completed. The miracle was so close, yet it never happened. Something similar happened yesterday when the markets did a correction and for the first time in a really long time, they actually close deep in the red. Nevertheless, today they rebound a little but not enough to erase the doubts in the hearts of some investors who believe that the bull run may be over.

Everything has an end, yet a small correction is by no means the harbinger of doom because if we look at the bigger picture we can see that the US economy is mostly positive. We have near full employment, increasing wages and the housing market seems to be finally picking up. However, there are also some minor problems that may affect the degree in which the economy would grow such as frail workforce, which everyday seems to grow more divisive in terms of gender, and the willingness of the US farmer to continue to expand their crops regardless of how low are the prices for agricultural commodities.

The first problem is social and its solution depends in the reconciliation between two genders and the borders of their interaction. The second one is political because subsidies that were granted after the Great Depression to US farmers continue to exist regardless of how much the agricultural global stage has changed, and until the subsidies are no more and the market eliminates the under-performers, the US agriculture won’t change.

In the end, this should be nothing but a small correction but we should expect to see some volatility in the short-term. The trend continues to be bullish

 

Sources:

https://www.wsj.com/articles/stocks-in-asia-follow-the-dow-lower-1517876595

https://www.wsj.com/articles/will-inflation-eat-this-market-alive-1517934669

https://www.wsj.com/articles/investors-suffer-heavy-losses-on-bets-against-volatility-1517914770

https://blogs.wsj.com/economics/2018/02/05/u-s-farmers-are-producing-too-much-food-heres-why-they-cant-stop/#livefyre-toggle-BL-REB-37994