Editorial Director’s Note: Hope you all had a wonderful New Year. We’ve officially stepped into 2019, and in the spirit of transitions, I’m excited to announce that you’ll now be able to follow Michael Carr’s expert analysis in our other daily publication, Sovereign Investor Daily. Be sure to continue tuning in there to discover what he sees for the market ahead. — Jessica Cohn-Kleinberg
Recent stock market action indicates either a pullback or the beginning of a bear market. Investors are worried and searching for clues.
Unfortunately, many of the clues point to a bear market.
Those clues include many momentum indicators for stocks. Breadth indicators tell analysts to expect more declines. Financial media reports focus on these indicators.
One story some analysts are missing is the price of lumber. After surging to a new all-time high in May, futures prices fell 48% by the end of the year.
If analysts notice lumber, many blame weakness in commodity markets. A benchmark index, the Bloomberg Commodity Index, fell 13% last year.
It is possible lumber was simply among the worst performers in a bad market.
But lumber should be up. The news was bullish.
Tariffs on Canadian wood pushed prices up in the first half of 2018.
Wildfires and hurricanes destroyed acres of woodlands, crimping supply.
A beetle infestation in British Columbia added to supply concerns.
Bad news pushed prices to new highs. Then prices collapsed.
Tariffs Are Bad News for Markets
Tariffs contributed to the decline.
Suppliers and users knew tariffs were coming. Both rushed to get ahead of the news.
Suppliers rushed lumber to market as users ordered as much as they could before tariffs hit.
In part, the price collapse reflects oversupply that developed because of tariffs. This is one of the reasons the decline in lumber shows 2019 could be difficult for the economy.
Tariffs and the threat of tariffs distort behavior. Both suppliers and consumers react irrationally and unpredictably. Wild price swings are one result of the irrational behavior.
Unpredictable prices drive other patterns of behavior. Some buyers wait for more stable times. This dampens economic output.
Other buyers rush their orders. If too many buyers do this, it results in inflation.
Rushed orders also reduce economic output when inventory levels increase too much. That leads to wasted capital.
The problem is no one knows which behavior will dominate in advance.
In lumber, supplies built up in lumber yards. But consumers are deferring purchases of homes because prices are too high.
The result is pressure on many small businesses that have too much inventory. There is also pressure on small businesses employing craftsmen who would build homes if prices were lower.
In this case, low lumber prices will not be enough to resurrect home building. Builders are wary of price swings in raw materials and must estimate contracts based on higher prices.
Consumers are worried about overpaying after seeing home prices crash a decade ago. They’re now unwilling to buy at current prices.
Unpredictability Is Rising
This is the first stage of what could become a housing crisis.
And lumber is just one commodity that is more volatile than usual.
Threats of tariffs are affecting farmers and businesses associated with grain. This is a large part of the Midwest.
Industrial companies are concerned about tariffs. So are consumers. The result could be a spiral in prices and a decline in the economy.
It’s possible the economy will survive 2019. But that’s only possible if businesses know what to expect.
In the current climate, unpredictability is rising. That points to problems.
For now, expect a bear market unless policies in Washington, D.C., become clearer.
Regards,
Michael Carr, CMT, CFTe
Editor, Peak Velocity Trader
Hеy there! I’ve bеen readіng your blog for a while now and finally got
the courage tto go ahead and give you a shout out from Lubbock Tx!
Just wanted to mention keep up the fantastic work!
Link exchange is nothing else but it is simply placing
the other person’s website link on your page at proper place and
other person will also do same for you.
my web blog – MetaboFix Reviews
Wow! This can be one particular of the most helpful blogs We’ve ever
arrive across on this subject. Actually Excellent. I’m also
an expert in this topic so I can understand your hard work.
my blog Claritox Pro Side Effects
Great post. I used to be checking constantly this blog and
I am inspired! Very useful information specially the remaining phase 🙂 I take care of such info a lot.
I was seeking this particular information for a
very lengthy time. Thank you and best of luck.
Also visit my web-site; OHO Pro Smartwatch Review
Hello There. I found your blog the usage of msn. That is an extremely neatly written article.
I will make sure to bookmark it and come back to learn more of
your helpful information. Thanks for the post. I’ll definitely return.
I take pleasure in, cause I discovered just what I used to
be taking a look for. You have ended my four day long
hunt! God Bless you man. Have a great day. Bye
I would like to use the ability of saying thanks to you for the professional suggestions I have enjoyed going to your site.
I’m looking forward to the actual commencement of my college research and the overall
groundwork would never have been complete without visiting your website.
If I can be of any assistance to others, I’d be delighted to help via what I have
discovered from here.
Here is my blog: patimood.net
Regrettably, for most lenders, credit checks will be a essential part of your loan assessment.
Superb blog! Do you have any suggestions for aspiring
writers? I’m planning to start my own blog soon but I’m a little lost
on everything. Would you suggest starting with a free platform like WordPress or go for a paid option? There are so many
choices out there that I’m completely overwhelmed .. Any tips?
Thanks a lot!
Review my web blog … mpc-install.com
I don’t unremarkably comment but I gotta admit regards for the post on this amazing one : D.
I’ve been browsing online more than 2 hours today, yet I never found any interesting article like
yours. It is pretty worth enough for me. In my view, if all site owners and bloggers made good content as you did, the internet will be much more useful than ever before.
Good respond in return of this question with genuine
arguments and telling everything on the topic of that.
My page … Burst Audio Wireless Earbuds
I wish to show some thanks to the writer for bailing me out of such
a crisis. Just after exploring through the the web and coming across principles which were not beneficial, I thought my life was done.
Being alive without the strategies to the difficulties you have solved as a result of your good
posting is a serious case, and ones that might have adversely damaged my entire
career if I hadn’t noticed your blog. Your own understanding and kindness in taking care of every aspect was
useful. I’m not sure what I would’ve done if I had not come across
such a solution like this. I’m able to now look forward to my future.
Thanks very much for the high quality and effective
guide. I won’t hesitate to refer your blog to any person who
should receive guidelines on this issue.
Also visit my blog – http://frun-test.sakura.ne.jp
I think this is one of the most vital info for me. And i am glad reading
your article. But should remark on few general things, The website style is perfect, the articles is really great : D.
Good job, cheers
Hey there, You’ve done an incredible job. I’ll definitely digg it and personally recommend to
my friends. I’m sure they will be benefited from this site.
My site :: Helio CBD Review
Good ? I should definitely pronounce, impressed with your website.
I had no trouble navigating through all tabs and related information ended up being truly simple to do to access.
I recently found what I hoped for before you know it in the least.
Reasonably unusual. Is likely to appreciate it for
those who add forums or anything, web site theme .
a tones way for your client to communicate. Nice task.
my webpage – www5c.biglobe.ne.jp
I dugg some of you post as I cogitated they were very beneficial very
useful.
Also visit my homepage – Crypto Advantage App Review
Really informative and good bodily structure of content material, now that’s user friendly (:.
I love what you guys tend to be up too. This kind of clever work and exposure! Keep up the great works guys I’ve added you guys to blogroll.
Would love to perpetually get updated great weblog! .
Hi colleagues, pleasant article and pleasant urging commented at this place, I am actually enjoying by these.
My web blog … Libido Build
Hi, Neat post. There is a problem with your web site in internet explorer, might check this?
IE nonetheless is the market chief and a good portion of other folks will pass over your magnificent writing because of this
problem.
Stop by my blog … Botanical Farms CBD Gummies Review
Hi there exceptional blog! Does running a blog such as this take
a great deal of work? I have very little expertise in coding but I was hoping to start my own blog soon. Anyway,
if you have any suggestions or tips for new blog
owners please share. I understand this is off subject however I simply wanted to ask.
Cheers!
Check out my webpage :: Total Keto 365 Side Effects
Awesome! Its actually awesome paragraph, I have got much clear idea concerning
from this post.
Visit my site – http://www.digital-marketing.ipt.pw
I believe that is among the most vital info for me. And i am happy studying your article.
However wanna statement on some normal issues, The site style is wonderful,
the articles is actually great : D. Good task, cheers
Here is my web-site; TestonoX Review
Glad to be one of many visitors on this awesome web site :D.
Here is my web-site – Virgo FX Male Enhancement
Wow, this piece of writing is nice, my sister is analyzing these
kinds of things, thus I am going to convey her.
Review my webpage :: Keto X3
I like the helpful info you supply on your articles.
I will bookmark your blog and test once more here frequently.
I’m rather sure I’ll be informed plenty of new stuff proper here!
Best of luck for the next!
Review my blog; http://www.a913.vip
Remarkable! Its truly amazing article, I have got much clear idea regarding
from this article.
Here is my web page; http://www.aniene.net/modules.php?name=Your_Account&op=userinfo&username=CarstensenRosaline