Mexico Trumped

 

Trader Scott’s Market Blog

January 27, 2017

There are several “anti-Trump consensus” situations I’m watching. This recent post discussed Mexico and that situation will become volatile over the next several weeks. Donald Trump has a big mouth and is a big Tweety Bird, so between his tweets and his chattering there will be some trade/investment opportunities over the next few years – meaning to potentially take the other side. Like “talking down” the Dollar, but after it’s already put in an intermediate high. And then doing it again to push the US$ below the 100.00 handle and really get people convinced the top is in, thereby setting up a long side $ trade. President Obama was a piker in his effect on markets, which is actually about the only thing I liked about him. It’s pretty disgusting how intertwined the powers that be (central banks and governments) are with markets – basically grotesquely incestual.

So with Mexico in the President’s crosshairs with his negotiating style, we have to be watching for some potential big volatility with Mexican stocks. And also with the Peso, which will affect US traded Mexican ETFs, stocks and Funds. If it gets intense with the NAFTA negotiations, there would be a good opportunity to buy Mexican equities, which for the US traded ones are way off their highs thanks to the Peso. The “negotiations” between Trump and President Nieto will likely get more intense. President Trump’s threat to “make Mexico pay for the wall” has been revealed by a plan to charge Mexico a 20% “border tax” (actually a tariff, but that has to remain a secret so the crappy WTO doesn’t find out about it). So let’s see – imports from Mexico get charged a 20% (tariff), and US consumers actually pay the (tariff), but Mexico will supposedly “pay for the wall”. Is this economic theory straight from the Trump School of Economics. No wonder Trump University had so many lawsuits filed against it. I can’t wait to see how the Economist-in-Chief punishes China. Why is it the average citizens always end up paying in the end?

 

About

img_0074bwcrsmTrader Scott has been involved with markets for over twenty years. Initially he was an individual floor trader and member of the Midwest Stock Exchange, which then led to a much better opportunity at the Chicago Board Options Exchange. By his early 30’s, he had become very successful in markets, but a health situation caused him to back away from the grind of being a full time floor trader. During this time away from markets, Scott was completely focused on educating himself about true overall health and natural healing which remains a passion to this day.Scott returned to markets over fifteen years ago where he continues as an independent trader.



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'Trader Scott’s Market Blog – Mexico Trumped – January 27, 2017' have 9 comments

  1. January 27, 2017 @ 10:16 pm Easy Al

    If one is convinced that gold, silver and based metal will head higher, one indirect way is to invest in the miners whose primary operation is in Mexico. Their products are sold in dollar. However, most of their operating expense and mine fees are in Mexico peso. First Majestic silver (AG), which probably has the highest leverage in silver (i.e. highest percentage in silver vs by-products), has all its 6 mines in Mexico.

    Reply

    • January 28, 2017 @ 12:02 am traderscott

      Yes they are all in on Mexico, where they love their silver. They are pretty mining friendly also. I don’t own AG, but I do SIL, and it’s 1st and 3rd top holdings are basically Mexican companies – so 25%. MUX is also in Mexico, but certainly AG is the best pure play on silver and Mexico.

      Reply

      • January 29, 2017 @ 5:04 pm Easy Al

        When one is bullish on PM, one tends to get in the early stage of the correction. I got in AG in late October, after it has declined more than 50% from its 52-week high. At the time, I thought Mr. Trump had a higher chance to beat Mrs. Clinton. And the decline of the peso would be a positive factor for AG. Moreover, I noticed that two insiders of AG were buying the shares in the open market. What I did not consider at all was PM would keep dropping (and more significantly) after Mr. Trump got elected. By the time the miners dropped to their lows around Christmas, I was over stretched in PM miners and did not have fund to buy AG.

        Since I know that I tend to get in too early, I try to break up my purchase in multiple times. The problem is that when the correction is too deep and last too long (when compared to my anticipation), I often run out of money near the price that I should really buy. I hope that I can learn a few things from Scott and people post here to get my timing better. Needless to say, I am waiting for the opportunity to increase my holding of AG.

        Reply

        • January 29, 2017 @ 5:24 pm traderscott

          I’m going to be talking more about an approach I use with every trade I do, daytrade to long term position trade. That is the margin of error, and averaging in, not averaging down – huge difference. I never average down, but begin to enter when I believe the market is ready to turn. If I time it really well with that first entry, I will not get filled on a full position, which is fine. I’m in this business to not lose, as wacky as it sounds, only by not losing will we consistently have profits. Hopefully I can get this example posted of that exact thing in an FCX trade from Thursday afternoon to the exit Friday.
          You did well with your general approach to NOT buy all at once – that will serve you well over time. Keep doing that, but just do alot of work to figure out how to hone that approach – timing. It will work.

          Reply

  2. January 28, 2017 @ 10:48 pm Peter

    Per recent statements on agri stocks, do you have an opinion on NIB or CHOC? If I’m absorbing your teachings lately, it looks like this could be a good buying time.

    Reply

    • January 28, 2017 @ 11:08 pm traderscott

      Cocoa is at support and is a good place to take a shot. And I like your thought process. Support is certainly one of the preconditions for me for a buy. The problem is I’m not doing any individual ags, only a comprehensive basket, like RJA. And even the equities are spread out, and will spread out more on the next big selloff.

      Reply

  3. January 29, 2017 @ 4:38 am Matthew - London

    Hi Scott. I’m watching cocoa also via COCO etf. It’s had an Ending action – selling climax – and little SOS right? (and at support).
    THE GBP gets so weak some days though which adds to the challenge. I have WEAT (wheat) too which looks good. cheers

    Reply

    • January 29, 2017 @ 10:24 am traderscott

      Matthew, I’m super bullish on ags over the next 4 years, as a group/index. The biggest components of that index are corn, wheat, cotton. and soybeans. Wheat is really holding things back. A big push higher by wheat will be bullish for the whole complex. I’ve written about how wheat has been at the bottom of the worst performing asset’s lists for two years in a row. The wheat market is starting to give off signs. But I do not have any positions in any individual ags, only the basket via RJA and my own basket of the equities. i believe that is a much better way of doing this thing, much less stressful. Having said that, cocoa went to another new low on Friday, and has shown some preliminary signs. You’ll have to decide, but it should just be a trade. It needs much more time, and volatility, to set up a much bigger bottom.
      BTW, a selling climax is actually the ultimate sign of strength.

      Reply

  4. January 29, 2017 @ 10:49 am Matthew - London

    Thanks. I liked your quote the other day ‘you don’t always have to be doing something’ . Patience.

    Reply


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