Galiga: Major Oil Boom Set for 2017, Reverse of Fortune

For Americans in oil producing states and those with supporting industries life has been a tough road as oil prices dropped from a high of over $125/bbl just a few years ago to the lowest point in decades at nearly $25/bbl last February. That’s a 500% swing in just eight years and is enough to crush most industries.

But history has shown with oil — as with most commodities — that what goes down must come up. And with the recent changes in the global market, it appears history is proving predictive once again.

Trading guru Mike Galiga argues that the oil market may provide some of the best opportunities for stock profits in recent memory. According to his analysis, most traders were shorting oil as the production glut continued after OPEC repeatedly refused to cut its supply.

 

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Oil prices busts in the last 10 years

 

But the financial hit that U.S. oil producers took in the fallout also hit members of OPEC. For example, Saudi Arabia burned through several hundred billion dollars in revenue reserves to ride out the wave. The result has been a massive reduction in global supply along with an unexpected spike in demand, largely in the Asia sector.

Galiga also points to the fact that nearly every trader who maintained a short position in expectation that oil would continue to drop has now converted to a long position. He explains, “There is now a higher percentage and larger absolute number of long positions in crude oil than at any other time in recent memory. What does this mean? The big boys expect the price to rise – my expectation is $61 per barrel in the first quarter of 2017.”

If Galiga is right — and he nearly always is — that represents more than a 100% gain in price since the low nearly a year ago. Historical charts appear to proving Galiga’s prediction correct.

 

Every major drop in commodity price has been follow by a steep recovery
Every major drop in commodity price has been follow by a steep recovery

Galiga Predicts Massive Stock Records During Trump Era

Last week we shared reports from economic experts who are predicting a major global economic collapse in the near future due to unstable financial systems and over-leveraged central banks in the developed world. Though no one can know with certainty when such an event might occur, there are telltale signs based on what might precede it.

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Financial guru Mike Galiga offers an example of what some of those telltale signs may be. Explaining that foreign investment dollars are increasingly flooding into the U.S. markets, he details that the seeds both of a potential global collapse and a massive U.S. expansion are being sewn.

Detailing this scenario, Galiga advised, “Foreign assets are flying into the U.S. with unprecedented speed. Europe, India and all of the Asian sectors are seeing an exodus of investors who are seeking safe harbor for their dollars.”

That would explain some of the recent spikes in the Dow Jones and other indexes, continues Galiga. The renewed confidence in the White House ahead of Donald Trump’s inauguration will likely continue to pour gasoline on investors’ confidence in U.S. markets.

Galiga went further with an even bolder prediction: “If conditions in the Eurozone and Asian markets continue to flounder — and there’s very little evidence that they won’t — we could see the biggest expansion in the American economy in history. That may mean the Dow’s recent record will be utterly eclipsed by much larger records.”

He detailed that the Dow could see a high-water mark of as much as 30,000 points or more by 2020. However, he warned, that is the bubble that will presage a massive collapse in the U.S. market, which would cause a global domino-effect.

Galiga echoes recent comments concerning the fundamentals of the economy still being absent after the 2008 Great Recession. “There will always be bubbles in the global economy. They’ve been occurring for millennia. The only uncertain question is when and how big. But the pin that will prick the next global bubble is already there. Debts being amassed by central banks and by consumers are reaching entirely unprecedented levels, and that debt is totally unsustainable,” he warned.

The takeaway, Galiga advised, is that the boom and bust cycle of the global economy will continue and that opportunities to grow and protect wealth are huge for those who see the signs ahead of time. The expansion of the Dow to 30,000 in three years alone presents investors with an opportunity to more than double their money if placed in the right sectors.

Galiga: Trump Comments on U.S Dollar Could Signal Major Shift

d19e7a0c-76c5-4980-bbbd-ab1ba2ceab27On the eve of his inauguration Donald Trump made a pronouncement that did not get as much play in the media as it should have, likely because scuffles via Twitter with the media and recalcitrant Democrats won the headlines.

In a recent interview with the Wall Street Journal, Trump declared the U.S. ‘dollar is too strong.’ It was a nuanced statement about his monetary policy that revealed quite a bit more about the future of the world economy and how President Trump will deal with trade and monetary imbalances that have plagued the West for over a decade.

Finance and trading expert Mike Galiga unpacked the statement and projected what he thinks it may mean for the U.S. economy and specifically for investors in 2017.

“For years now China has been deliberately devaluing its currency both to bolster the Chinese stock market and to maintain the upper hand in the trade deficit,” detailed Galiga.

“What it means is very simply this: China can manufacture all sorts of things much cheaper than any other nation in the world, which gives it a competitive edge. This means they can export much more than they import because their goods are cheaper than everyone else’s.”

Donald Trump made China a favorite whipping boy during the presidential campaign arguing that, if elected, he will work hard to force China to stop its currency manipulation.

Should he do that, explains Galiga, there could be very serious implications for the U.S. economy and for investors. “With his ‘dollar-too-strong’ comment, Trump could be signaling that intends to counter-punch China by intentionally weakening the U.S. dollar to make us more competitive. And that means rising interest rates and prices.”

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“It also means a potentially devastating hit to the Chinese economy both in terms of the trade imbalance and in terms of domestic manufacturers should Trump make good on his threats to impose sanctions or import taxes on Chinese goods,” continued Galiga.

“This means investors heavily leveraged in the Chinese market will likely follow the exodus of investors from the rest of Asian sector and from the Eurozone toward the U.S. stock market. This would likely further inflate the U.S. stock bubble.”

Galiga explained that, in addition to opportunities to short the Chinese stock market, investors could see growth opportunities in U.S.-based manufacturers and simultaneous short opportunities with U.S. retailers who are heavily reliant on the import of Chinese goods.

Whatever Trump’s intentions really are, it is likely they will become very clear in short order as he continues to pressure Congress to act on many of his agenda items within the first 30 days of his administration.