After harkening to the old saw that past performance is no guarantee of future results, Lapthorne mentioned a statistic he read where there has been a 100 percent incidence of recession within 12 months at the end of two-term presidencies.
Elsewhere, Lapthorne likes Russia as a contrarian Trump play. But he’s not big on Europe. “I think people are just bored with it and all of the politics and issues surrounding the EU and eurozone,” he said.
He’s likes Japan, describing it as a market with sound corporate balance sheets and cheap equity valuations.
Gartman quickly pooh-poohed that notion. “It’s cheap for a reason,” he chimed in, noting that the population is falling and that the country has the highest debt-to-GDP ratio among the G7 nations. “You have to be careful about Japan.”
But Gartman did agree with Lapthorne about Europe. “I don’t’ see any reason to be in Europe,” he stated. “I‘d rather invest in the United States, Canada, New Zealand, Australia that will benefit from rising commodity prices.
Another panelist, Robert Carey, chief market strategist at First Trust Advisors, said health care, and particularly biotech, is a good place to be in 2017.
Among other conclusions offered by the panelists is that it will be difficult to maintain a bull market in oil because the increased efficiency of fracking technology makes it easy to keep pumping oil, and that any increase in prices will encourage U.S. producers to bring more crude to market, which will serve as a natural cap on the market price of oil. In other words, don’t expect $100 oil anytime soon.
Throw in the fact that the U.S. isn’t the only nation sitting on frackable oil deposits, and once other countries start using this technology and bringing more oil to market, we might not see $100 oil for a long, long time.