You Don’t Give Adrenaline to a Healthy Patient…

How healthy is the economy?

Gold busts through to the upside

If only you knew...

back and forth with little progress



An adrenaline shot can restart your heart if it suddenly stops beating, but a 2018 trial shows that chances are your life might not be the same if you survive.

Researchers found that people who suffered cardiac arrest and were resuscitated with adrenaline had an almost doubled risk of severe brain damage.

"We found adrenaline does not increase your chances of surviving without severe brain damage," said lead researcher Dr. Gavin Perkins. He is a professor of critical care medicine at the University of Warwick Medical School in England. "In fact, of the survivors, twice as many have severe brain damage."

The findings should prompt major medical societies to rethink guidelines for using adrenaline ( or "epinephrine") to restart a stopped heart, Perkins said.

I think the medical work done regarding adrenaline shots relates very well to the Federal Reserve Meeting in July where they lowered U.S. Fed Funds rate by 0.25%.  Interest rate cuts don't occur when everything is going swimmingly.  Coincidentally, you don't give an adrenaline shot to a healthy patient.  So, the adrenaline provided to the markets by the Fed may signal an unhealthy economic outlook.  Further, if the medical studies regarding patients are accurate the corollary to the market is that interest rate cuts will not prevent a recession from occurring.

The U.S. stock market, bond market and the gold market all rallied together in the weeks leading up to the rate cut.  Chairman Jerome Powell, said in June via CNBC that the Fed is closely monitoring the implications of developments regarding the possibility of a global trade war and its ramifications in their economic outlook.

The job description of the Fed is to be an independent body that seeks to keep price stability in the economy and promote job growth. Is it the Fed's job to help sustain economic expansion and keep recessions at bay? 

  • Can government intervention permanently raise economic activity or do their actions temporarily pull forward future demand?
  • Can Quantitative Easing (QE), that has been in place in some form for over 10 years elevate global economic growth above what it would have normally been?

I am skeptical of both, but for ten years it hasn't mattered.  The Fed's interest rate cut, which is the first since 2008 is clearly sending a signal.  What that signal is, depends on how you interpret their actions.

Many people (let's call them optimists or first-level thinkers) believe that you should take a Fed rate cut at face value.  It is bullish and a "buy" signal for investors.  The thought process goes like this:

  • Weak Economy ➡️
  • Rate Cuts ➡️
  • Results in Economic Stimulus ➡️
  • Stronger Economy ➡️
  • Higher Corporate Profits =
  • Higher stock prices

If you choose to be a second-level thinker, ask yourself, "Why is the Fed cutting rates?"  The answer, in my opinion, is that the Fed is anticipating economic weakness, or is already seeing it taking place.  I wonder, how bad the outlook is, especially with an economic trade war intensifying.  No matter where you stand on our relations with China, it appears to me that now is as good a time as any to hold their feet to the fire to promote future prosperity on a level playing field.  However, future economic health and prosperity probably come with present pain.  Similar to my workouts...

The decision in July about the rate cut isn't all good news.  I am writing this in early August in the middle of significant global market volatility.  For those old enough to remember, leading up to the financial crisis in 2008, the Fed cut interest rates for the first time in September 2007.  The Fed then cut ten more times, eventually taking rates from over 5% to Zero.  The rate cuts didn't stop the stock market from falling over 50% from the day of the first rate cut to the bottom.

All things being equal, most investors would want to have low rates rather than high rates and seem to think low rates are better.  Really, the only people I can think of that would like high-interest rates would be those with low-risk tolerance, sitting with zero debt and lots of money in savings accounts.

Why would President Trump want low interest rates?

  • In my opinion, Trump is focused as much on re-election at this point as he is the global economy.  He will do whatever he can to push a recession or declining stock prices out until at least election day to enhance his chances.
  • He has always been comfortable using debt, as most real estate investors are.  Low rates, encourage borrowing which generally helps asset prices and activity...until it doesn't.

Political views aside, do you really what to get into a fight with Trump?  People do...  They fight with him all the time.  Lots of investors don't want to own bonds for fear of higher rates.  He is literally ordering the Fed to lower interest rates.  In fact, he threatened to fire Chairman Powell unless he gets his way.  He has badgered Global Central Banks on interest rates for months and guess what?  Interest rates around the world are coming down.

I am not saying I agree on anything the man is doing, but from an investor perspective, I don't really want to bet against what he outspokenly wants.  President Trump has said publicly, he wants higher stocks, lower interest rates a lower U.S. Dollar and stable oil prices.

On one hand, we have an economy that has been expanding consistently with 50-year lows in unemployment as he enacted tax cuts reduced regulation and generally encouraged business growth.  On the other hand, did investors react too positively to the uncertainty to come over the next 18-24 months and the potential economic weakness associated with it?

I believe the Fed has zero predictive power.  I also believe that the Fed isn't actually influenced by whoever is president even if it appears so.  (Side bar, it must be hard to do your job when if you don't do what the boss says, he publicly says he will fire you.) . That being said, I believe the Fed just follows what the Treasury market is telling it.  When you look historically at the numbers, Fed rate cut cycles really just follow what Treasury Bill rates are doing.  When they rise faster than current rates, the Fed raises rates, when they fall faster, they lower rates.  When you actually look at the data, that is what you see.  The Fed, as they say, is data-dependent and does what the market tells it to do.

My crystal ball, which shall forever remain cloudy tells me to straddle the line.  Global economic activity is slowing noticeably from most data you look at.  Whether due to political uncertainty or general activity it is slowing.  However, that should be countered by a strong desire for re-election by this President.  I wouldn't want to be too far out over my skis in either direction at this point in time.


Some of you may be too young to remember the old Milk campaign, "Got Milk?". It is now 26 years old. Britney Spears and the Olsen Twins were early supporters.

I thought of that campaign when talking with clients and potential clients over the past 12 months.  Gold peaked in 2011 at just over $1,900 oz. and was front page on most investment publications.  The euphoria surrounding gold as an investment was rampant.  It was also a signal if you are a contrarian.  Gold fell for 5 years before bottoming out in late 2015 at $1,045 oz.  Here is a chart showing what happened.

All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.


Since 2015, gold has zig-zagged higher over the past four years but each rally was capped by the $1,380 level.  Four times in four years it rallied to that $1,380 level and then backed off, so when it did it a fifth time in 2019 most investors were skeptical again.

However, this time, gold busted through that level with ferocity.  It appears that the three-year-long consolidation has ended with a bang.  You can see from the chart below that gold moved above that $1,380 oz. blue line and ripped higher to its current price of $1,519.60.  It's the highest price in six years and a 45% move from its late 2015 low.

All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

What is gold telling us if anything?  Gold continues to act as a historically good, low correlated diversifier in a portfolio.  Appropriately positioned, gold has almost zero long-term correlation to any asset.

Many media pundits talk about how when stocks go up, gold goes down. I beg to differ.  Both are up significantly in 2019 and were in many other periods as well.  In the 2008 financial crisis, both gold and stocks fell together as the crisis deepened.

Additionally, they talk about how when the U.S. Dollar Rises, gold goes down and vice versa.  Another case in point, gold, and the dollar are both rising in 2019.

Gold does its thing but it does act like many other assets when responding to sentiment.  A year ago, very few publications talked about gold.  A year ago, very few investors had gold positions.  Now investors are beginning to take initial positions....after its 45% rally off the 2016 low!

In my opinion, gold was under-owned and unloved by Americans.  Even more so are the gold and silver mining companies.  Despite their significant rises this year, volume has been light to this point.  As gold and the miners began to rise in 2019, the media slowly took notice and began publicizing the move.  The key level in my eye is $1,500 oz.  It is a big round number...and very close.  Now that gold successfully and swiftly moved above $1,380, and now through $1,500 oz., it may usher in a whole new swath of buyers.


Of course, that is a trick question!  I have no idea, and neither does anyone else.  But, if you are one of the many people who bought a new home in in the past 3 years, it would make sense to take a look at a refinance.  I can't believe I am saying that with rates as low as they have been, but interest rates have really declined fast this summer.  Take a look at this chart of 3 types of mortgages.

Source: AmeriSave All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested in directly.

The 30-year mortgage has declined from a high of 4.88% in Fall of 2018 to its current rate of 3.38% in August 2019.

"Hypothetically, on a $500,000 30 year mortgage at 4.88%, you would pay $2,648 per month in principal and interest.  At 3.38% that monthly payment drops to $2,212.  That is an extra $5,232 a year in your pocket at current rates!  That is quite a potential cash flow increase."

Make a call to your mortgage broker to see if a refinance makes sense for you.

As I said earlier, low rates are a good thing if you borrow money.  Credit Card rates, HELOC rates, auto loans, and mortgage rates should follow suit lower.

U.S. Stock Market Performance

All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

For all the hubbub of how well the stock market has been doing, what is often lost on the average American is that for all intents and purposes, the stock market, when measured by the popular S&P 500 has been essentially flat since January 2018. (notice the blue circles in the chart above noting price) That is 20 months of zero gains according to the index.

Whether this is a consolidation before another significant move higher or the topping process of an overextended, overvalued and tired market, only time will tell.  Make sure you have a plan and are prepared to stick with it.  If you don't have an investment strategy feel free to reach out and we can discuss further.

Until Next Time...


  • Rather than trying to “beat the market”, focus on beating inflation and the rate on cash.  Plan for safety and liquidity while seeking positive returns.


  • Monsoon country investments. Attempting to take advantage of demographic, educational and investment possibilities in the countries surrounding the old spice routes of the Indian Ocean. International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.


  • A potential U.S. infrastructure upgrade cycle may be around the corner. Moving from our current grade of D+ to B would require an investment of $3.6 trillion by 2020.


  • The rollout of the highly anticipated 5G network is upon us.  There may be many potential investments that could pay off as implementation both in the U.S. and around the world begins.


  • Potential food shortages due to inclement weather and higher demand from the emerging Asian middle class could result in a boon to agricultural land and potash fertilizer companies. International and emerging market investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.


  • The rise of E-Commerce has coincided with an increased desire for efficient warehouse distribution real estate. As e-commerce moves toward even faster delivery, positioning of distribution becomes even more important.


  • Precious metals mining companies have been extremely beaten down over the past four years. Mining is an industry that spans hundreds of years. Companies that mine for commodities are often highly cyclical, meaning they have sustained moves both up and down. When investing in the mining space it is important to be a contrarian. Ideally, you would want to accumulate miners when sentiment is poor around them and sell them when sentiment is positive. Historically this has been a good strategy.


No strategy ensures success or protects against a loss.



Colin B. Exelby
Celestial Wealth Management

Important Disclosures
  • The information herein was obtained from various sources and we do not guarantee their accuracy.
  • The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
  • The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
  • No security, financial instrument or derivative is suitable for all investors.
  • In some cases, securities and other financial instruments may be difficult to value or sell and reliable information about the value or risks related to the security or financial instrument may be difficult to obtain.
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  • Past performance is not necessarily a guide to future performance.
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  • The fast pricing swings in commodities and currencies may result in significant volatility in an investor's holdings.
  • There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio.  Diversification does not protect against market risk.
  • Because of their narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.
  • The prices of small and mid-cap stocks are generally more volatile than large-cap stocks.
  • An investment in Exchange Traded Funds (ETF), structured as a mutual fund or unit investment trust, involves the risk of losing money and should be considered as part of an overall program, not a complete investment program. An investment in ETFs involves additional risks such as not diversified, price volatility, competitive industry pressure, international political and economic developments, possible trading halts, and index tracking errors.
  • High yield/junk bonds (grade BB or below) are not investment grade securities and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.