Is The TSX Venture Going To a New Record Low?

Pinnacle Digest writes: James West’s latest article discusses the varying degree of risk in the market and the rising level of uncertainty. Given all the uncertainties in the market, West  believes it is only a matter of when, not if, the TSX Venture falls below its 2008 record low of roughly 700. As he states, “TSX Venture market – in my opinion, the purest indication of risk sentiment there is on the planet – is now within 500 points of its 2008 record collapse, and the only question is: How fast will we blow through that record?”


Today the TSX Venture currently sits at 1224 (down 17 points on the day).


West explains several reasons why he believes the risk-on trade, which is so influential on TSX Venture equities, is dying. He points to the fact that the hyperinflation storyline is fading quickly from mainstream media outlets as stimulus measures implemented in 2009 are wearing away. This is setting up pessimistic sentiment towards commodity based equities who thrive in inflationary environments. It is West’s belief that mainstream media has successfully misinformed its audience, yet again, that inflation is no longer a threat. And although West agrees with the lack of inflationary presence, he hasn’t given up on its possibilities in the slightest.


West believes that as the debt crises in Europe spreads from Greece to Spain and then to Italy, drastic measures will be taken. On top of that, the US will hit its debt ceiling yet again in Q4 of this year which will also lead to more easing and problem avoidance by politicians.


West states ‘There is a high potential for congress and/or the president elect (assuming its Romney) to cancel the automatic spending cuts that were the solution to last year’s debt ceiling date, as a measure to soften the blow and likelihood of default after the election in November.”


Click here to read James West’s article.