Posted on 05/09/2020 11:23:50 AM PDT by SeekAndFind
There can be no doubt that inflation is coming.
Inflation will devalue the existing $22 trillion debt. The new debt is at 0 interest. Devaluing the old debt means the interest in old $$ has less effect on the budget and economy.
Every prince tutored to be king learns the way to get rid of bothersome debt is to devalue the currency. The technique is as old Midas
Regarding the market....... the inflation increases the value of many stocks. To protect against inflation, stocks are a good investment.
If you live outside the USA, American blue chip stocks could look very good for parking some $$$
Markets don’t like uncertainty. When the election was shifting from an expected Hillary win to Trump, the markets reacted negatively to the possibilities of an uncertain outcome... hanging chad time?! They quieted down again quickly when it became clear Trump had won it outright.
I think its a simply that there is literally no where else for money to go - and there’s a ton of money (and new money) chasing them.
Even the best bonds (Treasuries) are nearly 0% interest. Foreign markets are too risky. The dollar is strong and getting stronger. Some companies are doing quite well. Particularly tech companies - the trends set in place by coronavirus lockdowns will actually benefit many of them. I believe that’s why NASDAQ especially is leading them all.
Its perverse, but its the world our government and Federal Reserve have created for us.
Are we producing less? Clearly YES.
Duh, the economies of the rest of the world are far worse! The U.S. economy may be in the toilet, but the rest of the world is already flushed. It’s a no-brainer.
All that helicopter money has to go somewhere.
Stocks (companies) will at least not blow whatever cash windfall they can scrape up from their spendthrift consumers.
So, where is the excess cash gonna go? Something HAS to inflate. Answer: Stocks.
The Spanish flu came in three waves.
Wall street Journal, US news & World report, New Zork Times, Scientific American, National geographic, etc. all fallen institutions.
The answer is that people who understand the causes of past recessions see this induced recession as different. The normal reason for an economic contraction are because the Federal Reserve tightens credit and the money supply which reduces liquidity. Businesses can’t easily borrow to expand and they lay people off to reduce operating costs.
The Great Depression was caused by the failure of banks who had invested in the Stock Market on margin and were unable to meet their margin calls. The Fed stupidly tightened credit and reserves to prevent the banks from selling their gold reserves to remain solvent and the economy was strangled for years.
The financial crisis in 2008 was another failure of banks that caused businesses to pull back on borrowing and reduce expansion plans.
The unemployment of today was induced by the stay-at-home orders that had nothing to do with market liquidity. The Fed has gone all in on maintaining liquidity to solvent businesses who should recover quickly once people are able to get back to normal and forget their fear. Investors know the old rule “The Fed is your friend”.
There are still a lot of people employed, and those people have 401ks. Every two weeks, a pile of money shows up on broker’s desks in Wall Street firms, demanding to be invested. So they buy stocks. Nothing can keep the stock market down for long except total unemployment, and we don’t have that.
One reason must surely be that the Fed has forced interest rates on bonds and cash down below zero after inflation. Savers are getting punished.
After Election Day in 2016, Wall Street figured out pretty quickly that Donald Trump wasn’t going to be anywhere near as disruptive as advertised. Heck — he even hired a Goldman Sachs Democrat as his Treasury Secretary.
It is not an economy caused recession. It’s a government mandated shut down.
God’s blessing on America lives in the WH but many AMericans don’t realize it.
My guess is Investor delusion. I watch Fox Business and I like guest (Allianz chief economic adviser) Mohamed El-Erian’s takes. Basically the jobs issue is much worst than the already bad picture we are seeing. He is of the “W” shaped recovery opinion.
W shaped recovery:
KEY TAKEAWAYS
A W-shaped recovery is when an economy passes through a recession into recovery and then immediately turns down into another recession.
When charted, major economic performance indicators form the shape of a letter “W” during a W-shaped recession.
W-shaped recessions can be particularly painful because the brief recovery that occurs can trick investors into getting back in too early.
__________
The two major investment accounts that myself and the wife have are back to 96% and 92% of the Feb. 2020 highs. I believe we still have another 1,000 plus ride higher in the DOW at which point the euphoria will wane as the economic impact / realization millions of jobs will never come back kicks in = extended recession. I’ll be taking our accounts from 30% to at least 50% cash soon. We don’t need growth at this point, so we can afford to be wrong on the upside.
The day before Trump won in November of 2016, the market
made a huge move up.
Xxxxxxxxxxxxxxxxxxxxxxxxx
You sure about that?
Because it dropped way too far way too fast. DOW shedding 11,000 points in just a couple of weeks was a hysterical overreaction. DOW is where it probably should have gotten to at the beginning of this government-created shitstorm.
“Savers are getting punished”
It’s been that way since the 2008 crash. I know of a few restaurants that catered to an older crowd that shut their doors after 40 -50 years because here clientele got killed with their fixed income investment vehicles. Interest rates dried up so did there discretionary income.
This man is telling the truth beyond's peoples' imaginations.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.