This article was originally contributed by Lior Gantz of The Wealth Research Group.
The markets have GONE UP, almost in a straight line, since the March 23rd lows. Who’s been doing all the buying? Institutional money has been SELLING into strength, so we know FOR SURE it’s not them. Hedge funds have turned even MORE BEARISH, so it’s absolutely not them. Buybacks from the likes of Apple Inc. are back, so that’s part of it, but is that the only explanation?
Retail investors, the younger demographics, are RUSHING BACK, thinking that every blue-chip company that is down 50% MUST go back to its all-time high, pre-COVID-19.
It’s not only buybacks and retail that are buying, it’s also the FEAR OF FIGHTING the Federal Reserve, which is scaring away investors who want to either SHORT the indices or bet on a slow recovery.
All of this is leading to many investors simply resorting to cash, which means markets are ARTIFICIALLY-HIGH. Without the Federal Reserve, there would be more pressure on the downside and the retail millennials would be out of the picture.
Is there VALUE to be found in current index prices? The answer, as we see it, is that prices are TOO FORWARD-LOOKING.
In other words, in the future, the S&P 500 will trade (in real terms, inflation-adjusted) much higher than the 3,300 it reached before the panic; America’s businesses are the best, no question. But we don’t see that occurring in 2020 or in 2021, and even IF IT DID, the returns it represents are not worth THE RISK.
In the chart above, you can see that Jerome Powell’s actions can ONLY BE MATCHED by the Federal Reserve’s reaction to WW2.
You and I are going through a SURREAL PERIOD on our journey. Covid-19 isn’t the result of IDIOTIC BEHAVIOR by consumers, lenders, Wall Street or CEOs; it is the PRICE PAID for reacting responsibly and maybe too aggressively to the unknowns of the pandemic.
In other words, its impact on the economy is real, but because of the way it happened, we’re seeing BAILOUTS that are justified by authorities as Making People and Businesses Whole.
The problem is that the government DOESN’T HAVE any tax reserves; it’s already operating from a position of weakness. These extensions of goodwill, these helping hands that reach out to us via Helicopter Money and QE programs, are not MAGIC PILLS. They come at a great price.
While many have speculated the price would be runaway inflation, this HAS NOT manifested yet. Still, other UNDESIRABLE OUTCOMES have been introduced to our lives.
As judged by Goldman Sachs’ re-opening gauge, the reality is that we still DON’T HAVE the slightest idea how fast the world will go back to growth and full economic activity.
We don’t know what the ramifications are of all the stimulus money, Federal Reserve loans, and HATRED towards China.
It’s extremely difficult to PLAN AHEAD, which means that CEOs aren’t making big decisions or masterminding strategies right now; they’re focused on DAY-TO-DAY operations.
This is an environment ideal for gold.
We’re passing an IMPORTANT MILESTONE because Quantitative Easing seems to only result in higher asset prices, but not in more productivity.
I expect governments to be PROACTIVE in ways that we’ve not seen since the days of Franklin Delano Roosevelt.
The world has changed; KEEP UP with the pace!
I find it very hard to believe that this Fed rally is caused by millenials. It is a Fed rally. Not buying it. Maybe those are the ones that are a step above the ones that drank and injected cleaning products or ate Tide Pods.
Detergent pods are so 2018!
The 18-21 Y.O soyboys have advanced to the Pee Your Pants selfie challenge!! One was wearing a Warren 2020 T Shirt while emptying his bladder…
I find it very hard to believe that this Fed rally is caused by millenials. It is a Fed rally. Not buying it. Maybe those are the ones that drank and injected cleaning products or ate Tide Pods.
This must be the neurological effects of Wi-Fi and EMFs on developing brains, which really is not anything to laugh at. I am gravely concerned about the severely impaired cognitive functioning of younger generations post Wi-Fi. It really has to be addressed. It could also be all of the vaccines, but there are serious signs of severe mental impairment with the younger generations. There is a complete lack of common sense, but there is with many people in America that have become corrupt, and destroyed the country with an inability to see the trees for the forest and think ahead, choosing terrible options with devasting consequences, as everyone can clearly see.
And no. You are totally full of shit. Shutting the country down was 100% irresposible, insane, and diabolically evil.
Suddenly everyone in the country is misophobic over a virus less deadly than the typical flu. It is just not possible to believe anyone that claims that these measures were justified. This is just because the psychopaths that behave like flesh eating bacteria have yet again been caught red handed for financial fraud!
They are far more life threatenning than the coronavirus! Death to the psychopaths! Can’t co-exist with people that act like flesh eating bacteria!
No to sanctioning China! The homicidal tendencies are clearly escalating with the Republicans wanting to sanction China, to force it to comply with all U.S. demands, which they have no right to do. This is outragious and is the last thing that we should be seeing from the government, who should really be demanding that Bill Gates be thrown in prison, in addition to the psychopaths responsible for the financial fraud and shutting down the economy, like Mike Pompeo who said that this is an exercize in action.
So, in other words! This is only a test! We destroyed the economy to see if it could survive, the way that we drown witches, and if they died, it meant that we were wrong, but, at least we know in hindsight that they weren’t witches!
Easier way to see if she’s a witch. If she weighs the same as a duck, she’s a witch.
I’m sure a similar metric could be found for this fake economy and fake panic.
“Without the Federal Reserve”
If God wants it, he can do it, at any time.
That was never especially planned to happen, of which you were aware — the abject lack of helicopter money.
“Final straw…You and I are going through a SURREAL PERIOD on our journey.”
Perhaps, I’m showing my ignorance, here, but, for all of the years, I have kept market activity in the corner of my eye, I really can’t imagine any more intuitive and normal way for a lending monopoly to work.
Imagine where you might be, if your ancestors had learned all this, some generations ago — before The Mark.
And, you are politically, financially, agnostic. You don’t actually love the money; it’s just a tool to get you where you are going — whatever you like, you and your family. Plutocrats have hobbies and traditions.
I think, I would have made a rule, in my family, to the effect of no direct participation in dialectics. No public statements.
Buyers are clients of Armstrong Economics in 157 countries. The firm has computer models that track everything from over 1000 markets a day, to domestic and international capital flows, solar cycles for commodity traders and big ag, social and political changes that the movement of capital creates not just only markets, cycles of viruses, etc. They do so with the largest databases on the planet going back over 2000 years and using PI and quantum mechanics make forecasts without any human intervention. They are so accurate that both Goldman and the CIA wanted the source codes. Clients include multinationals, institutional investors, pensions funds, hedge funds and even governments and central banks like the Swiss and China. The current environment is setting up for a slingshot move up and if markets do go down again the deeper they go the faster and stronger the slingshot move will be. Even before the virus scam the models forecast that Europe and its banks are in serious trouble and defaults on sovereign debt start in 2021. The dollar is the most hoarded currency on the planet and this is creating dollar shortages especially in Europe. Now with the virus Armstrong is warning people to get out of any government debt including municipals which is the next crisis and if you have to park capital in sovereigns only extremely short term treasuries. International capital simply needs a place to park and that is US equities. Capital has been fleeing Europe for a number of years and because of this, the worthless sovereign debt banks must hold along with pensions, the collapsing emerging markets that banks there loaded up on as their was no yield is what has caused the liquidity crisis in the US after Labor Day. Armstrong in Rome back in May 2019 at the World Economic Conference warned of this which would be all caused by Europe. After Labor Day right on queue US banks stopped lending to each other because of not knowing the exposure other US banks have to Europe and its banks with rates spiking 10%. The FED was forced to act as a middleman to keep rates down and now they are trapped. If they stop rates shoot up at least 10% and this spreads into the real economy and collapses any recovery that people dream of as it will not happen anyway as the damage has been done to the economy and the worst will be 2021. There is simply few places to park large amounts of capital and that after September of last year was treasuries where int capital bid up prices collapsing yields plus equities and dollars. As this international capital sees sovereigns start having more serious problems than they are already in addition to the municipals in the states capital will accelerate into US equities. Where would you park large amounts of capital? Banks? Sovereign debt? European equities? The pound, yen, euro, yuan, Canadian or Aussie dollar? Emerging markets? Any bank in Europe? The gold bugs simply do not understand that the physical gold market is simply too small for this capital, does not provide yield, is not liquid plus has fees like transportation and storage. If you cannot press a keystroke and buy or sell millions or billions at a time then the markets are too small.