Market and Economy
Diligence is the mother of good luck
Benjamin Franklin
Video: Stay Cautious – QT (Quantitative Tightening) Has Just Begun
our opinion, QE will be restarted at some point as the deficit and debt spiral out of control. Inflation reduction will be pushed aside as an achievable goal. QT will likely continue until something breaks; what that something remains to be seen.
Video: Focus on Quantitative Tightening. QT has just begun.
The Fed has reduced its balance sheet by $206 billion since Quantitative Tightening (QT) started in April. The notable part is $36 billion of it was last week; 1/6 of it. This is still a drop in the bucket compared to the 11x increase we have seen in the balance sheet since 2008. $800 billion to $8.9 trillion.
Investor called the November market peak. Do you want to know when he thinks stocks near the bottom?
11/3/21: Are we in a Stock Market Bubble? Is it like the Internet Bubble? 1987 Black Monday crash possible?Things are looking very similar to the internet bubble. Many of the bubble stocks, like SPACs, will not survive. 12/16/21: Inflation Inflection. Inflation will drive the inflection change for value to outperform
What are ESGs? What does ESG mean?
Environmental, social, and governance (ESG) have become focal points for companies, analysts, and investors. The evolution of ESG has created a growing awareness among the public about how companies formulate criteria for socially conscious decisions.
Inflation Zugzwang
Zugzwang; what a great word! A chess term meaning: it is your move, but there is no good move you can make. When faced with zugzwang, all you can do is play for time. We are in inflation zugzwang.
Tapering QE, Fed Balance Sheet, Interest Rates, Oh My!
Quantitative Tightening Scheduled to Begin This Week.
Fed looks to Aggressively Increase Fed Funds Rate over next several meetings.
Our report from March 11th gives you background information on what you need to know.
Stay Cautious. Sanctions could spark a recession in Europe that may cause Spillover.
• Sanctions do come with severe economic ramifications.
• Europe imports much of its energy, food, and raw materials from Ukraine and Russia. It is likely this will cause a recession in Europe.
• Will it spill into the US? The entire world?
• Stocks could fall another 10-15% from current position if we enter a recession.
Negative Boomerangs from Sanctions: Oil & Gas, Food, Recession, Dollar Reserve Status Jeopardized
• Sanctions will prevent Russian export commodities which include natural gas and oil, metals, wheat and corn from making it to the global markets in the same volumes as historically.
• This will result in higher prices and shortages resulting in higher inflation.
• It will most likely push Europe into a recession and could spill over into a recession in the US as well
• Inflation over the near term will stay high across the globe and the US.
How will Russia’s invasion of Ukraine hit the global economy?
Soaring energy prices alone could tip the world into a second recession in three years
Déjà Vu, Bubble Two? Nothing New, Popping Too?
• Déjà Vu
• Year 2000 after Party Like it is 1999.
• NASDAQ bubble which went down 78% when it popped. Very Similar to today.
• Billion Dollar companies with little revenues and no profits.
• IPOs (Initial Public Offerings) and SPACs (Special Purpose Acquisition Corporations).
• Cathie Wood and ARK Innovation = ARKK. Jim Cramer and his Red Hots in 2000.
• Today’s NASDAQ looks very similar to 2000.
• Interest Rates headed up. 10 and 30 year treasuries rates are normally close to nominal GDP. 10 and 30 year treasuries rates could go over 5%.
• End of Quantitative Easing? Tapering by the Fed, will they follow through?
• Will the Fed be forced to have another round of Quantitative Easing? Watch the Fed and rates closely.
7 Reasons to Raise Cash
• Long-Term Interest Rates Headed towards 5%
• Federal Reserve (The Fed) is tapering, stopping its bond buying program
• The Fed is raising Short-Term Interest Rates
• Political Gridlock, No Stimulus Bill Passed
• China Reemergence
• Russia NATO Ukraine
• Valuation
