The
economy, at this time in history, will be marked by the folding of a monetary
theory, if I get to write history at least. This
financial cycle will yield
either one of the biggest successful proofs of concept or it could be one of
the biggest disasters in modern financial history.
اضافة اعلان
What is really going on
with the markets today is simple: Everything on the balance sheets is going up.
Just like your start-up took a hit a couple of Februaries ago, so too did large
companies,
SMEs, home businesses, and even nations. Thus, the world’s dominant
financial market influence — a position that can be earned by any nation large
enough a producer/consumer to dwarf all others — reflected its way of doing things
to the rest of the world. This is exactly what I meant in my
previous piece by impulsive action of monetary policy makers influenced by
millennial behavior. Almost $9 trillion was injected into the US economy alone
through the financial market system.
Since the start of the
pandemic, central banks all around the world have been binging on debt. These
new market whales now own some $24 trillion of assets in every
angle of every capital market, money market, and financial market around the
world. These mass expenditures have really overdriven the money prints
(servers) and magnified the velocity of money because there is simply too much
of it. You can also notice this in the stance of the US Federal Reserve, which consistently
delivers the promise of not cheap money, but a lot of money. It also delivers
an even more important massage. The desperate affirmation that nothing is
happening too quickly. It is more important for monetary policy makers to deny
the speed at which things are happening than it is to deny their magnitude in
order to not cause panic.
Unfortunately, the
opposite of a panic is happening. Prices are climbing and the stock markets are
spiking out of order, having crashed hard during lockdown. Some economists have
speculated there will be a V shaped recovery, while others have speculated about
an L or U shaped one for the economy. However, we have broken historical
records over and over again out of not thin air, rather it was the money in the
air! And now big banks might be hooked on it. A dance with the devil every time
J. Powell speaks.
One may wonder why the
market is the talk of the town or why things are going wild. Bitcoin and
speculative meme stocks have broken percentage records, US indices are breaking
highest figure records, and commodities are hitting record volatility. This
really is how deep fundamental analysis begins, by the way. There is increased
demand for speculative, sophisticated investments usually is driven by younger
risk investors with a huge appetite by quick gains and incredibly high marginal
returns. These are the guys trying to make a 9,000 percent return on a $50 investment
on a leveraged penny stock, option trade, or cryptocurrency swap. The nature of
traders on this side of the market drives them to carry high risk, so they
often either get their targets quick or lose all their money quicker. US indices
represent the global demand for investing in US companies in favor of other
countries, given that said economy continues to become more expensive to buy
into. Indices also represent domestic demand to participate in the private
sector economy.
Finally, commodities break
down into two types: Utilitarian or safe haven. An example would be coffee vs
gold. High volatility in safe havens indicates either uncertainty in risk
assets or over optimism in risk assets. They are also an indicator of increased
industrial activity.
These indicators are
tilting towards a warning zone of fear, uncertainty, and despair in the market
which really should be a reason we begin positioning our portfolios much more
defensively, to capitalize on weaknesses in safe have commodities such as
precious metals and take advantage on short-term swings in main energies like
WTI oil and natural gas. These are moving in a reasonable direction with
substantial opportunities in both the upward and downward direction.
Read more Opinion & Analysis
.jpg)
.jpg)
