Jul 27, 2020

Bearish Scenario For Stocks

I wonder how long it will take equity investors to realize that a collapsing dollar and soaring Gold price are bearish for stocks, as it will force the Federal Reserve to dump bonds, forcing interest rates to surge, the Federal Government to slash spending, and corporate earning to plunge.

Related trading instruments: SPDR S&P 500 Index ETF (SPY), SPDR Gold Trust ETF (GLD)

Why Traders Are Buying Stocks

CNBC's Jim Cramer is wrong about why investors are buying stocks. They aren't buying because they expect a COVID cure, but because they expect the Fed to keep printing money. They just don't understand how bad the consequences will be. If they did they'd be buying Gold instead.

Related trading instruments: Market Vectors Gold Miners ETF (GDX), Market Vectors Junior Gold Miners ETF (GDXJ), SPDR Gold Trust ETF (GLD)

Jul 20, 2020

The Federal Reserve Is Creating Dollars To Buy Bonds

The only way the Federal Reserve can suppress interest rates is by creating dollars to buy bonds. The more dollars it creates the more value the dollar loses, and the faster consumer prices rise. That puts upward pressure on rates so the Federal Reserve must create even more dollars to keep rates low.

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