All major asset classes are up this year. Seriously, cash has been such a wasted opportunity — the S&P 500 is up more than 20% in six months (first time since 1997), Bitcoin is soaring, and precious metals are up big – it’s a reversal of 2018!
Everybody already knows that the Federal Reserve’s going to cut interest rates, so investors have already priced this eventuality into the stock market, precious metals, and Bitcoin. When the Fed does cut rates, it will move the needle a little bit but don’t expect much; afterwards, investors will have to turn their attention to corporate earnings, which is when things could get ugly.
The second half of the year is a time when analysts start looking at the next year and adjusting their earnings forecasts. And so, as analysts gear up to start making predictions for 2020, the stock-market gravy train could come to a screeching halt if they “revise” their outlook to the downside.
I even heard JP Morgan predicting an all-out market sell-off to commence as early as this quarter, which wouldn’t surprise me at all, as investors are leveraged to the hilt and anyone who traded in 1999 and 2007 knows that that’s never a good sign:
Courtesy: NYSE, FINRA, MarketWatch
Just in the month of June, margin debt (i.e., people borrowing money to invest) increased to a stunning $596.3 billion, representing a 4.8% monthly increase – the biggest in both dollar and percentage terms since September of 2016.
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JPMorgan is also making a recommendation you wouldn’t expect to hear from a traditional big bank: get into alternative investments like gold because the U.S. dollar’s reserve status is in serious jeopardy. That’s right – they’re directly warning investors that the dollar could lose its status as the world’s reserve currency, primarily due to the rising economic dominance of China, India, and Asia generally.
The American government is willfully precipitating the dollar’s decline. President Trump has declared outright that he wants a weaker U.S. dollar, while the Federal Reserve hopes to see inflation increase from its current 1.6% to the Fed’s target of 2% so that they can immediately start cutting interest rates.
Meanwhile, Congress is doing its part to decimate the dollar by encouraging spending at unprecedented levels. The latest approved budget, if you can believe it, includes a whopping $738 billion for fiscal year 2020 and $740 billion for fiscal year 2021 just for defense spending.
In this bloated two-year, $2.7 trillion budget agreement, our elected representatives approved $1.48 trillion in military spending – that’s more than half of the entire budget. Even the Pentagon didn’t ask for that much: they “only” requested $718 billion for defense spending, which was already overzealous.
No wonder the U.S. dollar is in a constant state of decline: we have a government that can’t control its spending habits and instead of tightening its belt, it just prints money into oblivion. This is bad news for traditional investments, but potentially great news if you’re taking a position in inflation hedges like gold and Bitcoin.
Even beyond your investment allocations, you need to prepare for big changes that are already under way. Millennials with money are leaving central states and moving to the coasts: California, Florida, New Jersey, Washington, and Oregon are seeing an influx of moneyed millennials, and you should expect a concentration of the jobs and housing markets in those areas.
No matter how you parse it, the future of America will look nothing like the past that your father and grandfather grew up in. The days of irrational exuberance and dollar domination are numbered – make your move now.
Governments Have Amassed ungodly Debt Piles and Have Promised Retirees Unreasonable Amounts of Entitlements, Not In Line with Income Tax Collections. The House of Cards Is Set To Be Worse than 2008! Rising Interest Rates Can Topple The Fiat Monetary Structure, Leaving Investors with Less Than Half of Their Equity Intact!
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