The coronavirus and especially the lockdowns have grounded the US economy to a halt.
This is both intuitive and backed up by data:
- US GDP fell 4.8% in Q1 2020
- 16.5% of the labor force on unemployment
- S&P 500 Q1 earnings down 64%
- US industrial production down 15%
- Most economists believe Q2 will be even worse
The speed and gravity of all this collapse is breathtaking.
But there are a lot of people scratching their heads as to why the economic data is so bad, yet the stock market continues to rally.
In fact, the stock market ended one of the best months ever. According to CNBC:
“The S&P 500 was up more than 12% for the month and on track for its biggest one-month gain since 1987. The Dow was up 11% in April, which would be its best month since 1987.”
So what’s behind it?
You guessed it.
Lending programs, asset purchases, and monetary stimulus packages seem to be endless.
The Fed’s balance sheet moved above $6.9 trillion with $2.6 trillion in assets purchased over the last 2 months.
Expect to see similar numbers in Europe and Asia.
And all this free money has to go SOMEWHERE.
It seems obvious that stocks get even more inflated by QE.
So where do we go from here?
The US and the world governments are going to continue printing money and approving stimulus packages.
They have no other choice.
There is too much pressure from the bankers and the media.
The NARRATIVE is crystal clear…
Print trillions and try to make people feel like you are helping them.
It’s simply impossible to print trillions and not see INFLATION over the long term.
But I don’t think that the people who are in charge care about the long term.
The majority of the world population has less than $500 in savings…
…and many (not all) dependent on government help.
Sadly, most don’t understand that there is the dark side of money printing.
The poorest are historically most hard-hit by INFLATION.
Right now, we are following the playbook Weimar Germany from the 1930s…
And devaluing our money at an accelerating pace.
Money printing has become the ultimate drug.
You get high in the moment but become addicted over time
Just as a drug ravages your body, money printing ravages an economy as it is applied.
The short-term economic high feels great. (Look at the CNBC investors celebrating the recent rally in prices.)
But the long-term impact destroys everything.
Governments are weakening us economically. If we continue to do this, we will have to pay the price one day.
That day may not be today or tomorrow, but it will eventually come.
This isn’t a time for politics.
We are currently engaged in an economic war.
We don’t need to listen to our mediocre politicians.
They are just doubling down on totalitarianism.
They received great power from this pandemic, and they don’t plan to relinquish it.
And at the same time, we don’t need to get misled by CNBC. (These people have been dead wrong for decades.
We must be willing to do bold decisions so that we SURVIVE.
Think about it like survival of the smartest where only some investors will survive, and only the very best will make money.
The good news is that the markets will recover from this crisis
But as the saying goes
The market can remain irrational longer than you can remain solvent.
And the best way to remain SOLVENT is to protect your capital.
So set a strategy. Be disciplined. And understand what inflation can do to your money and life.
And in case you missed it…
Bitcoin is up almost 40% year-to-date.
We are currently in an economic carnage and it is outperforming every other asset class.
But you don’t have to believe me about the future outlook. Paul Tudor Jones, one of the most well-respected investors on Wall Street recently said:
“The best profit-maximizing strategy is to own the fastest horse. If I am forced to forecast, my bet is it will be Bitcoin.”
Make no mistake, he is gaining exposure to Bitcoin as a hedge against the coming INFLATION.
So, here are some questions you have to ask yourselves:
- Where are the best investments right now? Where can you buy them?
- How can you make your portfolio more profitable?
- What is your investment horizon? How long can you remain solvent?
- How can you adapt and ride the wave of the inflationary environment?
- How can you buy inflation-proof assets? Which are they?
- What is the best way to own gold?
- Where are you getting the most freedom in trading?
- What strategies can you apply to capture every opportunity from the market?