While we are at the end of the first half of 2020 I thought it would be interesting to see how things are going in the “markets”. Of course, we are still in an economic coma where nearly 50% of all working age people do not have a job. (CNBC- employment-population ratio hit 52.8% in May.)
The economy is continuing to collapse even though the rate of collapse has slowed down there is VERY little chance of a V-shaped recovery.
We are seeing headlines like “Dow Soars To Best Quarter Since ’87 As Fed Balance Sheet Explodes”. This says it all. Without the Fed and other central banks buying trillions of dollars, yen, yuan, euros, swiss francs, etc. the “markets” would have found fair value already and most would be stunned just how little their “assets” would be valued at without those conjured up out of nowhere currencies buying up just about all assets to keep the illusion of solvency and normalcy alive.
Some other headlines that may grab our attention are:
“Chicago PMI Suffers Biggest Miss in 5 Years as “V” hope fades” “Sweden Increases QE by 66%”
“Cocoa Futures Hit One Year Lows As Pandemic Wrecks Global Consumption. Cocoa is not the only casualty. “Royal Dutch Shell To Write Down Up To $22 Billion After Covid Hit”
“ US Consumer Confidence Rebounds In June Led By “HOPE” . I guess that “hope” comes from the financial game shows only putting out massaged numbers that make things appear far more rosy than they actually are.
“Goldman: Over 40% of the US Reversed Or Placed Reopening On Hold” So much for a quick reopening.
We used to make fun of the Japanese as they have an over 700 trillion yen balance sheet, own 80% of all Japanese ETFs and ARE the Japanese Bond Market. They have bought ALL of the Japanese government bonds in the last 3 years.
The Fed has, in just a few weeks, become a top 5 holder in many US ETFs. Currently, they are supposedly only purchasing bond ETFs. There is a LOAD of heavy lifting going on to prevent the stock and bond ”markets” from collapsing. On the other hand, there is a lot of heavy lifting going on to make sure that gold and silver stay suppressed in price so that the debasement of the fiat currencies remain hidden.
How are they doing? Let’s see!
Market Price 1-2-2020 0 Price 6-30-2020 YTD return Last 12 mos. Return Return since 1-2000
DJIA 28,639 25,812 -9.5% -3.64 +124% (6% AVG)
S&P 500 3,258 3,100 -4.0% +4.28 +106% (5.2% AVG)
NASDAQ 9,093 10,058 +10.6% +24% +102% (4.9% AVG)
GOLD $1528.00 $1798.00 +18.35% +26.55% +619% (30% AVG)
Major Miners $29.17 $ 36.70 +25.8% +43% *
- All prices and averages from Marketwatch
- * Major Miner product did not exist in 2000.
It appears to me that no matter how hard they are trying the metals are exposing the extraordinary actions taking place below the surface.
The one thing that I am most sure of right now is that this will end in tears. Whether it is because the “stimulus” is stopped and the asset prices collapse or if the “stimulus” continues and currencies get destroyed one after another and people may only accept real assets for real labor and goods.
The time to prepare is NOW. The writing IS already on the wall and there is likely not much time to get yourselves and your investments prepared for a FAR different future than the past we have seen for our entire adult lives.
Any opinions are those of Mike Savage and not necessarily of those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. The information in this report does not purport to be a complete description of securities, markets or developments referred to in this material. The information has been obtained from sources deemed to be reliable but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.
Commodities are generally considered speculative because of the significant potential for investment loss. Commodities are volatile investments and should only be a small part of a diversified portfolio. There may be sharp price fluctuations even during periods when prices are overall rising.
Precious Metals, including gold, are subject to special risks including but not limited to: price may be subject to wide fluctuation, the market is relatively limited, the sources are concentrated in countries that have the potential for instability and the market is unregulated.
Diversification does not ensure gains nor protect against loss. Companies mentioned are being provided for information purposes only and is not a complete description, nor is it a recommendation. Investing involves risk regardless of strategy. If you no longer wish to receive this correspondence please reply to this e-mail.
The Dow Jones Industrial Average (DJIA), commonly known as “The Dow” is an index representing 30 stock of companies maintained and reviewed by the editors of the Wall Street Journal. The S7P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market. The NASDAQ composite is an unmanaged index of securities traded on the NASDAQ system.
Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees which will affect actual investment performance. Individual investor’s results will vary. Past performance does not guarantee future results.