Gold actually exists. You can touch it. Wear it. Store it. It has industrial applications. Bitcoin is totally a figment of techie imagination. Nobody knows who invented it and no one actually has physical possession. It is the biggest con in history after Trump.
âThis market is driven â yes â by intense speculation, but also by fiscally pumped, central bank-primed corporate earnings, which when discounted to present value by near zero nominal and in many cases negative real interest rates, produce record stock prices,â Gross said.
Agree.
âA lot of the marketâs appreciation over the past two years, especially for growth stocks, has been due to lower real interest rates,â Gross said. A rally that will only continue if real yields stay âsubstantially negative,â he continued.
That is what is going to happen for yearsâŚ
He attributes their potential down performance to the Federal Reserveâs commitment to keeping interest rates at near zero for years.
Is that a typo? Replace down with up.
Growth stocks, particularly 2020âs biggest IPOs including Snowflake, Airbnb and Doordash will struggle to live up to the expectations of what Gross calls âday-trading Robinhoods,â he added. The same goes for SPACs or special acquisition companies and the âTeslas of 2020.â
The only expectation is the existence of a greatest fool. Plenty of them around, why would a rally ends?
Thatâs an easy and obvious call, but I havenât seen anyone predict when zero percent rates will end. Unless it ends suddenly and without warning, then the party is going to keep going. Anything that causes rates to rapidly rise is going to destabilize the entire global financial system and make 2009 look like a tiny blip. Governments wonât be able to afford their debt. Itâll be total chaos.
We now have a multi decade trend of rates going lower. Each rate increase cycle ends below the prior cycleâs peak. Each rate cutting cycle goes lower than the prior cuts.
What events need to occur for rates to go up rapidly? I mean i know the govt could think about raising rates a quarter or half point a year or so from now. But I canât seem to see how rates could ever go higher more meaningfully and what the catalysts would be.
Itâd require bond holders/buyers to lose all confidence in the ability of governments to make bond payments. Then theyâd demand higher interest rates regardless of what the fed does. Thatâd lead to a full on currency crisis which would destabilize everything.
More subsidies for EVs, batteries and solar. There is speculation on the EV forums that Biden will bring back the 7500 tax credit for manufacturers that have sold over 200k vehicles. Base Model 3 for $24k + TTL after credits and rebates. Tesla
Manch wants correction to come, right. He will get even more recession!!
One more to add: Market wonât show such correction or recession immediately.
All 3 cases (Both Dems or Both Rep or one each), market will be exuberant immediately, but will show correction at a later point of time, and not tomorrowâŚ
This is a sample of how reckless Robinhooder (win or lose 15k in a day) ! For each call, someone needs to hold 100 shares !! This is creating abnormal volatility.
Thereâs a massive rotation to cyclical material and industrial names. I guess everyone is betting on massive fiscal stimulus and a huge infrastructure bill. I canât wait for those who complained about the deficit under Trump to complain about much bigger deficits under Biden.