SNEAKY DEVILS: Central Banks Pump INFLATION!
The U.S. Federal Reserve is pulling back, as we know. They’re raising rates, liquidating assets, and “normalizing,” but what they aren’t telling you is that the reason it’s being executed is that tax cuts are essentially an improved version of QE.
Through the back door, they are sneaking not only elevated inflation levels in the U.S., but throughout the globe.
Sure, you don’t see it yet, because tax cuts have a lagging effect, which will come into full swing in early 2019.
This is critical.
So, for the next few months, investors will begin to position ahead of this expected surge in global inflation, but prices won’t reflect the change, since the FED is counteracting this phenomenon, for now.
Both the ECB (European Central Bank) and the BOJ (Bank of Japan) are still aggressively monetizing by creating credit, not following the path of the Federal Reserve thus far, so on the global basis, there is more credit with every passing day.
The difference between QE programs, which did not result in general inflation and the monetary policy and fiscal policy of 2018, is that, as it stands, the U.S. economy is at full capacity, contrary to the 2010 to 2015 era. The other major factor is that tax cuts reach the average guy, while QE didn’t trickle down from the high echelons of finance to us.
In other words, the U.S. consumer, which is the biggest driver of growth in the world, is now better employed, has access to more cash than at any time in the previous decade, has seen his tax liabilities shrink, and he wants to spend, after years of holding back.
The rest of the world is happy to supply this demand.
No country will be able to shield itself from inflation this time around. Growth, real consumer demand, is back.
For now, the USD is holding strong, since the FED is doing everything possible to tame this tidal wave, but as Wealth Research Group sees it, there will be NO remedy.
Starting soon, 2019, according to our calculations, inflation will kick-in hard.
Previously, I mentioned that in November or December of this year, the FED might hike rates by 50bps instead of 25bps, which will be the signal that inflation has arrived.
Inflation Trades: Complete Guide
One of the most important aspects of inflation is that it decimates the purchasing power of fiat currencies. You’d be wise to lower your cash allocation steadily, when opportunities present themselves in the months ahead, as volatility will not stop this year.
When companies trade below their intrinsic value, bargains will appear.
Another massive change in the months ahead is the sentiment change towards commodities.
In the past seven years, investors wanted nothing to do with risky exploration projects, but the appetite for these will return, big-time.
Stocks, which are in the midst of drilling seasons, will see speculators taking positions early – something we haven’t seen since 2010.
Wealth Research Group will roll out a list of four such companies. The pendulum swing alone, from “too risky” to “too juicy to pass up on” will send valuations significantly higher.
The most important thing to remember is that INFLATION creates bargains because of market panic.
Do not get sucked into this fear mode.
You have full control of your emotions; don’t allow the media to hijack them.
The surest strategy has been and still is to buy cheap. Nothing could protect you more than being selective, patient, and a bargain hunter.
I want to get a jump-start on the market, though, so I created a database of the newest-listed stocks, which are exploration-focused and are seeing HEAVY insider buying.
This is the key!
It is going to be our starting point, and I plan to make sure we get to research these before it’s too late.
Global inflation is not an easy reality to live through – this is going to be mentally demanding. Get ready