Inflation is very high, and the Federal Reserve is indicating a Hawkish stance over the coming year in regard to a reduction in bond purchases, and an increase in interest rates next year. This would indicate a slower moving market through 2021 into 2022, the reversal of a bullish trend pattern that we have seen since April of 2020. However, because inflation is so high, and federal money printing has diluted the M2 money supply, increasing the money printing rate at an unprecedented clip; pushing the prices of fixed assets up with it. fred.stlouisfed.org/series/M2SL
Will this bullish trend over the last year fueled by cheap money, retail trading, stimulus checks, and government bond buying suddenly reverse at the signal of the beginning of withdrawal of support by the federal reserve? Or will it continue to push higher, fueled by inflation, setting the stage for a bear trap as prices reflect the scarcity of a sound store of value in an unprecented inflationary environment. I believe time will tell, but in the near term the break out to the upside, or the downside of the flag pattern will indicate the dominant trend for some time to come.
Additionally, the current environment of unprecedented technological shifts, coupled with and unprecedented amount of social restrictions create an uncertain environment int the foreseeable future. I am market neutral, meaning, I believe that the market is poised for long term growth, though will face challenges of the continuation of a global pandemic, its bureaucratic social reaction, the attendant supply constraints, and rapidly shifting and disruptive federal monetary policies.
Note: These ideas are my own, and are not intended to be financial advice. --
Will this bullish trend over the last year fueled by cheap money, retail trading, stimulus checks, and government bond buying suddenly reverse at the signal of the beginning of withdrawal of support by the federal reserve? Or will it continue to push higher, fueled by inflation, setting the stage for a bear trap as prices reflect the scarcity of a sound store of value in an unprecented inflationary environment. I believe time will tell, but in the near term the break out to the upside, or the downside of the flag pattern will indicate the dominant trend for some time to come.
Additionally, the current environment of unprecedented technological shifts, coupled with and unprecedented amount of social restrictions create an uncertain environment int the foreseeable future. I am market neutral, meaning, I believe that the market is poised for long term growth, though will face challenges of the continuation of a global pandemic, its bureaucratic social reaction, the attendant supply constraints, and rapidly shifting and disruptive federal monetary policies.
Note: These ideas are my own, and are not intended to be financial advice. --