Quantitative Easing

The Fed will not start any cuts until 2022

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In his Daily market notes report to investors, while commenting on the Fed’s decision not to start cutting until 2022, Louis Navellier wrote:

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Letters, conferences and more on hedge funds in the second quarter of 2021

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Screenshot 23David Einhorn’s Greenlight Masters funds grew 10.1% net for the first half of 2021, compared to the 15.2% return of the S&P 500. The Greenlight Masters team were generally satisfied with the results of the first half. half-year and that the performance of its managers varied widely from 40.4% to -3.4%. Letters, conferences and more on hedge funds in the second quarter of 2021 Read more

The Kansas City Fed’s annual conference in Jackson Hole, Wyoming, has been canceled. The Jackson Hole conference is a major international event that would have provided insight into the quantitative easing of major central banks. Although the Jackson Hole conference is now virtual, I suspect attendees may be slightly less transparent.

The central bankers of the European Union and Japan pioneered negative and zero interest rates and are now dragging Britain and the United States into the abyss of negative interest rates. The point is, governments can no longer tax their old budget deficits, so that inflation and ultra-low interest rates remain the lasting legacy. If the United States taxes all Americans 100%, there will still be an $ 8 trillion federal budget deficit, so we cannot impose our tax problems.

No unraveling

No matter what the Fed announces at its next Federal Open Market Committee (FOMC) meeting, the Fed will not start tapering until 2022 and will continue its quantitative easing, but at a reduced pace. Inflation effectively allows all central banks to print more money and the potential risk is stagnation, especially after businesses and consumers have spent a storm.

In Japan and Europe people are older and often live in small houses, so after spending money they tend to save the rest and a high savings rate helps keep interest rates down. managers, regardless of the rate of inflation. In the United States, we are also aging, but we tend to live in bigger houses and have larger families, so consumer spending in the United States should not stagnate.

6% GDP growth

It will be interesting how long can the United States maintain 6% GDP growth, which is expected to persist until the third quarter. In addition to robust consumer spending, there remains a massive backlog due to supply chain issues that effectively ensure that U.S. GDP will continue to grow at an annual rate of 6%. In addition, robust job growth continues to add new consumers, which should continue to drive retail sales. With strong businesses and healthy consumer spending, they represent a powerful double blow that should continue to drive GDP growth.

The the inflation bubble created by accommodative monetary policy should ease somewhat in the fall, especially energy as the demand for crude oil and natural gas decreases. This seasonal decline in global energy demand is caused by the fact that there are billions more people in the northern hemisphere, so demand naturally decreases as the weather gets colder. Unfortunately, much of the wholesale inflation that spilled over to the US economy was due to service costs that are not expected to decrease, so some permanent inflation is here to stay.

Oasis In Stock

I expect growth stocks to remain an oasis in the chaos that spreads around the world. The money has to go somewhere and due to the ultra low interest rate environment millions of new investors have turned to the stock market in search of higher returns. Also, when government becomes ineffective, which seems to be happening lately, the private sector takes over and prosperity tends to soar!

For the future, the new wars of the future will be fought with economic and not military power. China has won the economic wars, and the United States must now assert its economic might. Future military actions will likely be carried out by special forces, which the United States is moving in and out of quickly. The debacle in Afghanistan illustrates why it is important not to stay too long after special forces have done their job and achieved their objectives. The United States is now out of the nation building business because frankly we’re not very good at it.

The only thing our federal government did that had an impact on the stock market was to increase the money supply by 40%. over the past year, this is why residential real estate, the stock exchange, and some collectibles have thrived. The speed of money, that is, the speed at which money changes hands, remains high as consumptioners are moving, despite the Covid-19 Delta variant, so an annual GDP growth of 6% persists. Another comment I have is that one thing the federal government has done right is that at least most of the Covid-19 relief has gone directly to businesses and consumers, who can spend money more efficiently than the federal government.

Market Fact:

What a difference a decade makes. In 2011, the S&P 500’s total dividend was around $ 240 billion. For the last full year, 2020, total dividends were around $ 483 billion, a CAGR of around 8%. For 2021, dividends stand at $ 494 billion on an annualized basis. At the end of the second quarter, the dividend yield on SPX was 1.38%. Source: S&P Dow Jones Indices.


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