Seeing Into the Future
You can do it too!
Hey there, friends!
We're back at it again, cracking the code on all this financial stuff. Remember, we're in this together, breaking down the fancy jargon and making this whole money thing make sense. Swing by my Twitter(X) @Lumberhawk- I keep the conversation going there with more insights and real-time updates.
That being said, today, we're going to talk about you crushing this next year...
TLDR:
I am short term bullish, long term bearish. Everything leads to more inflation.
I’ll go ahead and toot my own horn a little here; I believe this is one of my most valuable articles to date. It’s definitely worth your $5 for the month. So please get your money’s worth and read the whole thing. As such, if you’re not already a paid subscriber, you will see a little “upgrade to paid” button about halfway through this article. We surely didn’t learn any of this in public schools.
If you’re not interested in the upgrade, no worries. I appreciate your presence here. If you have read all my past free articles, you likely already have a pretty good idea where my head is at. I’m going to be very specific today to make sure I am providing proper value to those of you who have decided to reward me for my work with your hard-earned dollars. I work for you. You help me provide for my family. You have my gratitude. I should say that more often.
Economic Concerns
If you’ve been here for a while, you know I have a lot of concerns about the economy in the medium to long term. I think it’s more likely than not that inflation will stay high for a while. In the short/medium term, assets will do well. The government has already begun to loosen up its policy and is injecting some liquidity into the market by reducing quantitative tightening and some tricky backdoor budgeting tricks. You can see below the M2 supply moving back to positive. I expect significant liquidity injections to support suffering GDP over the next 2 years. This is generally very good for asset prices but bad for inflation (you’ll notice a recurring theme here).
The Fed’s interest rate position has stayed “higher for longer” but at some point, they will have to pivot. When they do (September maybe?), it won’t be a significant shift at first, but I still expect the appreciation of quality assets to do very well, especially considering the economic growth we are having presently (more on that below).
However, just because the stock market, Bitcoin and your home prices go up with monetary easing; that does not mean the economy will be in good shape. I expect more “K-shaped” recovery conditions to continue, significantly benefiting those with assets and causing pain for those without. Expect the wealth gap to expand.
I also have a lot of consumer debt-based concerns, but I covered them pretty well here, so I’ll skip over them today.
The S&P just retested its 100-day moving average, which happens regularly during a strong bull market. All of the significant moving averages are still trending upwards, albeit at a slower pace. The long leverage positions (NAAIM index) in the market were small as the fear and greed index was firmly in fear (as of May 1st). These are generally good short-term indications for upward movement considering the greater bull structure we find ourselves in.
However, in this last week the NAAIM has increased significantly, while fear and greed moved from fear to neutral, bordering greed. This has given me some pause. I still think we are strong in the short term, but I expect some choppiness going forward.
The underlying weakness in the economy will likely start to show itself more by the end of the year with depressed earnings and increased unemployment numbers. A fed pivot might have some impact, but it will be delayed. I have several predictive metrics I am watching closely, which I will share with you at the bottom of the article (it’s the best part).
If I were looking to go shopping today:
Bitcoin
This one is obvious. I won’t bore you with all the reasons that I’ve already covered in recent past articles. But I expect this to be the best performing asset on the planet for the next 12-18 months. By a long shot.
