| | | .Hi Ski,
Just a note of appreciation on all of the links you provide on Kaeppel - he is valuable input to me.
I still think we're in for higher rates and more inflation over a longer view 6-12 months at least.
I get haunted by Jeffrey Curry who noted the last super cycle started when the Fed began their rate cutting.
When the Fed begins the rate cutting cycle, no doubt others will follow suit.
A synchronized reflation will result.
In the developed countries, home and auto sales will get a boost.
In the emerging countries (as your link points out) where the populations are young and growing, economic activity will grow.
Young families have longer term views and have greater expenditures. They want and will borrow to achieve those items we older folks have already achieved AND paid for.
Noting how China and India have relied on coal for electrical generation - (which is the lowest cost electricity).
This will be a competitive advantage for cheaper manufacturing.
I have long thought that if and when the US truly wanted a faster rate of inflation , all they had to do was stop globalization and on shore or near shore of friend shore the manufacturing of the many items we at one time made "IN THE USA".
Covid changed much of that. We still need China for many things, but an exodus out of China to other Asian locations has started several years ago. I think the tremendous loss of capital that China has experienced in the over building of residential cities is becoming more pronounced with the exodus of those sectors still making money, but none the less moving out.
The world has had a taste of totalitarian lying and zero credibility when things like pandemics leak from their society/economy.
Once bit twice shy is exposing the weakness that Chinese people are experiencing when the one thing they could invest their earnings into, has now collapsed.
It took the USA 12 years to work out of our 2008 Great Financial Crisis.
As we embark on a synchronized recovery, I expect another commodity super cycle will emerge. Couple that with new prosperity popping up in Asia vs China and demand for everything will explode.
Much like breadth in the stock market is healthy, so too is growth when it is spread over a greater population that extends much farther than in China.
AI will become built into high content items. AI will flourish in the USA as we onshore higher content items.
I think this bull is long in the tooth, and we are due a reset. A reset that will be short and shallow if it is a soft landing.
If it includes a higher interest rate to be applied to capital, the recovery will be slower to see , but build with a great length and strength.
That would most likely make the reset longer in time, but more powerful in growth.
Higher rates for longer is not a bad thing.
It requires more down to be able to buy durable goods.
That is an economic strengthener.
It threatens the bank's capital less. Fewer loan reserves, better profits.
In a long term, it is a far better future for our economy.
I'm 33% cash, and my portfolio is at record highs and yielding record dividends.
A weak spot in the economy might just offer up some lower account equity, but better prices in which to invest in.
Having cash in downturns and then deploying it in solid balance sheets corporations is the best way I know of super charging the growth of one's account. That is not a bad thing at all.
Just a thought that has been in my mind for several months,as I see my account prosper.
The rotation into smaller caps is perhaps the best thing I've seen of late.
It also is a precursor to Euphoria at times.
It may be that the time to sell is nearing, but months away yet, is my bet.
Bob |
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