It’s Monday morning, after 8:00 am EST, and the markets all around the world have either closed higher, or are trading higher, as I write this. Our own futures are also higher, but by 1/3 to 1/2 of 1%. This may be the day that US stocks breakout into new all-time highs. The reason is pretty clear. Central banks are creating new money at a breakneck pace to prevent a full-blown economic stoppage. Growth is so slow, debt is so pervasive, and much of that is not of a good grade or rating. With rates being what they are, corporations are able to roll older debt into lower interest rate debt; and create new debt to reduce their costs, and also to buy back their own shares as a means of manufacturing a higher EPS number.
It creates such an artificial atmosphere, due to this central bank manipulation, that it becomes increasingly harder to know what to do. The latest news, especially pushing assets higher, is that the BOJ, the central bank of Japan, is now going to start buying foreign assets in order to prop their economy. Yen will be spilling out all over the world directly from its own bank! Between that, and the unprecedented negative interest rates for the first time in history… you can begin to imagine the concern rising in people’s minds. This thought only occurred to me last week, when I learned that our own 10-year Treasury was hitting new all-time highs in price, and lows in yield… and the US is supposedly not even in a recession. It gave me cause to stop and wonder!
I’ll come back with the stock picks, and those exhibiting strength shortly…
Here’s to your successful investing!
Harold F Crowell