It was a lengthy call with a team of partners based in different locations this morning. As usual, the meeting began dynamically, with team members from diverse backgrounds and expertise exchanging ideas on various issues.
Obviously, the odds of a second Donald Trump presidency are increasing in the wake of a failed assassination attempt and his recent strong debate performance against a helpless Biden with Wall Street preparing for the possibility of sticky inflation, protectionist trade policies, and higher long-term bond yields if he wins the election.
While Trump previously said Bitcoin is a scam, Trump now believes the top cryptocurrency and other cryptos should be made in the US. “If we don’t do it, China is going to figure it out – or somebody else.” I quickly jumped in and predicted that the moon and stars might be aligning for another breakout soon.
Everyone in the meeting concurred that Trumponomics would not impact the long-term trends of the various markets we are monitoring.
All that glitters. On gold, buy some, forget about it, and get on with your life. Gold prices continue to ride the wave of post-CPI and rate cut optimism as the precious metal nears its previous all-time high around the USD2,450.
Exciting times! Wall Street is very strong and bullish at the moment. Sector rotation appears to be picking up steam. There are many reasons for the shift, including value searching due to sky-high multiples and a broadening of a rally that was supercharged by mega-cap tech stocks.
Here come the cuts! Increasing rhetoric surrounding Fed cuts has also ignited excitement about the lending and growth environment for smaller companies. I have been fearful that the Fed might wait too long, leading investors to grow more concerned about sustainable economic growth than inflation.
Is this for real? Japanese stocks celebrated another milestone. The story has not really changed and then there is a weak Yen which is actually too weak for comfort for the policymakers. I suggested that we all take a holiday trip to Japan before the Yen reverses.
One of the partners talked about the market outlook for the rest of 2024. She discussed three potential scenarios on how markets might perform from here. I have maximum respect for her work.
She does not care about GDP, the yield curve, or anything else. She knows that I’m “terrible” at predicting the path of official growth. She cares about investing according to what is happening on the ground. As opposed to what most people do, invest according to what should be happening.
Historically, both August and September are often weaker months but that might not happen this time, argued another partner. He added that close election years have seen increased volatility for stocks around the election and then a rebound once there is clarity.
One partner lamented that it is always challenging to persuade investors to maintain diversification when markets are hot like what we are experiencing at the moment. Everyone tends to chase for higher prices as long as they can make some quick bucks. A properly diversified portfolio prevents big losses and stress when mostly every other retirement account does.
On strategy, our exposure to extended duration bonds is expected to perform well in the coming months. Patience is a virtue.
Regarding the US dollar, everyone agreed that any reports of the American dollar’s demise are greatly exaggerated. The financial gurus get paid to be wrong all the time. Please stop watching those scary predictions on social media.
On real inflation on the street, what is the greatest risk for someone who is fighting a higher inflation? Not investing at all.