I closed down 17bps today due to a leveraged Bitcoin position, as I am intent on enjoying the impending GIGASPIKE. Nevertheless, I feeeeeel rather in control, especially with the Fed about to expand the monetary base.
Being up post Fed isn’t a foregone conclusion and there is a scenario where we “sell the news”, as the randomness of Wall Street endeavors to trick and fool speculators all the time. But on a longer term basis, providing Trump can remain alive, we are bullish on the prospects of multiple expansion.
What the means is exactly what is sounds like.
Corporations have debt and they pay interest on that debt. When rates go lower, they have to pay less interest and that is usually factored in the share prices, measured by PE or PS. This is why we are seeing secular ‘old man’ stocks jimmy higher. Stocks like $CLX and $PG do poorly in a rising rate environ but do much better when they drop.
The entire market should do better, as cheaper credit creates speculative fervor. The rally to come is not limited to stocks, but will also encapsulate commodities, real estate and cryptos too. Fight the FUD and stay focused on what you see, rather than what you believe.
I am 107% leveraged long into Tuesday.
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Stocks should react positively to Fed cuts. But it depends on the cycle of which this one is different. Will bonds follow suit? Guessing bonds will not follow suit this go around.