- One man's ceiling is another man's floor
- Paul Simon (There Goes Rhymin' Simon).
A few weeks ago we gave you the mid-year outlook from the investment firm, Morgan Stanley. This week, we give you a second opinion from Charles Schwab. They had the benefit of producing their report late in the month of June. We do not bother with the two biggies, JP Morgan and Goldman. They sold their souls to fiat. We do not believe anything that they say.
Schwab's panel noted that Europe outperformed the US market despite the tariffs. The report gained credibility with the insights of Liz Ann Sonders. She reminded us that there are connected agencies that can be effected and not just people saying that tariffs are just a one time price increase. This related aspect says inflation will continue beyond what "experts" believe. This outlook backs our belief that we are in a stealth inflationary environment even though no one else makes that claim.
A note of caution on Europe came from Michelle Gibley. She reminds us that trade deals take on average 18 months. The annoucements of deals are premature. She still likes the EU markets because their P/E ratios are much lower than ours (EU14 v. US22). European markets also have no trillion dollar market firm cap companies. However, she adds that the EUs leading indicators have risen 31 months in a row. We see a retracement is over due. She, like Morgan Stanley sees defense spending as a big catalyst, especially for Poland, Greece and Denmark.
Finally, Kathy Jones spoke about interest rates. Her question: Will foreign investors still buy US notes? She did not mention Trump's budget bill, but she talked about currency evaluations. How will they change with US debt and trade wars? She touched lightly on the appearance of the inverted yield. This is an indicator of trouble in bonds that flows out into the economy. However, she sees no loss of the reserve status if the dollar.
Our Question?
Neither of these firms talked about gold. They did not discuss the dangers to King Dollar like the BRICS and IMF. If Trump's budget passes, what happens to the dollar? We see more weakness ahead.
What We Know
Trump's bill passed. Our debt will rise. You can only go to the well so many times. One day, it can be dry. We know the anti-American whispers are out there. Maybe they will gather ears? The faith in America to do the right thing is fading. Our politicians are weak. They use deficit spending to mask all their sins, but they have created the greatest sin of all, debt bondage. We fear a crisis concerning our dollar and its reserve status will come into question. Get some gold! ...Peace.
