Brave New World: Why you need to be an asset owner at this time

Ritesh Jain, a Dalal Street veteran, trend watcher and Global Macro Investor, captures global macro investment opportunities and economic, business and financial trends with charts and commentaries in this space.

With Federal Reserve’s balance sheet expanding exponentially, Fed is now the largest holder of US Treasury securities (Fed data as of mid-June & other banks as of mid-May). The more I think of it the more it becomes clear to me that Fed will have to monetise rising US deficit. The US dollar should slowly loose its value against real assets.

The relative performance of US cyclical and defensive stocks is a useful indicator of economic growth. Investors priced in a rebound in activity in April & May after March's collapse, but this changed since June, likely due to the impact of the Southern/Western Covid-19 outbreak.

- GAVEKAL

The Silver-to-Dow ratio broke above its 50-month moving average for the first time since 2002. Last time it happened silver went from $5 to $50 in 9 years.

YoY change in job postings: - retail +5.4% - software development -35.0%

This tweet from US congresswoman got 1,73,000 likes. I believe politicians across the aisle will continue to usher in socialistic policies to appease voters.

Sorry to hammer the point again, but we need to be an asset owner at this time. There could be a correction at any given point of time because we are reaching all time highs but that would not be a change in trend.

We are back to pre-pandemic inflation expectations.

GSR has now made it back to the major channel breakout. Will need this 30- year rail to crack. If Gold/silver ratio breaks 80 then “INFLATION” is not far off.

More free money: This time from EU Look at loans and Grants. I am pretty sure that loans will be waived at later date.

US treasury cash balance on Friday exceeded the GDP of Canada. This money is ready to be used to goose the US equity markets just ahead of US elections… but not yet.