What The Market Is Telling Us Now | Get Ready
Big news just came out from the Federal Reserve, Chair Jerome Powell said during a post-meeting press conference that the central bank plans to keep its low-rate, “easy money” policies in place
They have agreed to keep rates pinned to the floor literally pegged to zero, and just leave it there Powell said that would be the case until inflation rises consistently and maximum employment is reached.
Also of note, the individual projections of Fed governors showed that most expect rates to stay down near zero through 2023. so what does that mean for us, our money and the markets? Well if you have been watching this channel, then you already know the artificially low-interest rates and the fast-rising Fed balance sheet are the gasoline that is being poured on the market fires and creating the biggest bubble and “Melt Up” in stocks
and I know this sounds crazy, but… even the start of a new bull market…
some other signs I am watching back up this thinking, for example, we are seeing some very “frothy” behavior as lots of company mergers are happening right now These usually happen during “good” economic times
and signal a more positive economic outlook from the buyers involved in the deals
A few notable ones have been seen from Semiconductor designer Nvidia (NVDA) as they announced they are acquiring chip-design firm Arm Holdings for $40 billion.
We also saw the Biotechnology company Gilead Sciences (GILD) announce they are buying their competitor Immunomedics (IMMU) for $20 billion.
We also saw Telecom carrier Verizon (VZ) disclosed plans to buy prepaid wireless services provider TracFone for up to $7 billion.
and the big one announced this week was from Oracle (ORCL) as they announced they would buy up TikTok
This is all bullish because, this is what we typically see when companies are looking for quick ways to get more growth. CEOs start to looking for opportunities to snap up other companies
when they believe the market is mispricing an opportunity.
Good old uncle Warren Buffett’s Berkshire Hathaway who was an early investor in the company,
made about $1 billion today alone as the stock closed up 123%. The reason why I bring this up is that Warren Buffet has been outspoken against IPOs, just like he “WAS” against gold. and he has also been keeping lots of cash on the sidelines, so to see him using some of it now further makes me think this cycle could just be starting.
But… let me say now and very clear a couple of things. first, remember the economy and the market are not the same things I still think there is a BIG crash coming, but timing is impossible. It could happen Q4 of this year, or Q1-2 of next year, or even longer, who knows how many more magic tricks the fed will pull off but, from what we can see in the near future, it looks like the melt-up into the blow-off top is still on! so… how do you play this?
Well the saying is, cut your losers short and let your winners run long if you are in some good positions, stay in them. Move your stop losses up or adjust your trailing stops so when the market does finally crash you will lock in your gains and profits also, make sure you are managing your risk using the other 2 main tools allocation strategies and positions sizes and of course, never invest what you can’t afford to lose.
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