One Thing Trump and Biden BOTH Love

There's no denying it will have a major impact on the economy no matter who wins November 12, 2020 UNSUBSCRIBE | ARCHIVES One Thing Trump and Biden BOTH Love Totally unplug from stocks — and STILL make big money The nerve-wracking volatility. The screwy valuations. The head-scratching upswings…   If you’re ready for an alternative to stocks, we’ve got you covered.   There’s a little-known pool of assets we guarantee you’ve never traded before.   And we’ve developed a way to nail winning trades nearly 77% of the time so far in these obscure assets…   For big, fast double-digit — and even rare triple-digit profits — in mere days.   Click here for the details, no strings attached. Dear Money & Crisis Reader, Over the last few weeks, I’ve spent a lot of time presenting the different outcomes for the market depending on who ends up winning the 2020 presidential election. Today I’d like to take a moment to talk about one way in which Joe Biden and President Trump are similar. Both have shown themselves to be BIG believers in government spending. During the eight years of the Obama administration, for which Joe Biden served as vice-president, the U.S. grew its debt load from $11 trillion to $19 trillion ($8 trillion total, or roughly $1 trillion in new debt per year). President Trump has proven to be no different. During his first four years, he grew the U.S. debt load from roughly $20 trillion to over $26 trillion. To be fair, a significant portion of this debt growth (approximately $3 trillion) occurred in response to the economy being shut down due to the COVID-19 pandemic. However, the fact remains that even if the pandemic hadn’t happened, President Trump was on track to add nearly $5 trillion to the U.S. debt load during his first four years (a little over $1 trillion per year). Put simply, regardless of who ends up actually winning this presidential election, we can expect the debt binge to continue. The Fallout of Too Much Debt This debt binge will require bond yields to remain at or below historical lows in order for the U.S. to continue financing itself. This means a continued bull market in bonds, with bond yields staying within the confines of the downward channel that has guided their direction for most of the last 30-plus years. In order to maintain this bull market in bonds (bond prices rally when their yields fall), the Fed will continue to play a major role. During a private lunch, former Fed Chair Ben Bernanke once told a group of hedge fund managers (who paid $250K a pop for his time) that the Fed would be unable to raise rates to their historic average of 4% during his lifetime. Current Fed Chair Jerome Powell has proven this statement accurate. Former CIA and Pentagon Advisor: “Millions of Americans are in DANGER!” America could be facing a catastrophe that will catch most people by surprise… And no, it’s not the coronavirus. Most Americans have no idea what’s about to hit them in the coming days. Which is why Americans should take these 5 steps right now. Click here now to see the shocking details. Powell took over the helm at the Fed in 2018. At that time, he stated explicitly that his goal was to normalize Fed policy, moving its focus away from the financial markets and shifting it to the economy. Powell only managed to shrink the Fed’s balance sheet by about $700 billion (out of $4.5 trillion) and raise rates by about 1.5% (to a high of 2.5%) before the corporate bond market froze up, and stocks imploded. He rapidly abandoned his goal and has since expanded the Fed’s balance sheet $3.3 trillion while cutting interest rates to ZERO. So… no matter who ends up winning this election, three things are clear: The U.S. will continue its debt binge, as both candidates have proven to be big believers in government spending. This debt binge will require interest rates to remain near historical lows. Low rates will require the Fed to intervene on a regular basis in order to control the bond market via both rate policy and Quantitative Easing (QE) programs. The ultimate outcome of this will be stocks going much, much higher, along with higher inflation. Why? Because, barring something breaking in the bond market, stocks are priced based on bond yields. The below chart shows the yield on the 10-year U.S. Treasury Note compared to an inverted S&P 500 (meaning when the stock market rises, the blue line falls). The relationship, while not perfect (for the obvious reasons that market conditions can change dramatically in the intermediate term), is a solid one. This is the BIG picture from a macro perspective for the U.S. — regardless of who wins this election. Until the U.S. finally experiences a debt crisis the Fed cannot stop, bonds should continue to rise, meaning bond yields will continue to fall, and stocks continue to rise. The bad news is that, right now, yields ARE rising. And that could spell BIG trouble for stocks. I’ll explain how in tomorrow’s issue of Money & Crisis. Best Regards, Graham Summers Editor, Money & Crisis More important than your Social Security number? The type of 32-digit code you’ll see here holds the keys to a market that could become bigger than the computer or even the smartphone market... Click here now to find out how to get in on the ground floor. To end your Money & Crisis e-mail subscription and associated external offers sent from Money & Crisis, feel free to click here. If you are having trouble receiving your Money & Crisis subscription, you can ensure its arrival in your mailbox by whitelisting Money & Crisis. Money & Crisis is committed to protecting and respecting your privacy. Please read our Privacy Statement. For any further comments or concerns please email us at MoneyAndCrisis@threefounderspublishing.com. Three Founders Publishing, LLC. 808 Saint Paul Street, Baltimore MD 21202. 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