That the situation is complicated my friends, and I can tell you that it is rare that I do not manage to make myself a conviction, but then there… it is neither for nor against on the contrary!
At a time when the markets should have cracked, and this predictably enough and I had located that time between July 15 and August 15, the FED, the American central bank, released a weapon of massive market increase in referring to its inflation target and specifying that it was no longer a rule ending 40 years of monetary policy doctrine in a single sentence.
Logically the markets have understood what to understand to know if inflation is no longer a problem, then the FED will inject again and again … Even if this were to trigger an inflationary episode.
I have also always said that a tightening of American monetary policy, that is to say a lasting and significant increase in interest rates to move towards a “normalization” of the price of silver, was a policy. impossible. The world economy has long ceased to be afraid to bear rates even at 5% per annum, which is not, however, really mind-boggling. On the contrary, money must have a price, for the price of silver is the master price from which everything starts.
So we are there. A central bank which explains that the money will flow freely, the Secretary of State for the Treasury who explains to him that finally the money that the State has just advanced to companies could not be reimbursed and that it would not be very serious …
So the markets, go up, go up like the little beast in the neck of my youngest child, except that in the end, the ticklish markets may not make us laugh too much, but rather cry.
The question is, can the rise be eternal?
I don’t have an answer to this question.
No one has that answer for sure.
In a world that has become absurd where central banks print trillions of dollars and euros; in a world where money that does not exist directly into the bank accounts of families or businesses, what is the limit on the rise?
The rise in assets is also a form of inflation, it is there that the surpluses of money will be lodged.
Intuitively, I tend to believe that there is always a limit, and that this limit is that of trust. Confidence will be eroded when “anything” becomes too visible.
Overall we are there. The valuations of companies, in particular “tech” GAFA and other technological companies, have become totally delusional. Everyone knows it, says it now and sees it.
So the markets hesitate, waver… will they fall?
And this last question brings us to this article from the Reuters news agency.
New tech storm warning on Wall Street
“PARIS (Reuters) – The Nasdaq is reported Tuesday down more than 2% at the opening with the expected continuation of the correction on the tech giants, whose extremely tight valuations are no longer justified in the eyes of investors in a very uncertain market environment.
The futures contracts on the benchmarks of the New York Stock Exchange, announce a hesitant opening for the Dow Jones, in moderate decline for the S & P-500 and still in clear decline on the Nasdaq, with strong technological component.
“This downward movement seems to be for the moment a simple correction, because of the extreme valuation of the American technological sector”, estimates Vincent Boy, market analyst at IG France “.
Another element to watch, oil, and oil has just started to fall again due to fears about a slower-than-expected recovery in demand!
I’ll pass you all the other “bad” news that you know if you read these lines.
The only interest that remains in owning stocks from a strictly financial and investment point of view is that with negative rates or 0, nothing else is able to provide a return and money to a saver. But this has a limit, that of the capital risk of your investment.
The other thing about stocks is that in the event of a systemic collapse, you have title to a tiny piece of a business. Yet the day your shares serve as title deed, I can assure you, you will bless your stock of boxes of ravioli!
It is already too late, but all is not lost. Prepare yourselves !