Once money printing starts it never ends! Instead what happens is any unwinding of central bank balance sheets tends to be temporary in advance of the next crisis which tends to send balance sheets through the roof. This has been my consistent message for the past 10 years since Quantitative INFLATION began in 2008! And so the corona crisis has seen the Fed once more flood the markets with liquidity buying up all sorts of assess left right and centre from junk bonds, to stocks of bankrupt corporations to of course government bonds, and when the buying is done the Fed will likely have DOUBLED it's balance sheet from $4.2 trillion a couple of months ago to approaching $9 trillion!

This is why the perma bears are not going to get their Dow Bear collapse dreams come true, despite GDP collapsing by as much as 40% in Q2!

And INFLATION IS THE PRICE PAID! Which means if you are smart you can LEVERAGE yourself to INFLATION by investing in assets such as AI Stocks. Whilst Governments pay people for NOT working will ALSO cause CONSUMER price Inflation even if the official statistics won't measure it, but people WILL experience it in their weekly grocery shops and online purchases. For instance my monitoring of prices on Amazon.co.uk already resolves in a 10% to 20% jump in prices!

Whilst other online retailers show 10% plus price hikes, so if you are looking to buy hardware online then do your research as you can still find retailers that have yet to hike their prices as a consequence of central bank rampant the money printing. With typical super market prices for weekly shops up about 5%! Again which won't be reflected in the official inflation indices as the Bank of England looks set to monetize virtually the whole of the £273 billion projected corona deficit so far, that could easily double to more than £500 billion by the end of 2020.

And I am sure similar price hikes are taking place in the United States given that the US will likely soon double up on it's recent $2 trillion corona bailout.

The whole of this extensive analysis was first made available to Patrons who support my work: Dow Stock Market Trend Forecast for May 2020

Preliminary Stock Market Analysis
Fed QE4EVER
Dow Short-term Analysis
Dow Long-term Trend Analysis
VIX Analysis
ELLIOTT WAVES
Dow Stock Market Forecast Conclusion
AI Stocks Buying Levels Q2

So for immediate first access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $3 per month. https://www.patreon.com/Nadeem_Walayat.

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Your Analyst

Nadeem Walayat

http://www.marketoracle.co.uk

Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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Comments

JustAnotherExBanker
08 May 20, 10:22

And negative interest rates on the way?

Nadeem,

Great, informative article as always.

Looking at the UK 10-Year bond, the interest rate is fast collapsing towards zero.

As the central banks are running out of ammo, will we see negative interest rates as their last roll of the dice?

Thanks,

Rob.

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