Good day everyone,
Bearish sentiment is roaring louder on Wall Street. Everyday we see reports from one or two analysts predicting a market crash. We believe they are wrong. We believe the remainder of 2021 will generate a booming economy and the boom may continue beyond 2021. Small corrections along the way are necessary. The caveat is the continuation of accommodative FED Policy regardless of inflation running hot or over the FED’s 2% target. They have already stated this as policy, for now.
There are too many contributors, such as stimulus payments, the $1.9T American Rescue Plan, and the proposed trillion-dollar infrastructure plan, supporting the economy for it to falter. Will the DOW reach 40,000 in this decade?
The Federal Reserve has indicated it wants to keep interest rates close to zero in the near term. This is another contributor to the potential for a booming economy as companies can borrow funds for expansion without generating high interest payments. The other side of that coin is the lack of investments with a decent yield outside the stock market.
The monster, the 800-pound gorilla, the part of the economy that worries investors about the Fed policy is inflation, currently staying below 2%. What level of inflation is dangerous? Those with long memories remember inflation during the 1970’s that ran into double digits, peaking at 13.9% in 1979, and yes, that level of inflation had a negative impact on the economy.
But if we look at some of the boom times in America, the second half of 1980’s, the second half of the 1990’s, the 2000’s before the mortgage crisis, we see inflation was hovering in the 2.5-4.0 percentiles and we are not near those levels yet.
Crypto currency is taking a hit right now as governments around the world try to wrap their heads around the phenomenon. We knew this was going to happen eventually as the DE-FI aspect of crypto currency could be disruptive for government financing and economic control. Turkey just banned transactions in crypto currency and the U.S. is exploring ways to ensure that crypto gains are properly taxed.
We’ve been looking at a company, relatively new to the NASDAQ, that indicates value and the potential for rapid growth. This company has a tiny float, growing revenues, significant insider ownership, and a business model, in an established industry, that may be disruptive. The chart set-up shows a pattern and trading metrics, that indicate the shares may be ready for a bounce, swing opportunity. Everything we see in this company indicates potential for fast, near term market value growth.
Stay tuned and stay informed.