Deflationary vs Inflationary - What's your thoughts?

Hey everyone

So with the markets having their own surge upward, what is your thoughts on this move?

Do you think this mini Bull rally is being driven from Technical Analysis or has the markets factored in the economic recovery?

As the FED has printed money into the market in large quantities, do you feel this will have a inflationary effect or will this become deflationary?

Every other country seems to be doing the same, so if other countries such as China are being hit with production hits, will their surplus of stock translate into cheaper prices for the US, in turn causing a deflationary era?

Share your thoughts below!

Vote : How do you see the state of the economy, after coronavirus:

  • Deflationary
  • Inflationary

0 voters

Currencies (USD rallying as the world’s currency), bonds (going down) and commodities (crashing), all get the message.

It’s just equity that’s standing out because the Fed is creating Quantiative Easing Infinity. And it’s only US equities, every other index hasn’t shown the craze bear rally.

The problem is, it inflated an already artificially inflated asset bubble, with fundamentals (P/E, Buffett indicators, etc) completely out of kilter.

People pin their hopes on a speedy recovery once markets open. That hasn’t happened in China, in fact, second waves of COVID19 are already spring up in some areas of China and Singapore.

30m unemployed in The USA, at least 2/3 of them are continuing claimants so have no job to go back to. Some economists see 34% unemployment as likely. CPI at historical lows. Various big companies like Hertz already going bankrupt. Q1 earnings was 17% down if I remember correctly, and that was only two weeks of lockdown - Q2 will be dire. GDP likely to contract by 40% annualised rate in Q2.

Those are numbers you can’t just shake off. The Fed thinks they can solve insolvency with liquidity, you can’t. You don’t solve a demand problem with supply.

Also, let’s not forget that the global economy, and the USA in particular, had already slowed down before COVID19. The virus wasn’t the reason for the crash, it just exposed and accelerated underlying economic weaknesses.

There is a reason the S&P500 has been going sideways now. The market is nervous and unless the Fed starts buying stocks, like they did in Japan, they are running out of ammo. And buying stocks or negative interest rates didn’t work for Japan - it creates a lost generation, and they can’t find a way out.

S&P 500 and Nasdaq are entirely dependent on 5 stocks not selling off and to keep adding to their multiple expansion program.

The way I see it is this: buy the re-opening rumor, sell the factual horror: rally-inducing news of stimulus & vaccine efforts will likely give way in coming weeks to disappointing realities of prolonged distancing, supply frictions, and confused calls for budget austerity.


Thanks for sharing your thoughts.

Can’t argue, the figures do pan quite a bad picture for the future.

It’s times like this where I wonder if we are seeing a repeating cycle of history.
So many empires and civilizations throughout the years have always been toppled, either by a third party or themselves. It’s just a pity people can’t live past a century to notice these events repeating. Maybe this is the USA’s time ? :mask: :exploding_head:

“Bank of England warns of a deep and sharp U.K. recession.”

“EU’s commission says the EU faces a deep and uneven recession”

“Larry Fink, CEO of BlackRock, warns for the US for mass bankruptcies, empty planes, cautious consumers and an increase in the corporate tax rate to as high as a 29%”

Markets are out of kilter. Get into gold, USD and Treasuries I’d say.

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