A subscriber asks; Should we wait for a recession to buy assets?

Unprecedented and historic circumstances are supporting asset prices

Other than bonds is it possibly too early for other assets? If we are to have a recession the stock market will be down significantly on the hype. The recession itself doesn’t have to be real, just well promoted.

Regards,
D

Here was my response (edited for grammar):

The alt-financial media always say this, while the mainstream press has started its central bank cover campaign.

Hi D,
Just imagine how the US Fed will act if it sees an imminent recession. I certainly do not see one here in the United States, but most of the other developed nations are experiencing massive slowdowns in economic growth. The United States stands out as an outlier, hence its monetary policy is relatively tight.

What I try to tell the listener and reader is that if the US Fed sees an imminent recession, it will slash rates very quickly. Perhaps as quickly as they did last decade. The US fed does not want to risk some sort of calamity like last decade, because it will fully get the blame. The Fed is under the microscope and will err on the side of liberal monetary policy.

I am not here to say that the stock market won’t crater ever again, but we are confronted with the reality of institutionalized ever-declining interest rates. It’s very difficult to contemplate the lowering of asset values when global monetary policy has been geared to be so accommodative, and is bound to be even more so over the next few years.

Since the central banks have taken it upon themselves, in a well-publicized manner, to perpetuate the economic growth timeline and asset cycle, they will do whatever it takes to make things move forward. It is imperative that asset values continue to climb as higher asset values accommodate higher debt loads. The debt loads also accommodate higher asset values. The central banks are more than willing to let sovereign-debt generation pile-up. This alone will force asset prices higher over time as the currencies are debased and the sovereign debt provides more leverageable collateral.

The average person on the street [alt-financial follower] will get poorer over time because he or she is left with the debt burden fallout with no offsetting assets that benefit from rising debt levels and lower interest rates. He is left with the fallout from rising asset values and not partaking in them.

The bearishness on the street is amazing. I am also beginning to grow concerned about the overwhelming bullishness on gold. Everyone is bullish on gold and the business press see it as a no-brainer ticket to gains. The gold commitment of traders is once again historically stretched, and gold has been the only commodity rising in price. I am concerned we could have a redux in gold similar to what happened early in the decade when the first rounds of quantitative easing did not result in calamity.

[With respect to bonds, despite the ‘analysis’ to the contrary, I see an orderly and well-undertstood process taking place in the bond market with no impending calamity, and as interest rates go lower it’s very difficult to contemplate a scenario of collapsing asset values. With this said, I could see a retracement in yields over the short-term].

Once the shock of negative bond yields wear off and people get used to them, they are going to be confronted over the longer-term with the overwhelming and punishing deflationary forces that will result, and many people will be on the wrong side once again when it comes to investing. The followers of the alt-media will once again lose out.

The fear of recession has already acted to provide support to asset prices. The contemplation of this manufactured pending doom has given the central banks the cover to slash bond yields across the board. That alone has provided supportive effects to stocks and real estate. Think about this. The end of the world is being priced in as we speak and stock prices are only down about 4% from their all-time highs. What’s going to happen when things turn around? I would not be shorting the stock market.

Regards,
Chris

I observe the psychological dynamic between Fed Chair, Jerome Powell, and President Trump and can hypothesize. Although President Trump seems to be excoriating Powell’s ostensible hawkish policy, I have to believe that this is just Trump’s disingenuous personality manifesting. Trump knows his traits and picked Powell so he could publicly lambaste him. Trump can only get away with these tactics when the Fed Chair is a white male Christian. This is why I believe Trump picked Powell. Any other Fed Chair who was a member of the tribe would probably be undertaking a similar monetary policy. But by having a goy at the helm, Trump can get away with what he does.

Stop staring at the stock market, there are always opportunities
Sevierville, TN is a beautiful place

Sevierville, Tenn., located in the heart of the Smoky Mountains, ranked as the No. 1 market to buy a vacation home. The cap rate for properties in Sevierville was 10.3%, while the median sale price for homes was nearly $240,000. In the report released Tuesday by vacation-rental management company Vacasa, housing markets were ranked based on their cap rate, a commercial real-estate metric that cross-references the net rental income with the purchase price.

The best place in America to get the highest return by renting out your vacation home – MarketWatch, August 20th

I understand that many of the alt-financial followers refuse to believe that they have been sold a poor bill of goods, and have stood on the sidelines as prices of everything have continued to scale new heights. But this will not change the reality. Take a look at this article from MarkeWatch that came out earlier today regarding the highest capitalization rates of vacation properties around the United States. Below is a list of the cities with a capitalization rate of at least 5%.

I have visited and stayed in Killington, VT many times as it offers some of the best skiing and Summer recreation in the Northeast. I have been to Pigeon Forge and Sevierville, TN as well. They are excellent places to invest.  Keep in mind that those in the alt-financial media are continually professing collapse, because they have a huge bias. They come across as having some sort of deep knowledge and insight, but they all either have a service to sell you or rely on clicks to generate revenue.

If you have cash to deploy, I would slowly nibble away at opportunities as they come up. We know where the world is heading, so plan accordingly.