SATURDAY Morning Coffee Thoughts: (6/19/2021)

If anything, USD has finally strengthened compared to other currencies. For example, the almighty dollar has climbed 50 cents more expensive for the Philippine peso now at 48.50 per dollar. 

The doors are slowly getting closed for the ‘easy money’ era. We are slowlyy getting into more tighter monetary policies and corporate bond support will eventually be slowed down if not halted eventually. 

Treasury yields have not looked like this for the past year when taking a magnifying glass and taking a closer look. (this definitely screws up big money who bought in early for protection, therefore increasing frustration). 

In more simple observation, TECH IS NOW BACK IN THE GROOOOOOVE. and banks, materials, oil are suffering much buyer’s remorse and smart money are no exception (listen to our episode 5 podcast if you must for this part). 

I am not saying na TECH will outperform continuously as predicting stock prices is a fool’s errand. pero my bet is on the biggest and most robust balance sheet laying around out there ie FAANMG stocks. These companies can withstand the financial blow that the FED is signaling to provide to those companies who took in much debt and had not been able to cover much of their interest expense, and are at risk of breaching debt covenants and unable to afford repaying debt (LOOK AT AMC by year-end).

The word TRANSITORY has now played its part in this great economic reopening, and I DOUBT that CHIPOTELE, MICKEY DS, WALMART, COSTCO, ETC. will pull back their salary offers to their workers just because PRODUCT PRICES ARE TRANSITORY. While savings rates are down low below 1%, INFLATION IS HERE TO STAY. Ultimately, savers will pay the ultimate price.

In summary, Cassandra is forecasting great market turmoil ahead of us. Last time the smartest guy in the room did made this forecast, noone gave any credit and it took a couple of years before the mother of all bubbles (real estae) burst and crashed economies worldwide.

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