Sean Brodrick – Market Reactions To Fed Policy, Gold And Oil Stocks, And The Tech Supercycle
Sean Brodrick, Editor of Wealth Megatrends and contributing analyst to Weiss Ratings Daily, joins us to review how he is investing in US equity markets, gold, gold stocks, oil, oil stocks, and the tech supercycle incorporating artificial intelligence stocks, robotics stocks, and defense stocks.
We start off reviewing some of macroeconomic data and market reactions that feed into expectations around future Fed rate cuts. Next we look at the disconnect in the junior resource stocks in comparison to the bigger moves higher in gold and oil prices, and even when compared to the larger producers in both sectors. Then we shifted over to tech supercycle that is continuing to unfold in A.I. stocks, chip companies, robotics stocks, and defense stocks.
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Off the top of my head, I think Ramaswamy worked for Goldman Sachs. That is worth a double-take.
Close … looked it up. Internship. Not as bad as I was thinking.
Sean Broooooodrick! My man! Always love his takes.
Two Cheers for Vivek Ramaswamy for His Commentary on the Fed
Matt Ray • Mises Wire (03/25/2024)
Ramaswamy writes:
“Beginning in the late 1990s, the Fed’s scope drifted to include “smoothing out” business cycles. This was a mistake, since business cycles serve a healthy function by transferring the assets and employees of poorly run companies to more capable management. Even worse, the Fed’s actions often exacerbated business cycles by creating transitions that create boom-bust-bailout cycles instead.”
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Matt Ray writes:
“It is more accurate to say that once the business cycle is set in motion by credit expansion, the recession is a necessary correction, but it is preferable to refrain from credit expansion to begin with. Ramaswamy seems to grasp that any additional government intervention to prevent or delay the liquidation of malinvestments from the preceding boom will only aggravate and perpetuate the depression. Crucially, however, Ramaswamy’s stabilization policy would cause, not prevent, such an inflationary boom.”
“The natural tendency of the unhampered market economy is toward capital accumulation and increased productivity. Consequently, prices tend to fall, making monetary inflation necessary in order to achieve a stable price level. The effect of monetary inflation to offset the increase in productivity and to stabilize the price level is still to push interest rates below the rate that would have prevailed on the market and distort the structure of production.”
“A popular fallacy at the heart of this doctrine asserts that such inflation is justified because falling prices decrease profitable investment opportunities, but profits don’t depend on the general price level. Lower prices due to increased productivity are also reflected in lower prices for factors of production, and entrepreneurs profit from the differential between the selling price of a good and its cost of production.”
https://mises.org/mises-wire/two-cheers-vivek-ramaswamy-his-commentary-fed