2021 FINANCIAL FORECAST
figure it is represented the historical diagram of the 10 years US bond.
to the cyclical analysis, rates are expected to reverse in 2021. If the
forecast turns out to be correct, the surge of the yields will force the
Federal Reserve to an early rise in rates, a scenario that terrifies the
markets, which survive thanks to the promise of "long-term low
fear that, in the face of the next wave of panic, central banks will create
more trillions of currency. This time the currency will also be addressed in the
real economy. The entire population will receive a non-repayable
cheque for several thousand euros.
Yes, one fine day in your mailbox you will find a free
five-figure check. It may seem like a dream but It’s actually a nightmare. It’s
repeating a failed scheme that led, among many, to the fall of the Roman
Empire. The same pattern that, in Weimar’s Germany, led
thieves to prefer wheelbarrows to the banknote pallets that were placed on
them. We’re talking about hyperinflation.
The graph compares GDP and US stock market
capitalization. No company has a higher capitalization than GDP; this
means that when the stock market capitalization exceeds GDP, we are in a bubble. The last two overtaking events were the dot-com bubble
(2000) and the subprime mortgage bubble (2007-2008). Today the capitalization
of the American market is equal 180% of GDP. The stock market is worth more than all of the U.S. How is
that possible? It’s not possible.
This is due to the continuous injections of
liquidity by central banks. These are trillions of dollars not guaranteed by
These maneuvers, however, have only a palliative
effect, as well as causing addiction: if to raise the markets today
"enough" 2 trillion, tomorrow we will need 3, the day after tomorrow
4 and so on. Whenever a central bank places these sums in the market, the
currency in which the sum is denominated loses value.
Where to invest
1) real estate
succeed in immobilizing a fixed and low rate mortgage, the real estate may turn
out to be profitable. The risk relates to liquidity. During hyperinflation
their price will rise but it
might be hard to find a buyer. Not to mention all the taxes you’ll have to pay
on them. I believe that by
investing in metals today, you will in future be able to buy more real estate
at a lower price.
2) bank deposits
In these situations it is not recommended to
keep the liquidity fixed, even in view of a possible capital. The only
alternative to the stock is the metals, having the government bonds yields zero
or negative. Do not forget that the recovery of the stock was only possible
thanks to the quantitative easing. The fundamentals of major societies remain
3) government bonds and refuge currencies.
and currencies issued by high-rating states fall into the category. In reality,
all currencies of today are fiat currencies; there is no substantial difference between
the US Dollar and Kenyan Shilling. Therefore
their aura of solidity is only conventional.
Too much overvalued. In the
today’s quotation of many Stocks the profits of centuries to come are already
incorporated. It means that, if you buy a stock today at 1000, in a
century the stock should be worth the same sum; provided
that the issuer maintains the
current growth rate.
Research on Plasticity, Financial Section 2021 © - january 11th 2021