October 2020 Update
How will central banks and politicians, hooked on intervention react to slowing stock markets and economies? With more money-printing, of course! What does this mean for your money? Inflation may seem imminent, but we believe deflation comes first. There is a wider, more volatile set of outcomes that demands investment flexibility.
The recent spikes in globally COVID cases are disheartening, and it appears some European countries are embracing limited lock-downs once again. This disproves the “reflation” thesis, and will once again put Central Banks on the defensive. Frank Capital has custom portfolios that benefit from Yield Curve Control in the US, as well as further Quantitative Easing.
The insatiable demand for tech issues is being force-fed innumerable SPACs and IPOs, and the S&P has one its largest ever allocations to large technology companies. Yet, liquidity is decreasing in both the S&P 500 futures as well as the world economy. A trend of slowing economic activity and more Central Bank intervention will test the resolve of passive investors, and as our research has shown, when passive strategies become net sellers of stocks, look out below.
Read Frank Value Fund commentary about how much stimulus it took to push markets back to their February 2020 levels, and what the consequences are when this much debt and money are created. Hint: it’s not inflation… yet