Regime Change?

What investing regime are we now in?

We are transitioning away from the Central Bank stimulation regime.

What may be the new Regime?  An environment of fiscal stimulus in China, Japan and the United States.  A spending of money by governments to stimulate growth, a global reflation environment.

This is what has driven the equity markets to new highs.  My sense at this point, given the anticipatory move higher in equity prices that has already occurred, is that it is too late to buy and too early to short. 

The phase we are in is an early inflation set-up, one that will continue to expand and that will have meaningful impact on various asset classes.  What to do?  Buy Gold and Silver.  With inflation emerging, real interest rates will become negative and that will drive interest rates higher.  Short bonds and buy TIPS.  Inflation should help commodity countries, so emerging market ETFs and commodity ETFs become more attractive.  Finally, with paper currencies walking around with a target on their back as governments try to increase tax revenues by attacking the black market and the shadow economy, it may be prudent to establish a small position in Bitcoin.

Author: Thomas Connolly

Tom possesses a rich and diverse background that includes deep investing experience, senior corporate executive positions, and roles as a Regional Managing Partner and Global Industry Leader within Ernst & Young. He has advised executives on some of the largest acquisitions and dispositions in the Media and Entertainment industry, including clients such as Comcast, Citibank, Sony, Dalian Wanda and Publicis. Tom is a Certified Public Accountant with a Masters Degree from Columbia University. His skills are further accompanied by a personal passion for the study of economic trends and evolving market dynamics.

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