That's the speed at which money circulates through the economy. It's a crucial part of the well-recognized link between the money supply and inflation.
But as we discussed, the eggheads have it wrong...
You see, they thought monetary velocity was relatively stable.
But in reality, it has been trending downward since the mid-1990s. And when COVID-19 shut down the global economy in 2020... velocity fell off a cliff.
Now, the velocity trend line is flattening out.
If you're lost, don't worry. The takeaway is simple...
New analysis explains what's making this risk-averse strategy so profitable right now. Get the full story now on how you could start collecting instant cash payouts like $775... $1,286... $1,403... and even $2,480 – every single month – right here.
It doesn't matter if you have money in the markets right now or are waiting on the sidelines. The short period we are about to enter could have the power to make – and destroy – fortunes. And what you do in the next 90 days could determine your financial success for the next decade. Here's what's happening and how to prepare.
For years and years, the Federal Reserve pumped money into the economy to battle crises.
Every time a crisis occurred, the central bank would go to work with bags of proverbial "helicopter money." And every time, falling velocity helped prevent inflation.
The Fed wound up pumping the economy full of money. But most of that money didn't circulate quickly.
So we got lucky... We got the benefits of "easy money" without having to suffer with rising inflation.
But with the velocity line flattening out, we have a problem today... It means the Fed's efforts are causing out-of-control inflation.
Falling velocity is no longer preventing the increased money supply from turning into inflation. That leads to some unavoidable consequences for investors.
Essentially, we're now faced with a big dilemma...
Is the current velocity situation a temporary post-pandemic adjustment? Or are we about to enter a new era in which velocity stabilizes – or perhaps even trends upward?
You don't need to look far to realize we're entering a new economic era...
The majority of Baby Boomers are retiring. And the folks who aren't old enough to do that yet are looking for alternatives to the kinds of jobs they previously had.
We hear constantly from companies about the challenges of finding workers today. Labor shortage is now a dominant theme in our society. And one way or another, companies will need to give more incentives to get the workers they need.
Regardless of how they do it, if companies want to get workers, they're likely to pay higher wages. And in turn, they'll pass the higher costs on to consumers through higher pricing.
It's more than just higher wages being passed on to consumers, too. It's also about how willing workers are to spend the money they earn. This idea can get complicated...
Economists talk in terms of "multipliers" to describe what appears to be "2 + 2 is greater than 4" to the average person. But we don't need to get into the weeds here...
We simply need to know that increased velocity can lead to more inflation than you might assume by just looking at higher wages being passed on to customers.
That means elevated inflation is here to stay as long as these economic conditions hold true. It could last for a decade or more.
Simply put, we won't be able to look at the stock market in the same way as before...
Companies, sectors, and industries vary in how they can cope with or be hurt by inflation. And after being dormant since the early 1980s, this issue is now back in the spotlight again.
In the end, as we've said before, it's time to get serious about finding the right stocks.
Good investing,
Marc Gerstein
Editor's note: Chaikin Analytics founder Marc Chaikin recently put together a presentation to show everyday investors how to find the best sectors and industries at any given time...
Marc's "Industry Monitor" constantly scans every corner of the market – looking for signs of weakness or opportunity. From there, he identifies the stocks poised to outperform (or underperform) the market. It's the ideal way to find the "best of the best" opportunities.
And right now, you can claim instant access to Marc's brand-new shortlist of Industry Monitor recommendations for 50% off the normal price. Get all the details right here.
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
+0.68%
10
16
4
S&P 500
-0.06%
144
287
65
Nasdaq
-1.46%
15
68
16
Small Caps
+0.33%
304
1082
495
Bonds
+2.01%
Real Estate
+1.89%
6
20
3
— According to the Chaikin Power Bar, Large Cap stocks are more Bullish than Small Cap stocks. Major indexes are mixed.
No significant Earnings Surprises in the Russell 3000.
* * * *
Sector Tracker
Sector movement over the last 5 days
Real Estate
+3.18%
Staples
+2.17%
Industrials
+1.90%
Financial
+1.53%
Energy
+1.34%
Materials
+1.33%
Utilities
+0.95%
Health Care
+0.70%
Discretionary
+0.46%
Information Technology
-0.37%
Communication
-4.41%
* * * *
Industry Focus
Dow Jones REIT Services
13
81
21
Over the past 6 months, the Dow Jones REIT subsector (RWR) has outperformed the S&P 500 by +7.96%. However, its Power Bar ratio, which measures future potential, is Weak, with more Bearish than Bullish stocks. It is currently ranked #10 of 21 subsectors and has moved up 3 slots over the past week.
Indicative Stocks
SRG
Seritage Growth Prop
MAC
The Macerich Company
SUI
Sun Communities, Inc
* * * *
You have received this e-mail as part of your subscription to PowerFeed. If you no longer want to receive e-mails from PowerFeed, click here.
You're receiving this e-mail at diansastroxz.forex@blogger.com.
For questions about your account or to speak with customer service, call +1 (877) 697-6783 (U.S.), 9 a.m. - 5 p.m. Eastern time or e-mail info@chaikinanalytics.com. Please note: The law prohibits us from giving personalized investment advice.
Any brokers mentioned constitute a partial list of available brokers and is for your information only. Chaikin Analytics, LLC, does not recommend or endorse any brokers, dealers, or investment advisors.
Chaikin Analytics forbids its writers from having a financial interest in any security they recommend to our subscribers. All employees of Chaikin Analytics, LLC (and affiliated companies) must wait 24 hours after an investment recommendation is published online – or 72 hours after a direct mail publication is sent – before acting on that recommendation.
This work is based on SEC filings, current events, interviews, corporate press releases, and what we've learned as financial journalists. It may contain errors, and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.
Post a Comment
Post a Comment