Washout ?

 27 Feb 2021

Dear Fellow Investor,

Washout ?

Last 5 weeks of the 20 year US Treasury Bond

On Friday there was a world wide stock market panic sell down on the fear of rising interest rates. The TLT as shown above reflects the interest rate trend. For the last 5 weeks US interest rates have been rising. (Interest rates move inversely to price.) Art Cashin, a 60 year Wall St veteran on Friday commented on CNBC that the spike in interest rates looks like a washout.    The chart confirms his view as prices dramatically fell only to later recover. Volume was massive as short sellers battled with buyers.  A washout is designed by insiders to flush out the crowd of investors who are on the wrong side of the market. In this case the insider is the US Treasury department who use  the exchange stabilization fund to manage markets. As they have unlimited funds and they have the power to move markets.

The US government will do all in their power to prevent a dramatic rise in rates and this is why they stepped in. Other central banks also stepped in. They have other tools.

Should interest rates rise too fast, it signals the potential of an  economic downturn. Many growth companies with high debt and low revenues may default. Stock markets will correct. To keep power politicians will do all in their power to prevent it. Money printing is their response .       

My view is to expect more volatility but not a collapse. We carefully selected  shares for you with good fundamentals including rising sales, earnings, low debt and solid management. Most pay dividends.  Some will benefit from economic recovery . Expect recovery.

Our newest additions have been Solar Vest in Malaysia and Canadian Solar traded on the Nasdaq which will benefit from a shift to renewable energy and the Biden green agenda.

Take care

Bill

Panic selling of shares and buying of US T bonds saw an outflow from precious metals  last week.  In my opinion this is temporary and gold/ silver are stores of value no matter what central banks do.  The bear on this coin is the symbol of Bern, Switzerland founded in the 12^th century.

Switzerland, Bern, Duplone 1794

 

Material: Gold   Full Weight: 7.5 grams   Fine Weight: 6.75 grams