FULL ARTICLE: https://midasletter.com/2020/05/what-were-trading-if-moderna-coronavirus-vaccine-fails/
Joy of the Trade Head Trader Jeff Zananiri joined Midas Letter to discuss the reflationary measures set by the Fed since the onset of the Coronavirus epidemic.
Fed Chairman Jerome Powell said the central bank has flooded the economy with liquidity and will continue money printing programs for as long as the economy is in need.
“As a central bank, we have the ability to create money digitally. And we do that by buying Treasury Bills or bonds for other government guaranteed securities. And that actually increases the money supply. We also print actual currency and we distribute that through the Federal Reserve banks.”
With this precedent set, it is difficult for investors to be trading on commodities dependent on economic activity and growth. Instead, the head trader believers we can look towards inflationary sectors such as gold.
The Head Trader believes we are still set to witness waves of equity selling as the stock market is correlated to personal income. With the jobless rate at its all time high, even with the added liquidity provided by the Fed, the public may still have to sell their investments to make up for the decline in income.
As uncertainty plagues the market with US – China tensions, COVID-19 vaccine concerns and no clear timeline to when the economy/world will return to “normal”, gold prices have been rallying. Spot gold jumped to $1,764.73 per ounce Monday — a 7 year high dating back to October 2012.
Watch the full interview to see other ideas/trades worth considering with the current economic climate.