Corporate Socialism at Its Boldest

Written by Gerardo Del Real
Posted June 29, 2020

Facts don’t seem to matter much nowadays until they do.

Here are some facts. The United States now has over 2.5 million confirmed cases of COVID-19 with over 128,000 dead. 

Hell of a flu. 

Here are some more facts. Taiwan with a population of 24 million didn’t implement a lockdown yet it did have mandatory universal mask-wearing. Of the 24 million people in Taiwan, it experienced a total of 447 cases and 7 deaths.

By comparison, New York, with 20 million people, has had 397,000 cases and 31,000 deaths. Not a political statement, just facts.

Here are some more facts. 

While the average everyday American has to have near-perfect credit and a pristine balance sheet to qualify for a mortgage or tap existing equity on decent terms, the Fed is busy making sure Main Street makes it through these unprecedented times. 

Wink wink.

What it’s really doing is counterfeiting money and buying up corporate debt.

Below is a list of the 10 biggest beneficiaries of Sugar Daddy Jerome’s generosity as of June 17. 

oc image 29june20

 

Let me be absolutely clear about one point. I believe in the business cycle, I believe in price discovery and don’t believe in counterfeiting money.

But if this is the path our elected “leaders” — from both major parties — have chosen to travel down, I’d like to see health care, education, and infrastructure taken care of before the Fed takes care of Warren Buffett by buying Coca-Cola, Apple, and Berkshire Hathaway energy bonds.

Targeting higher inflation for everyday folk while punishing savers and subsidizing major corporations is corporate socialism at its boldest. 

One giant middle finger from the Fed to everyone but the better off amongst us with exposure to financial assets.

Capitalism is dead, the Fed killed it. 

COVID-19 is back at record levels in Texas, Arizona, and Florida, among other states because people didn’t want to take basic precautions.

The Fed isn’t thinking about thinking about raising rates. 

I’m highlighting these very basic points because it is the roadmap for the next two quarters.

A roadmap that screams volatility.

Corporate earnings will slowly but surely crystallize the severity of the economic damage the lockdowns have caused.

There will be no V-shaped recovery. There will be more self-inflicted economic damage that will provide the Fed and politicians the cover to continue to bail out corporations disproportionately.

I suspect there’s more M&A in the cards as many companies are hitting all-time highs and can use a favorable share price as leverage.

It’s no longer the first inning in the new gold bull market but there is a lot of game left and it’s time to start doing what the Fed is doing... taking a little more risk.

To your wealth,

gerardo-sig

Gerardo Del Real
Editor, Junior Mining Monthly and Junior Mining Trader.

For the past decade, Gerardo Del Real has worked behind-the-scenes providing research, due diligence and advice to large institutional players, fund managers, newsletter writers and some of the most active high net worth investors in the resource space. Now, he is bringing his extensive experience to the public through Outsider Club, Junior Mining Monthly, and Junior Mining Trader. For more about Gerardo, check out his editor page.

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