As stocks continue to rise, inflation fears are becoming a serious threat. At what point, a rational investor should ask, will the Fed be forced to pull back on its overly aggressively low rate, money printing strategy?
While Treasury Secretary Yellen and Fed Chair Powell prefer to remain in their Alice in Wonderland dreamworld, continuing to believe they can manipulate the economy with no threat of inflation, billionaire investor Warren Buffett knows better.
This past weekend, the Omaha Oracle warned of “very substantial inflation” at the Berkshire Hathaway videoconference. He claimed that prices are going up everywhere, which makes for “almost a buying frenzy” as he put it.
And, unlike politicians and Fed Chairmans, who are banking on kicking that inflation-can down the road as far as they can, Buffet is telling it like it is.
He’s not the only one.
Interestingly, Dallas Fed President Robert Kaplan (who is not currently a voter in the rate-setting committee) went off-script at a Montgomery County Texas Chamber of Commerce meeting, saying that he notices signs of “excessive risk-taking” in the markets. He suggested that those signs should make the Fed consider reducing its bond purchases.
This is very unlikely, considering that even slight tapering could tank the economy and Yellen, Powell and others would never consider it.
Indeed, Treasury Secretary Janet Yellen continues to downplay the risk of inflation, especially in relation to Biden’s proposed $6 trillion in new government spending.
Yellen argued in an NBC ‘Meet the Press’ interview Sunday that Biden’s spending increases are “spread out quite evenly over eight to 10 years” so that the boost in demand is “moderate” and that she doesn’t believe “inflation will be an issue.”
And…What About Those Crazy High Taxes?
Here’s how you know we’re now witnessing a socialist regime that cares nothing about the fundamentals in the real economy. Not only is Yellen NOT worried about inflation…but, she told CNN in an email this weekend that, “the greatest threat to our economic recover, and out long-term economic prospects, is not a marginally higher tax rate for large corporations or the top 1% of taxpayers. It’s the lack of support for America’s worker and families.”
“Asking ‘will these tax increases hurt the economy? Is not the right question,” she insisted. “The right question is: ‘is trading higher taxes on high-income taxpayers for middle-class tax cuts and major economic investments pro-growth?’ And the answer to that question is a resounding yes.”
EXCEPT, of course, for the fact that those tax cuts, including a DOUBLING of cap-gains, would kill the markets. Which would, in turn, kill peoples’ retirements as well as the economy.
Trading volumes overseas were lower on Monday as several markets around the work, including Japan, China and the U.K., were all closed for public holidays.
S&P futures were up 0.5%, and Nasdaq-100 futures up 0.1%. Tesla were lower amid reports that the electric car manufacturer’s “gigafactory” in Germany will be delayed by another 6 months.
GameStop rose 2% after the company reported it had effectively eliminated its long-term debt.
Verizon is reportedly on the verge of a deal to sell Yahoo and AOL internet units to a private equity firm Apollo Global Management.
Buffett Names Heir
Warren Buffett named Greg Abel, vice chairman of Berkshire Hathaway’s non-insurance businesses, as his likely successor if he were to step down.
The investment fund reported a first-quarter profit of $11.7 billion, compared to a net loss of $49.7 billion in the previous quarter.
Ethereum Surges–Breaks $3000!
Cryptocurrencies were in focus again, as Ethereum reached $3,000 for the first time on the CoinDesk exchange. Ethereum’s gains amount to 323% this year. Conversely, Bitcoin has risen 100% so far this year.
Things to look out for this week:
- Fed Chairman Powel will speak at a National Community Reinvestment Coalition on Tuesday.
- The Treasury will announce its quarterly refunding on Wednesday.
- April employment reports will be released on Friday.
European markets rally, oil steady
European markets rallied as well, with Stoxx 600 in Europe up 0.3%. Oil was steady, at $63.81 a barrel.
The Bloomberg Dollar Spot Index was stable. Inflation fears drove Gold which climbed by 0.3%, to $1,774.25 an ounce.