Wall Street loves it when the government is pumping money into the economy. We’ve seen it with the Fed’s zero-percent interest rates and aggressive bond-buying program…and now, we’re seeing it with Biden’s big budget plan. A giant give-away. (Story continues below the video.)
According to the New York Times, Joe Biden is set to announce a budget of $6 trillion, including tax hikes and a budget deficit of $1.8 trillion. And are investors doing? Buying more stocks.
Investors hope that Biden’s budget will boost the economy with more spending. That’s why they loaded up on cyclical stocks. (Stocks that tend to benefit from economic booms.)
While this strategy may pay off in the short term, it could also be prove ultimately dangerous. (Story continues below the video.)
This fictional boom will have to come to an end eventually, and it won’t be pretty.
Joe Biden’s spending spree will have to be paid for at some point…and, remember: the bigger the bubble, the bigger the bust.