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More Fiscal Stimulus As Trading Frenzy Continues

trading frenzy
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EDITOR NOTE: With the Biden/Yellen administration in charge of the fiscal agenda, we’re virtually guaranteed more spending. Since many countries are bypassing the purchase of US Treasuries for those offering better returns or more economic stability, we can bet that the Fed is going to step in and load up its balance sheet even more. With a high unemployment rate--the last figure being around 10% according to Powell--the Fed’s pro-inflationary agenda shifts into high gear, giving a green light for more stimulus. The stock market is likely going to soar, but so will the reduction of your dollar’s purchasing power. If you’re seeking returns in the overvalued stock market, confident that its artificial backstop via the Fed will bolster the bull, at least do so responsibly and hedge some of your cash in non-CUSIP gold and silver. After all, when the market finally tumbles, any investor who ends up seeking safety in cash unhedged will find that his or her dollars will be a fraction tomorrow of what it was worth today.

The frenzy of trading in U.S. equities is showing no signs of abating and looks set to surpass levels seen during the worst of the pandemic panic in March. Over the last 20 days, an average 15.8 billion shares have traded each day on all U.S. exchanges, according to data compiled by Bloomberg. That’s just below the 16.1 billion average hit on March 25, which was the highest in at least over a decade. Bursts of trading usually come amid periods of surging volatility so with price swings subdued the jump in trading activity looks like another sign of stock market exuberance.

Since Covid and The Federal Reserve altered markets back in February/March 2020, we have seen stock market volatility rise then decline (purple line) while trading volumes have risen in January 2021. Boatloads of monetary stimulus …

and fiscal stimulus in the form of transfer payments to low- and middle-income households.

Tape A, B and C trading volume on all US exchanges (exchange symbol US) for all security types.
Quoted in millions of shares. Calculated by Bloomberg. (MVOLUSE = MVOLQE + MVOLNYE + MVOLAME).

The pledge of continued monetary stimulus and the hope of massive transfer payments have created a trading frenzy in stocks, Bitcoin and gold/silver. Especially Bitcoin and other cryptocurrencies.

The Fed has signaled no tightening until … after 2023.

Trading Frenzy

M1 Money growth is at 69.7% YoY, the highest since 1960.

Trading Frenzy

Hi Ho Silver! Away!

Originally posted on Confounded Interest

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