A Week of Volatility to go

In 1920, a full 101 years ago, the idea of building the 2^nd avenue subway was introduced. By 1929, the budget was approved, but the Great Depression killed the plan. By 1939, WW2 commenced and American infrastructure workers were occupied with the war industry. In 1973, as the city of Manhattan was grappling with a recession, the hype around an infrastructure revival – which puts people to work – was again broadcasted to residents as a sure thing, with TV commercials and info videos.

In 2006, the federal budget was finally approved and phase 1 of the plan was underway. The cost has been $1.7bn/KM, the most expensive subway in the world, by a mile.

When you want to build a subway through one of the most densely populated and expensive cities in the world, where pipes, sewers and other infrastructure are already occupying some of the underground territories the line will be traveling, in addition to the city disturbing people living in the vicinity of the project, it is costly, laborious and lengthy.

Manhattan is the hub of American capitalism. It is both the sign of globalization and of corporate finance and banking, as well as consumerism.

The most prosperous Americans have found ways of leveraging this to their advantage, and those who have not have suffered wage stagnation for decades on end.

Courtesy: Zerohedge.com

As you can see above, New York City is not only home to the world’s most expensive subway project, but also to money managers, who are going nuts over rate hike possibilities.

This uncertainty has led to some outrageous selling pressures in the past two weeks, the likes of which we have not seen since the height of the pandemic scare in April 2020!

In cumulative dollar terms, the selling over the past 10 days is the largest in more than five years.

Asset managers want a clean slate going into 2022. It doesn’t seem to be a bloodbath, when looking strictly at indices alone, but I can tell that I bought stocks that are down 60% and 70% since February!

Because of Powell’s flip-flop, everyone is in suspense (as we head towards the December 15^th FOMC meeting) that hedge funds are just sitting on the sidelines, not trading LONG or SHORT.

Courtesy: Zerohedge.com

The market feels the same as it did before the FED made other historic announcements in the past: tense and without direction.

Volatility will continue on its path of ups and downs, because the odds of a rate hike (as soon as March 2022) have quadrupled, with nearly half of Wall Street convinced of it.

Portfolio Wealth Global doesn’t think Powell is that aggressive. The thing is that rate hikes are great for precious metals, each and every time. We’ve never had rate hikes, where gold was down!

We welcome the rate hikes, just as New Yorkers would love to see a modernized subway, a century after the 2^nd line was first proposed.

When the FED announces it, gold and silver will surge.

Best Regards,
PortfolioWealthGlobal.com