Wealth Articles


Jul 31, 2019 | Wealth Articles

President Trump and the Federal Reserve are playing a crazy game of Good Cop/Bad Cop and everybody just assumes that Fed rate cuts will save the markets. Most investors have come to rely on the QE and zero rates policy and are continuing to buy stocks like they’re handing them out at liquidation prices.
The problem is that the stock market has become so severely overbought that a reversion to the mean (which always comes – don’t kid yourself) would utterly destroy the middle class’ savings, retirement accounts, and whatever personal investments Americans might have.
We’re at the point that a quarter-point rate cut isn’t even good enough: the market is like a heroin addict now, and it needs bigger and bigger doses of monetary stimulus just to function. Anything less than a half-point interest rate cut would be a dud to the markets – if there’s one thing the stock market can’t tolerate, it’s a negative surprise.
The New York Fed strongly hinted that a 50bps rate cut won’t happen: when NY Fed President John Williams projected a half-point rate cut for the July 31 FOMC meeting a couple of weeks ago, he was swiftly and vocally corrected by a New York Fed spokesperson.
It’s only a matter of time before equity valuations come down to meet the fundamentals, no matter how low rates go; it will be a long, painful drop when it happens. Take a look at the divergence:

Courtesy: Bloomberg, Morgan Stanley

Sooner or later prices will reflect the earnings power of stocks; profits drive prices. When the disconnect is this wide – even worse than it was in 2007 – there’s a long way to fall before the cycle starts over and the recovery can begin.

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Given the extremely high valuations in stocks right now, expect a bear market that takes prices lower by 40%-50%, when the slowdown becomes apparent.

Courtesy: Guggenheim Investments, Haver Analytics
Therefore, we all need to prepare for a long, hard winter ahead.
We all witnessed Bitcoin’s amazing recovery from $3,200 to the $13,000 level this year – BTC’s mid-May price rally was the strongest the coin has experienced since 2017. Furthermore, June 19 marked new, record-breaking highs for the Bitcoin hash rate, indicating robust health for the BTC network.
The network just got its strength tested when a Bitcoin whale transferred 49,756 BTC (worth $468,491,827) in a single transaction. The Bitcoin network facilitated this massive transaction quickly and easily – and only charged $374.98 to facilitate the transfer (a very tiny fee compared to the amount of money being moved).
Given the depth and severity of the economic shock that’s coming in the traditional markets, moving into cryptocurrency is the escape hatch that more individuals will be looking for – no need to rely on a broken safety net when the crypto network is stronger than ever.

Best Regards,

Brad Robbins
President, PureBlockchainWealth.com

Governments Have Amassed ungodly Debt Piles and Have Promised Retirees Unreasonable Amounts of Entitlements, Not In Line with Income Tax Collections. The House of Cards Is Set To Be Worse than 2008! Rising Interest Rates Can Topple The Fiat Monetary Structure, Leaving Investors with Less Than Half of Their Equity Intact!

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Legal Notice:
This work is based on SEC filings, current events, interviews, corporate press releases and what we’ve learned as financial journalists. It may contain errors and you shouldn’t make any investment decision based solely on what you read here. It’s your money and your responsibility. The information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If personal advice is needed, the services of a qualified legal, investment or tax professional should be sought.Please read our full disclaimer at PureBlockchainWealth.com/disclaimer

Trending: Social Media



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In a time when China is reiterating its pledge to crack down on cryptocurrency exchanges while simultaneously promising to develop its blockchain technology, the key is to monitor your sources of information #Marketwatch #Yahoofinance #Bloomberg #wsj


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