Conclusion
Gold (orange below) has outperformed the S&P 500 (blue) over the past three months. Long-term Treasuries (green), after leading both stocks and gold for the first six weeks, have plunged since the Fed announced a 50 basis point rate cut on September 18.
Tight credit spreads, abundant liquidity, and solid growth are not usually a good time for the Fed to aggressively cut rates. The bond market reaction warns that financial markets are still wary of inflation and concerned that Jay Powell may have emulated Arthur Burns and cut too early.
Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He founded PVT Capital (AFSL number 546090), which provides income and growth strategies to wholesale clients.
Colin also co-founded Incredible Charts and writes the popular Patient Investor newsletter.
Using a top-down approach, Colin identifies macro trends in the global economy and then combines fundamental and technical analysis to evaluate opportunities in sectors that stand to benefit.
Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.