Key Points
- We are in the midst of an inflationary boom, driving stock prices and home prices to record highs.
- But that is about to collide with a global oil shock of unprecedented proportions.
The inflationary boom is driven by:
Tax cuts from Trump’s “Big Beautiful Bill.”
Fed rate cuts. The Fed has two mandates: first, to maintain price stability by keeping inflation in check; second, to keep the economy at full employment. The Unemployment Rate (blue) was already low, below 5.0%, and Core PCE Inflation (red), the Fed’s favored inflation measure, was above its 2.0% target, which did not justify rate cuts.
If you are already a subscriber, please login to continue reading:
If you are not a subscriber, to find out more click here
Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.
Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.
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.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.