It was nice to finally see the beleaguered Financials stocks outperform yesterday, and it looks like another good start to the day today. Clearly, there is nothing bigger right now than the Fed and they remain firmly behind risk assets which are going directly into the “Covid-19 trade”– Info Tech and Health Care – rather than those areas betting on a return to strong growth.
Every time a Fed official speaks, they reiterate how bad the economic backdrop is, but how they are going to print an infinite amount of money to protect against sustained economic decline. As an example, yesterday the Minnesota Fed President – Neel Kashkari – suggested the April Unemployment rate may be way worse than the current consensus expectation of 16% vs. 4.4% last month. While that sounds so negative, he also stated “The Federal Reserve is acting aggressively, and we will continue to act aggressively.” Historically, you do not want to bet against an unlimited printing press.
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