Hyper Inflation. Zero Growth.
Daily Plan 1.28.26
So this market is running with an idea that a potential Hyper inflation scenario in the US is just right around the corner— if you look at the action of related markets like Gold and Silver in last one year or so.
If hyper inflation were to take hold in the US, which is to say the prices are doubling every few months, it does not really matter what stocks we own or not, it is all about the real money — Gold. I do not think most of us are prepared for this, I know I am not.
In a way, this market action is a repudiation of the way some of these policies around trade have been executed. Otherwise you will not see this surge in Gold prices. Even as the stocks make new highs. So obviously this is not due to some present crisis but in anticipation of a major future crisis.
In my view, the hyper inflation fears are over amplified and we will not have it anytime soon in the US— for Hyper inflation you need 3 things to happen all at once, and while we have 2 in play in some form or the other at this very moment, the third one is not going to happen, not in our lifetimes.
The credibility and independence of the Central Bank is now in question. Powell may be the only player in the game who is viewed objective and neutral by these markets. He will be gone soon. So the question at the hour is will FED in 2026 be run better than what we have seen so far from some of these other government agencies?
Obviously the dollar decline has been very sharp. Down 10% within a year, these are large moves when it comes to the forex markets. But some of that is also due to the gold and silver rallies. In fact a takeover of Venezuela should have been bullish for the dollar. It’s been anything but.
Now, the third key ingredient for any sort of hyper inflation scenario is decline in the productivity of the country. This usually happens in severe conflicts, wars, civil unrests, pandemics — I will let you decide how likely is the US productivity to drop in near future to almost 0? I do not see it.
If these 3 were to happen all at once, I could see dollar almost plunge to depths never seen before, and we can see a semblance of hyper inflation take hold. I think what is much more likely is that with a diminished FED, if the Supreme Court were to come in support of Trump tariffs , this will slow down the pace of cheap Chinese exports into the US. The US high end consumer flush with cash, and profits from stocks, would then be chasing too few a goods driving prices up for every one— even for basic household goods.
This could on paper lead to a surge in inflation back to 2022 levels— now you had Powell in 2022 who was seen as a much more credible figure and was able to rein in the markets. With a banana FED at the helm, the plot here may be lost and we could see a runaway inflation. This could be amplified by the surge in AI related layoffs, by AI related cuts in profitability of American mega caps— so higher inflation, FED unable to act, higher unemployment, lower growth— all hit at once. Ought to take some starch out of these markets?
The only scenario in which I see inflation to turn to an almost fatal for all hyperinflation scenario is if the US were to get involved in a global conflict of some sort.
Then yes, Gold rally, even at 5100 Gold an ounce, is in its infancy.
You lemme know what y’all think but my money is on cooler heads to prevail, some sort of stabilization of these policies which are frankly giving a lot of jitters to these other non-stock related markets — so see the action in the metals, you see what bonds are doing, you see what forex is doing. These are far more important markets than the stock markets but most of our collective conscious is spent thinking about stocks all day.
Now, if this is a more benign bout of inflation, and with a weakened FED unable to pursue what is needed, this could help stocks which actually make a dollar today than some of these vaporware tech stocks that promise a lot of money, but in 5-10 years time.
This is why you are seeing a surge in value type stocks. Look at SCHD— I think it looks about ready to trade all time highs soon. You look at the Googles and the MSFT and AMZN of the world — even though they are tech stocks, they do make a lot of money even today, not just a promise to make a lot of cash down the road.
This may help explain why TSLA has been relatively underwhelmed even as the general index made a new high again today.
You look at GME— up almost 20% on the YTD. They have cash, they could be a turnaround story, some inflation here does not hurt them, especially if the FED refuses to act.
Now as far as the levels go for tomorrow, it is FOMC. There are major earnings for rest of the week. There could be chop. A lot of it.
I will still lean on those levels from last night, I think if they hold, we could remain supported.
If you really want a strong sell off here, I think we need to see some closes on dailies below 6940.
Minus that, I think we could find bidders there for a push higher into 7000s once more.
Look at this META 630 PUT for Friday. I think this stock continues to surge into FOMC, I personally think this PUT at 2, may be a 3 dollars could make sense just from lotto. It is about 6 bucks now.
~ tic
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