Ross Powell is the founder of Survival 401k, a specialty financial services company that provides hard-asset based retirement account solutions and preparation recommendations. Please visit his website to explore the critical solutions that Ross offers. This article was originally published on US Daily Review: Trump Wins, Stocks Soar, Precious Metals Plummet, Bonds Burst
As the seconds ticked by the night of November 8, the world held its collective breath as it awaited news of who would be the next President of the United States. Those paying attention to corporate media outlets were left in suspended animation for hours as results were stalled and states uncalled. Meanwhile, asset prices gave away the game. At around 8:00pm eastern something dramatic and historic began to unfold. Over the course of the next four hours Trump’s win probability went from nonexistent to virtually certain. This led to massive swings in every asset class globally. Dow futures were down almost 1,000 points and paper gold rallied over $60.
Trump’s victory was declared and then, suddenly, something even more unexpected began to happen. While America slept, the entire move in stocks and gold reversed. It turned out that Trump’s election was a multiplied version of Brexit in more ways than had been expected. After the Brexit vote succeeded and shocked pundits as well as the markets, there was follow through to the downside in stocks for two days before the V-shaped recovery came into play. On the heels of Trump’s triumph, the reversal was well underway two hours later. This dramatic turn of events caught many professionals and prognosticators offside. Is this just an example of what Trump means when he declares that he finishes projects under budget and ahead of schedule, or – once we dispense with the sarcasm – is there something more going on here that has yet to fully play out?
These new all time highs in the Dow are brought to you by the Plunge Protection Team, the Federal Reserve, the Exchange Stabilization Fund, and high frequency momentum trading algorithms. There have been many attempts to construct a narrative that justifies these dramatic events. The most common explanation is that the immediate reaction was due to a framework that viewed Trump as disastrous and unpredictable. The stock plunge was exaggerated by momentum algorithms and people rushing to close out bets that they had placed on the ‘sure thing’ of a Hillary Clinton presidency. Once the initial dust settled, investors realized that Trump’s plans to rebuild infrastructure and strengthen the military would require massive fiscal stimulus. This blasted stocks higher – particularly the industrials – crushed volatility, boosted the dollar, eviscerated foreign currencies, and dumped precious metals.
There is a pervasive tendency for humans in general and financial commentators specifically to explain asset prices due to events. Whenever stocks move the financial press must justify why they did. This enterprise is mostly a fool’s errand full of sound and fury and signifying nothing. I’m a bit skeptical of a tall tale involving everyone who believed that Trump’s election would lead to nothing less than the destruction of the global economy immediately inverting to thinking that President Trump will create an economic boom. We could run around in circles describing various aspects of the wild disconnects and fluctuations that are taking place, but for the sake of everyone’s sanity there are a couple concrete dynamics that should be prioritized.
The daily chart shows the parabolic retrace of the dramatic drop in the Dow in the form of a green candle with a serious wick going below 17,500 on election night. Professional traders know that gaps tend to be filled sooner or later. This has been particularly true in the past several years with the advent of high frequency trading algorithms that hunt out stop orders in order to make a quick buck, or penny, or fraction of a penny. Even a fraction of a penny is a good gain if you can replicate it a billion times. Thanks to this machine intervention we’ve also seen unexplained spikes in various assets that have serves as pointers. These substantial moves are often rapidly unwound but end up serving as a magnet for price action. This ‘President Trump’ spike will likely be no different. While it doesn’t meet all the criteria to be termed a gap or a pointer that must be retested, it is reasonable to expect the bottom of that wick to be revisited at some point in the future. It could happen quickly, but it doesn’t have to.
Saving the most significant for last, Trump’s election has led to a hard selloff in bonds:
US Treasuries have been in a bull market for several decades. As the national debt has exploded exponentially it has been financed by money printing and currency debasement that has thus far managed to be camouflaged by the more severe depreciation of other fiat currencies and the total lack of money velocity in recent years. A longer term chart demonstrates that a multi-year uptrend in bonds and that the corresponding downtrend in yields is in the process of breaking barring additional moves from the Fed to quash the move.
There is international selling that exacerbates this move as we careen towards a time when the petrodollar is declared obsolete and the next necessary monetary reset occurs. Our debt cannot be paid back honestly, so the paper will inevitably become toxic. Our interest payments have grown alongside our debt, but it hasn’t reached the terminal stage yet because of the sustained emergency level monetary policy of near zero interest rates. As rates turn around and the selling of bonds forces the market to adjust, our debt will no longer be able to be serviced. The choices are still default, restructuring, or dramatic inflation where we print the money to pay off the debt. The dollar has lost over 95% of its value since the Federal Reserve came online in 1913, and we’re now staring down the barrel of the loss of the remaining purchasing power as default appears still to be off the table politically.
If real solutions are not implemented soon, then the Venezuela scenario will increase in likelihood. At this point, paying attention to bonds and currencies is a better use of time than focusing on the manipulated barometer of stocks.
Survival 401k: Take Control of Your Retirement and Achieve Financial Freedom
Survival 401k is a specialty financial services company based in San Antonio, Texas that guides clients through the process of taking control of their retirement assets. Their flagship offering is a full service Solo 401k that enables customers to invest in tangible assets including gold, silver, firearms, land, storable food, and even real estate. Survival 401k shepherds clients through the entire transition process of jailbreaking funds that are trapped in traditional retirement accounts and moving them into safe and secure IRS-approved financial vehicles.
Standard retirement portfolios are severely restricted in the asset classes they allow participants to select from. Because of this lack of flexibility and control, such accounts are severely vulnerable to the financial crises and economic downturns that can raid nest eggs and crush plans for retirement. Survival 401k empowers clients to protect against the risks of counterparty failure, price depreciation, currency inflation, and even systemic threats by diversifying into physical assets held in their possession.
Ross Powell, the founder of Survival 401k, is deeply committed to the project of protecting the wealth and retirement aspirations of every one of his customers. Ross was raised in San Antonio, graduated from the University of Texas, and is a veteran Naval Officer. His financial experience consists of almost thirty years at some of the largest banks and insurance companies in the nation. The intimate knowledge Ross has developed after decades of being involved with the inner workings of financial institutions makes him uniquely qualified to guide clients through the steps of transforming their retirement portfolios into robust, alternative strategies that focus on wealth preservation, growth, and liquidity.
Ross’s Christian worldview informs every aspect of his business from big picture strategy down to every single customer interaction. Ross is passionate about enabling his clients to achieve full spectrum preparation for an uncertain and unstable future in addition to financial security and prosperity. His company maintains strategic partnerships with top tier providers of indispensable goods and services as well as exciting international opportunities in Central and South America. Survival 401k’s responsible and compassionate approach to providing vital solutions shines as a beacon in these perilous times.
For more information please visit Survival 401k online at Survival 401k. Alternatively, you can contact the team directly via email (email@example.com), phone (844.650.5733), or fax (210.399.0524). Contact Survival 401k and file your application for financial freedom today.