The Scenario is Kicking In…

Markets have been in a whirlwind since May 19th. The AI Bubble crowd is pushing their views which in the long-term are probably correct. However, in the short run if one uses AI for small decisions, you will find it leads to a lot of small efficiencies. I don’t think AI will ever have real intelligence, and will not take over the world, but the next step is to watch its widespread small usage.

Moving on to the markets: I keep saying that my work for many years that has looked into what is the effect of various monetary factors on stock prices is key in this environment.

To keep it simple my monetary multiplier research has narrowed it down to five factors,

1. Dollar                                         Declining is bullish for stocks
2. Gold Price                                  Declining is bullish for stocks
3. Oil Price                                     Declining is bullish for stocks
4. 30-05 yr Yield Curve                 Rising is Bullish for Speculative stocks
5. 2 yr interest rate                      Declining is bullish for stocks

The factor that my correlation studies have shown to have the most impact is declining gold. I am looking for gold to decline to low 2000’s over the next six months and for that to be a real power behind stock prices. Bitcoin is too new to have research, but as it has no real value, declining Bitcoin is probably doubly bullish on stocks.

Interest rates as a factor are highly over-rated, especially short term rates. At the moment they are low enough, probably will not go down until the recession/depression hits in 2027.