Update - July 20, 2021

Setting Up for a BIG Move Higher

There’s only one story on Wall Street this week. It’s one worth watching very closely.

It’s the yield on the 10-year Treasury. It is plunging.

As I write, the benchmark figure stands at 1.14%, the lowest it has been since January.

But if you’ve been reading my analysis, you know there’s a figure that means a whole lot more… It’s the “real” yield on the 10-year. It subtracts the official rate of inflation from the nominal rate to give us a true sense of things.

Thanks to falling interest rates and rising inflation, the real rate now stands at -1.05%, just a few basis points from all-time lows.

The figure tells us a lot.

First, I must remind you how bond prices work. It’s simple.

When demand rises… so does a bond’s price. And when the price rises… the rate falls. That’s because as more folks want in, the market needs to pay less in interest to entice them.

Plunging rates tell us that demand is quite high and investors are valuing safety over return.

There are several reasons we’re seeing this shift.

More Trouble?

The first is more fears of a COVID resurgence. Numbers are still quite small here in the States, but the headline writers are having their way, and the rumors of mask mandates and closures are growing.

The second idea, though, is much more acute and, in Fed speak, far less “transitory.”

It ties to some recent data that shows the economic rebound may not be as long-lived as folks thought just a few months ago. The chances that this was just a quick spurt followed by “stagflation” are growing. Recent data out of China and the country’s monetary tightening both point in that direction.

But here’s the thing. I’m not bearish. Not at all.

Sure, the economy is in a rough spot. It has been since all this economic maneuvering and money printing started in 2009.

But keen market observers have been able to learn a lot over that time. Namely that this sort of rate pullback has preceded nearly every bull run in the past decade.

Remember, it’s not economics pulling the stock market to one high after another… It’s economic jiggering. As the patient starts to flatline, the folks in the white coats deliver another shot of adrenaline.

In this case, that shot will come in the form of more money printing, more federal spending (watch the news this week for the dealmaking in Capitol Hill) and increasingly dovish talk from the Federal Reserve.

Because our Modern Asset Portfolio hinges on real interest rates, we’re in an ideal spot to take advantage of what’s in front of us.

Buying What Works

Banking stocks, tech stocks and companies buying back large chunks of shares will continue to reward shareholders in this low-rate environment.

Perhaps the biggest opportunity in all of it, though, will come from the crypto sector.

The forces that pushed crypto prices to all-time highs earlier this year are circling back. A lack of return potential elsewhere in the market… massive amounts of money printing… and fears of the dollar’s waning power are all coming to the forefront again.

With crypto prices near their lows for the year, it’s creating a big opportunity.

We’ve got a crypto in our portfolio – Monero (XMR). We’ve had very good luck with it… more than doubling our money.

And thanks to what’s happening in the economy right now, the gains from the sector are far from over.

Like a coil spring, prices have been compressed by low interest rates but are ready to leap higher once again.

We’re dialed into the action. We’ve used our unique system to pull in one winner after another.

With rates once again falling toward record lows, the spring is coiled up once again. Markets will pop… and we’ll ride the very best opportunities higher and higher.