Boom or Bust?

 I watch and read quite a few financial sources, and at hand is the argument is boom or bust.  Almost universally it is agreed this ends with a bust, but is that very soon or a year out?

Most of the boom argument is about the free money about to be unleashed onto Americans by the democrats.  The argument goes last years free money produced the market boom in 2020, so its time to repeat it in 2021.  Its a good argument. 

The Federal Reserve wants to keep this party going too, with their recent change to no longer include new money in savings accounts as money expansion.  See Federal Reserve Changing Reporting on M2 Money .  And last night Bitcoin is trying very hard to enter bull territory.

The Green line represents the long term trend line for bitcoin, and it just crossed above it.  For me to believe this rally I need to see bitcoin 53,200, and of course once it crosses the previous high we are back into full bull. I even added A LITTLE of bitcoin on Monday on the open.

So what's the problem ? (Scroll down)

The problem I have is free money for everyone in the next 3-6 months is everyone's play.   But being a skeptic isn't evidence or a reason.    There is only two 'masters' of the markets that can take it down, value of USD and bond yields.    Too much free money could bring the USD into new lows and the US could lose control of the dollar.  Bond rates could rise until triggering a market run to force the rates down in a panic run.    Gamestop had a short against it of 135%.  US treasuries have a short against it of 200%.   What would happen if the shorts got scared?  We got a taste of a small scare among the shorts last week with rates rising in the 7 year, and the market corrected.  Mortgage rates are very low, but could that change also?  The rates are stabilizing, but is that it for the year ahead?

With a full bond short panic we would see yields on the secondary market go negative.  That right, people paying 1, 3, and maybe even 5 year a negative return to own a US treasury.  

So other than USD breaking down, or bond market short squeeze, I agree the markets are set to double from here with all the free money, and Bitcoin to go to 200K with ease.

Watch TLT on your favorite chart.  Below is a 7-10 year treasury graph.  Fun fact, over 50% of US treasuries in the 7-10 year changed hands last week.  That means there was a buyer as others sold.  Is those buyers stupid or expecting a return?  Look at the two LARGE volume candles, one red, one green, all being bought.

Since we are in a market the FED tries to control, its hard to say what the market does AND what the FED does.  To learn more about this bond theory, listen to 'the bond king'.

Another analyst who doesn't see the bond squeeze ahead, runs with the free money run, but see's a housing bust if it does.