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Thursday, March 28, 2024

US Election: What’s in Store for Equities and Gold?

Courtesy of Mish.

As we head into the final stages of the the US 2016 presidential election, one has to wonder: Does it matter at all who wins? And what are the implications for equities and gold?

James Grant

James Grant discusses election and equity questions Fed is Now Hostage to Wall Street.

James Grant, Wall Street expert and editor of the investment newsletter Grant’s Interest Rate Observer, warns of a crash in sovereign debt, is puzzled over the actions of the Swiss National Bank and bets on gold.

Mr. Grant warns of today’s reckless hunt for yield and spots one of the biggest risks in government debt. He’s also scratching his head over the massive investments which the Swiss National Bank undertakes in the US stock market.

Interview Snips

Question: For more than three decades Grant’s has been observing interest rates. Is there anything left to be observed with rates this low?

Grant: Interest rates may be almost invisible but there is still plenty to observe. I observe that they are shrinking and that the shrinkage is causing a lot of turmoil because people in need of income are in full hot pursuit of what little of yields remains.

Question: What are the consequences of that?

Grant: It reminds me of the great Victorian English journalist Walter Bagehot. He once said that John Law can stand anything but he can’t stand 2%, meaning that very low interest rates induced speculation and reckless investing and misallocation of capital. So I think Bagehot’s epigraph is very timely today.


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