Bravos Research explains why the stock market is hitting new highs even with rising oil prices and inflation. Their view is that the real driver is currency debasement, not economic strength.
Key Points
Key Highlights:
- Stocks are rising not because the economy is strong, but because the US dollar is losing value
- The Fed is expanding its balance sheet again, increasing money supply and fueling inflation
- High government spending and debt are adding more pressure on the dollar over time
- Inflation boosts company revenues in nominal terms, which helps stock market earnings grow
- This creates a situation where stocks can rise even while real economic growth slows down
- Similar patterns happened in the 1970s, where inflation caused volatility but earnings kept rising
- If inflation worsens, it could eventually hurt the economy and trigger a deeper correction
- Commodities may benefit the most in this environment, historically outperforming stocks during inflation cycles
Final Takeaway
Stocks can keep rising in the short term due to inflation, but that does not mean the economy is healthy. If inflation continues to build, it could lead to a bigger correction, while assets like commodities may offer stronger opportunities.
