Business

Inflation is going to annihilate the stock market.

The reason, in fact the BIG reason, that stocks have been soaring since November 2016 is because of the coming inflationary storm. Stocks LOVE inflation at first as it results in asset prices rising.

However, stocks absolutely HATE inflation once it starts eating into profit margins. When this happens, companies begin to lose money as higher operating costs eat into their profits.

On that note, take a look at the following chart of corporate profits pre-tax.

In his latest presentation, Francesco Filia of Fasanara Capital discusses how years of monumental liquidity injections by major Central Banks ($15 trillion since 2009) successfully avoided a circuit break after the Global Financial Crisis, but failed to deliver on the core promise of economic growth through the 'wealth effect', which instead became an 'inequality effect', exacerbating populism and representing a constant threat to the status quo.

Editor's Note:  

While we are disappointed to hear of Marc Faber's recent comments and the fallout from them, Sprott Money is not affiliated with Sprott Inc. and have had no bearing in Mr. Faber's resignation from the board. We are a private company held by Eric Sprott. Thanks. 

Under The Thumb Of The Banks

Written by Craig Hemke, Sprott Money News

With The Donald J. Industrial Average surpassing new record highs every day, questioning this bull market's continued existence remains heresy outside of dark little corners of the internet.

However, continuing his series, Bloomberg's macro strategist Mark Cudmore dares to mention a few of the more prescient 'known unknowns' that could hamper the meltup for the rest of the year... and in the case of today, some that may not.

Via Bloomberg,

Amsterdam | As the financial world happily fixates on who will be the next Fed Chairman, I am in Europe celebrating the 30th anniversary of Black Friday, October 19, 1987. Three decades ago, I was on a trading desk at Bear, Stearns & Co in London along with David, Joey, Gregory, Peter and Paul, among others. We had just finished a remarkable four year run, but the party was over.