“Paradigm Shift” has been a buzzword lately with Bob Prince, Co-CIO of Bridgewater Associates being one of the latest to speak at Davos and mention that word.  Basically, if the the US keeps monetizing it’s debt to stimulate markets, they could still go a long way and bring about inflation at a level we are not even suspecting.  A Paradigm Shift.  

If there are twice as many dollars in the economy, well the stock market should be worth twice as much as there is going to be a competition to own those companies.  That is the logic.  But the important thing to look at is what will rise slower than the price of things we use?  Who wins in this game of expansion?   

The other possibility is we somehow manage our way through this clear level of danger that has been confirmed by a large amount of indicators reminiscent of 2007-9 recession.  Namely, the yield curve, job openings, company buybacks and the list goes on. 

And the 3rd possibility is we follow our recent history.  The next trade we do here will be a big one, so stay tuned.  It will get very interesting very soon. 

yield curve:

 

job openings:

 

  Buybacks: