Bidenomics is a big departure from sound economics. But when reason sleeps, gold fortunes are born. Biden’s triumph in the presidential election does not just mean that a new man lives in the White House. It actually implies a fundamental shift in economic policy . Some analysts even see Biden’s agenda as a decisive break with neoliberalism or “Washington consensus”. You see, in the old orthodoxy, most economists trusted in markets, argued for privatization, deregulation, and liberalization. Taxes and social benefits should be low and don’t discourage work and investments. The governments should run balanced budgets, avoiding large and permanent fiscal deficits , while central banks should hike interest rates to prevent inflation from running out of control.
S&P 500 attempted a breakout, but retreated. Is that a reversal, or proof of more pressure building up? Much starker move in the high yield corporate bonds would speak in favor of a reversal, but only until the higher end of the debt markets is examined. Or the volume for that matter, as these would put the reversal hypothesis to rest. VIX continues turning lower, and option traders are getting the message – finally, the put/call ratio appears to be on a declining path, meaning that fewer market participants are expecting another shoe to drop. As if one fell in the first place, really. Is that the worst of the inflation scare being over, for now? Probably yes, and the retreating Treasury yields are mollifying – but as explained in ample detail, this calm before the (autumn) storm, is deceptive. Calling the Fed‘s bluff, precious metals (and some commodities) are onto something, really.