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The End of QE and Copper

Written by Luke Burgess
Posted October 2, 2017 at 1:57PM

Huge news...

The Federal Reserve just announced the end of its historic quantitative easing program.

The move to begin drawing down its $4.6 trillion balance sheet is a pivotal moment for the Fed. And everyone is trying to figure out exactly what it will mean for the economy and markets at large.

But I think the big takeaway from the end of QE is this...

The program worked (at least it didn't fail miserably).

And the economy is again strong enough to support itself.

This is a very bullish sign for investors. The end of QE will add a great deal of confidence to the markets, spurring new investment and emboldening current investors who are already quite emotionally dug into the market right now.

So, despite all recent predictions for a correction, I think the economy is set to grow faster than expected, and the stock market is still headed higher.

In fact, just yesterday, U.S. GDP growth estimates were revised upwards to 3.1% from 3%. 

What are we talking?

Dow 25,000?

Definitely.

Dow 30,000?

Absolutely, why not?

From here, an 8% growth compounded puts the Dow over 30,000 in four years.

But I think it's going to 30,000 much sooner than that. And it has a lot to do with Donald Trump.

Trump might be crazy. And he might be... no, Trump definitely is an a-hole. But maybe that's exactly what the markets wanted (and maybe needed) at the helm of the ship: a crazy a-hole.

No one can deny the Trump Effect is happening. But there are many who claim the rally is fake because it's only built on confidence.

And that may very well be true. But fake markets can stand and grow just as well as fundamental markets. Sound crazy? Let me explain...

Consider the Federal Reserve's quantitative easing program: The plan was to support economic stability and growth by buying up risky debt with new money without disrupting the functionality of the system.

In short, the Fed had to add to a house of cards without knocking it down. But instead of building up, it added more cards.

house of cards 515 x 215

The Fed was able to support a shaky system simply by giving it more of the only thing it really wants: money.

The Trump Effect is working in a similar way. Maybe the market is ballooned with confidence and “fake” in a way. But that confidence is strong enough to support the house of cards... for now at least.

Need evidence?

Ask a Trump supporter.

In the short term, all this puts the president's infrastructure plan in a great position.

That's why I'm starting to invest in copper.

copper 9%2F29%2F17

Copper is not sexy. In fact, it's pretty boring.

But it's absolutely necessary for electricity and other staple infrastructure.

Most of the market seems to be focused on the NFL or Trump's tax plan. And, surprisingly, only a few are talking about the need for infrastructure repair following all these hurricanes.

But I expect that to change soon. And I expect to see a big jump in demand for copper-related investments when the mainstream financial media starts really digging into the infrastructure story. That's why I'm just now starting to buy copper stocks.

There are no doubt other areas of the market to play in an infrastructure bull market. But with my long background in natural resource investing, I already have great experience trading copper stocks.

My colleague Alex Koyfman is also tuned into the copper investment market, and he's put together a presentation on one tiny stock that's set to explode. You can check that out here.

And be sure to be on the lookout for more copper-related investment ideas here in Wealth Daily coming soon.

Talk later.

Until next time,

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Luke Burgess

follow basic@Lukemburgess on Twitter

As an editor at Energy and Capital, Luke’s analysis and market research reaches hundreds of thousands of investors every day. Luke is also the investment director of Angel Publishing’s new Secret Stock Files newsletter, which helps investors leverage the future supply/demand imbalance that he believes could be key to a cyclical upswing in the hard asset markets. For more on Luke, go to his editor’s page.

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