In today’s Issue:

  • Why they’ll call it the Nuremberg Rally
  • Trump is laying the groundwork for Farage
  • How to profit from the Nuremberg Rally

As a German by birth, I’m usually careful about these sorts of things. And perhaps I did get a bit carried away. But my headline just sounded so good at the time.

Until the feedback came in…

See what you make of this peace, first published to my paying subscribers earlier this week…

 

Welcome to the Nuremberg Rally

What’d happen if you put a real estate developer in charge of fiscal and monetary policy?

To be fair, our politicians and central bankers have been real estate developers in disguise for many years now.

Our left-wing deputy prime minister was recently caught out buying a £800,000 third home.

Shortly after the homelessness minister resigned over evicting a tenant from her investment property.

But with President Trump, we’ve made it official. The property magnate is already running fiscal and regulatory policy. Next, he’s busy appointing his “yes men” to the Federal Reserve too.

The result will be loose monetary policy combined with expansionary fiscal policy. An overwhelmingly friendly environment for asset price inflation. And, because the US dollar is the global reserve currency, those conditions will be global. Investors need to be positioned to profit.

But the boom will be fake. It’ll be a bubble that resembles the 2002-2007 period. That’s the last time when US fiscal and monetary policy colluded to engineer a boom.

That boom was so powerful it even made industrial-scale mortgage fraud profitable…for a while. We know how it ended.

But this time, the Federal Reserve is on top of that concern. One of the Fed governors is an expert on mortgage fraud. In the sense that she allegedly committed it herself… Yes, also while trying to buy herself a third house.

President Trump is already trying to fire Fed Governor Lisa Cook for lying on her mortgage paperwork. She claims he doesn’t have the power. Which would be missing the point.

Lisa was only trying to position herself to profit from the coming bubble. After all, she expected to be the one inflating it with loose monetary policy.

The evidenced is growing

Central bankers and left-wing politicians buying third properties may be the best signal. But the last few days gave us a lot of other supporting evidence that we’re in the early stages of a bubble…

As soon as the US stock market began to falter last week, Federal Reserve Chair Jerome Powell jumped on camera with a surprisingly dovish announcement.

Stocks around the world quickly recovered to record highs. Silver popped 2% in minutes on Powell’s comments.

The media then went rogue. It claimed that the Fed has abandoned its 2% inflation target. This implies looser monetary policy in the future, even if inflation is above 2%.

The stock market need not fear higher interest rates blowing up the stock market again, like in 2022. And so it was off to the races.

My own reading of Powell’s comments are very different. But in a bubblicious market, who cares? All news is good news, even bad news.

Who profits?

The uptrend in US homebuilder stocks is accelerating, despite poor news out of the US housing sector itself. Our recommendation REDACTED is up 18% in a month.

The outperformance of housing companies is important because housing benefits most from artificially cheap monetary policy. So, soaring housing stocks in the face of poor property news is a signal we are correct about what’s to come.

Those in the know are positioning themselves in the stock market for a repeat of the 2002-2006 US housing boom. You should too.

And all this good news comes before the Trump announcement of who will replace Powell in May. At that point, the president will be able to play both the fiscal and monetary levers, not just threaten to.

Don’t you think he’s gonna yank them hard?

The Fed has lots of room to cut rates…

Why they’ll call it the Nuremberg Rally

We all know that artificially inflated housing bubbles end in tears. Just as the term “bubble” was ingrained in Japanese people by the 1990s, it’s part of Western psyche today because of 2008.

But the idea that central bankers are the cause of such bubbles hasn’t caught on everywhere. Especially not inside central banks or academia, where central bankers typically come from.

Some people just love the boom too much to acknowledge it causes the subsequent bust. It’s the same with drugs. No matter how obvious the consequences are, people continue to take them.

Central bankers are like that, but with the economy. They can’t help but lower rates to create a boom. Especially when their boss is a property developer turned politician.

In a few years’ time, the new housing bubble will burst too. It’ll trigger another major crisis. The King will ask, “How did nobody see this coming?” Movies will be made about those who did see it coming.

What intrigues me is whether central bankers will dodge responsibility again. Not many people blame Alan Greenspan for the 2008 meltdown, after all. Instead, central bankers got the credit for saving the system…from the crisis they created.

Central bankers did cop a bit of flack over the 2022 inflation debacle, though. But that one was obvious.

Even if the public do pin the tail in the right donkey when our new boom turns to bust, I already know what the central bankers will say in response…

“I was just following orders.”

After all, Trump has made it damn clear he wants a central banker who will cut rates. And given he appoints the Fed Chair, he’ll likely get one.

When disaster strikes, the next Fed chair will trot out the age-old excuse. They call it the “Nuremberg excuse”. Well, they call it the “Nuremberg Defence”, but you know what I mean.

And so I’m going to call this new stock market boom the “Nuremberg Rally”. A reference to the culpability of those setting us up for a bust. Let’s hope their excuses don’t wash when the time comes.

Trump is laying the groundwork for Farage

We don’t often comment on politics for its own sake. We’re an investment newsletter, giving investment recommendations.

But please indulge me for a moment with some political commentary that isn’t of a partisan nature…

If Nigel Farage is to succeed in becoming Prime Minister, and lasting longer than lettuce, he’ll have to defeat those currently running the country. I’m talking about the bureaucratic blobs. Organisations like the Office for Budget Responsibility and the Bank of England.

This means appointing new leaders to those organisations. Or removing their immense power and influence. In an interview, I asked Nigel about this. He seems to be well aware of it. He even threatened to get rid of the Bank of England governor…

Trump is paving the way for Nigel on how to reform government. Trump’s Democratic buddies in charge of the intelligence agencies and health agencies are trying to clean up shop there, for example.

Trump is also fighting the Fed, explicitly. This isn’t disjointed chaos. It’s an attack on the institution that is most likely to undermine Trump. Just ask Liz Truss about how.

Farage would have to do the same. So, the US’ battle is a preview for us and how our political policies will look after the next election.

Don’t throw stones at glass houses. You’re in one. 

Don’t sidestep a bubble either

Investing isn’t supposed to be about bubbles that inflate and burst. But with governments dominating economies in terms of spending and regulation, and central banks interfering in the economy to an extraordinary extent, that’s just the way it is right now.

If you’re inclined to sit out the bubble because it will burst eventually, that would be my own disposition too. But I have a warning for you…

It’s not just that I believe we can do better. By understanding the dynamics of investment bubbles, you can profit from them. It can be incredibly lucrative. As long as you never forget the nature of a bubble and sell out ahead of time.

It’s also that inflation will increasingly demand that you speculate. Just in order to keep up with the cost of living. Those who don’t own assets that benefit from speculative manias will be left behind. Their cost of living will rise without compensation from rising asset prices.

Worst of all, your irresponsibly overleveraged neighbour will be minted while only your bills creep up.

Gold is the happy medium. Its performance over the past 25 years shows how it can quietly outpace stocks as bubbles come and go. That’s because the gold price reveals the speculative mania to be a mirage. A fake boom induced by government and central bank policies. Something which the gold price calls the bluff on.

[Ed note: there is a better option than gold right now.]

But you can’t only own gold and property to profit. Buying the right stocks at the start of a bubble is a great strategy to leverage gains without having to take on a third property’s mortgage to do it. Crucially, stocks are highly liquid. You can sell out and do a runner when the market turns.

To ensure we participate in the growing stock market bubble, you need to invest. REDACTED is a great start. There will be more to come.

***

More on what all this means for investors, tomorrow. Or, if you’re feeling impatient and want to profit from the Nuremberg Rally, click here now.

And send me your own feedback about calling this bull market The Nuremberg Rally to: nickolai@southbankresearch.com

Did I go too far?

Until next time,


Nick Hubble
Editor at Large

P.S. The next bubble may already be forming — and it has nothing to do with property. I revealed the metal powering AI, solar, EVs, and more… and the three stocks I believe could soar 400% or more starting as soon as 17 September. If you’re going to ride this rally, this might be your best chance. Click here to learn everything you need to know.