Market expert warns government response to COVID triggering 'cobra effect'

Market expert warns government response to COVID triggering ‘cobra effect’ in US

The Bear Traps Report founder and editor Larry McDonald argues U.S. in a period where ‘hard assets are going to really dramatically outperform.’

The Bear Traps Report founder and editor Larry McDonald warns of the "Cobra Effect" taking place in the U.S., in which an attempted solution to a problem, such as the government's response to COVID-19 pandemic, results in unintended consequences. 

LARRY MCDONALD: Well, you know, what's remarkable, Maria, is that in the history of the Republic of the United States, 28 percent of all the dollars ever created were done so in 2020 and 21 – 28 percent of all dollars ever created. So what happens is you have a crisis like either Lehman or COVID. And then there's a government response and now we're having a cobra effect where the unintended consequences of government policy are creating a massive shift. I mean, this is such an incredible period to be alive.

AMERICANS WORRIED RISING INFLATION WILL OUTPACE THEIR WAGES THIS YEAR

We're heading back toward the 1970s, 1980s where you really wanted to be long hard assets and value stocks, whereas the previous decade that we just lived through was a deflationary period where financial assets did really well. So stocks, you know, growth stocks and bonds. Now we're coming in a period where hard assets are going to really dramatically outperform.

WATCH THE FULL INTERVIEW BELOW

Market expert: Unintended consequences of government policies creating massive shift

The Bear Traps Report founder and editor Larry McDonald discusses bank earnings, U.S. economic recovery, ‘the cobra effect,’ and the impact of the Federal Reserve’s rate hikes.

Source: Read Full Article