The U.S. economy has been on a diet of high-octane caffeine since the inauguration of the Biden administration. We are just at the beginning, and we ain’t seen nothing yet.

Where are we now?

The priority right now in the real economy and in the financial economy (aka Wall Street) is COVID-19 injections. How fast the government can get people vaccinated and how effectively the vaccines perform are the most important issues facing us.  Empirical data from all regions of our country and the world over show that all of the vaccines from the different drug manufacturers are effective. I know that there are some folks that for some reason refuse to get vaccinated. I simply say, exactly what other evidence do you need before you are convinced that it works? It is working in all corners of the world for blacks, whites, and Asians alike. In hot and cold weather countries. In capitalist and communist countries. And in rich and poor countries and every country in between. If COVID-19 is some sort of fake pandemic, then this is the greatest hoax ever perpetuated on the whole world.

Where do we go from here?

With massive government spending on COVID, plus the plan to spend additional money on infrastructure, it is unlikely that the stock market will decline or, more accurately, for the market to stay down for a prolonged time. Our investment tilt must change a bit to take advantage of the pumping of caffeine (government money) into the economy. The infrastructure-related companies/industries I mentioned in my last letter are still relevant, as well as companies in the electric vehicle (EV) industry.  Right now, I think the best bets are not the electric vehicle OM (Original Manufacturers) themselves, but the companies associated with vehicle manufacturers—battery makers, chip makers, charging companies, etc.  I see a whole new runway of opportunities in front of us, while some people are busy fighting over Tesla stock prices. I am agnostic regarding the price of Tesla stock. I am focused on the plethora of opportunities around the whole EV industry, not one single company. I am certain the EV industry globally will be in the multiple trillions of dollars very, very quickly and over the next 10 years.  I am working diligently and holistically to capture the names of the best-in-class companies in the industry. I am not a one-trick pony stuck on only one name—Telsa.

On fixed income and alternatives:

It has never been made so clear—the Fed chairman is not going to raise rates until the cows come home. When could we expect the cows to perhaps come home? As a longtime listener and observer of Fed Speak, I suspect it will be after the 2022 Congressional elections. I think if the Republicans capture the House of Representatives, the Fed will raise rates a bit to appease the new majority while ultimately keeping in lockstep with the Biden economic game plan.  Again, so far, no inflation according to the Feds.  They will not raise rates.

On Alternatives: 

What should we look out for?

Bitcoin seems to have totally replaced gold as the first order alternative.  I may be about to eat crow and invest in BITCOIN, if (and this is a BIG if) the SEC were to approve a Bitcoin ETF. That may be the gamechanger, and I may have to step up to the plate and forget all the bad stuff I said in the past about Bitcoin.  Nothing has happened yet, but you should know that I am watching and reading a lot—fully educating myself so I can serve you. That is one thing you can always be sure of about me:  No one will out-read or out-research me! I spend fully over 80% of my time reading about businesses.

In conclusion:

In 1773, America experienced the Boston Tea Party, when American patriots disguised as Native Americans boarded a British vessel in Boston Harbor and dumped all the tea into the harbor to protest “Taxation Without Representation.” In 2021, we have the American economy about to be loaded with fiscal stimulus “Caffeinated” money from President Biden:  trillions upon trillions of new stimulus dollars for COVID, infrastructure, and green energy. Make no mistake, Biden’s multi-pronged, double-shot caffeinated proposals that America is about to partake in are a BIG gamechanger, and I will make sure my clients are part of the winning team.

Sincerely,

Femi T. Shote, MSF, ChFC, CFP®

Accredited Investment Fiduciary®