‘Why Would Anyone Expect Stocks To Price Rationally?’ The State Of Exception Is Now Permanent
"Since the lows, the most frequently asked questions have been 'Who is going bust?', 'When will we retest the lows?', 'Why is the stock market so divorced from reality?'", BofA's Michael Hartnett writes, in the latest edition of the bank's weekly "Flow Show" series.
While market participants are justified in marveling at the rapidity of the rebound off the March nadir, it's worth emphasizing that the scope of that rebound isn't anomalous in the context of bounces after bear market plunges.
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The US and global developed markets have become financialized. As a result, security market prices, which always fed back into the real economy, now have an outsized influence on the real economy and not the other way around. It is this partial or fully reversal in causality which in turn causes central banks to be in the position of backstopping asset prices. This is related to George Soros’ concept of reflexivity. RIght now there seems to be no way out of this black hole. A fundamental restructuring of the economy appears to be necessary to get out of this quandry.
spot on, and that is why there is no correlation between GDP this year and financial conditions. Financial conditions lead GDP,
Could be a solution here for how to fund the food purchases cards and UBI for the 40% of the 40,000,000 unemployed whose jobs are never expected to return. Increase the capital gains rate on what are now forever inflated asset prices. For asset holders, net it out so weatlh growth minus taxes are about same as today. Assets go up, wealth goes up, taxes on forever inflated assets goes up, net wealth about the same.
An alternative is to wait for the pendulum to swing where assets are made to return to price discovery via epic rage express through political means. After all, these are exceptoinal times. We have to expect that as part of the cycle for this epoch, there will be a period of massive anger and resentment.
Only if permanent is redefined to include only the lifespan of the current Empire or some of us then and only then will it be a Permanent State of exception…
Almost as if we are all being taken on a ride down the Mississippi aboard the Fidèle. . .
My growing fear is the only path toward a true “reset” would involve a global conflict. That is obviously the worst case scenario, but the Chinafication of Hong Kong may be a bridge too far for global allies to allow happen without some sort of punitive response. Financial sanctions to start. Dominoes then begin to tip. Do we believe we have the leadership to keep the worst case scenario from occurring?
Chinafication of Hong Kong is as clueless a postulation as Americanization of Texas
😂 do u even have any high quality well informed Chinese friends to filter, muse and corroborate these historically out of context postulations ?
And by high quality well informed I do not mean the Americanization of China types 😂
So are you saying the girl with the umbrella is the problem? Hahaha, couldn’t resist.
So from now on, everything is fake?