In ‘Dreamland,’ Nobody Knows Anything

In ‘Dreamland,’ Nobody Knows Anything

To the extent they've succumbed to avarice, market participants could use "a little bit more perspective." That's according to David Solomon who, during an interview with Bloomberg on the sidelines of a forum in Singapore, suggested traders and investors may be too enamored with risk-taking in the wake of a historic rally that saw the S&P double from the pandemic lows hit in March of 2020. "I step back and think about my 40-year career, there have been periods of time when greed has far ou
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3 thoughts on “In ‘Dreamland,’ Nobody Knows Anything

  1. H-Man, I read somewhere recently that “Inflation is actually a good thing until it ends”. Can’t remember the author or the source but it does a pretty good job of summing up of where we are currently.

  2. I’m on Team Transitory (more or less) but I have to admit that inflation is higher and more persistent than I thought it’d be 10 or even 6 months ago. The story has evolved a bit too. It used to be entirely about supply snags (and the assumption they’d get worked out).

    Right now, it seems that it’s driven by excessive spending by Americans who are enjoying burning through their COVID fiscal windfall. It’ll take some months to work through that but I still expect inflation to come down at some point in 2022/when the US consumer isn’t feeling flushed and stop spending well above trendlines.

    I still would support the Fed accelerating its tapering as a way to reduce liquidity a bit faster and see what it does to markets. If this is all about past fiscal generosity and big spending by US consumers, I’d expect the practical impact on inflation to be limited but it would ‘reassure the market’ that the Fed is still the inflation fighter of yore…

  3. For the last five years or so I can’t help feeling I’ve seen this movie before, the one where the Treasury pegged US interest rates, wrecking the markets until we finally got the Treasury Accord allowing rates to float freely and the free market was again allowed to live. While rates are not actually pegged as they were in the 40s and 50s, what’s happening is a really darn good imitation. The situation has put intense pressure on pension funds, insurance companies, banks and many others while benefiting few beyond business and retail borrowers and members of Congress. However, everyone seemed to cope until we started to see actual inflation rear its ugly head. Now we are painted into a very tight corner and getting out, as the experts quoted in this post seem to agree, will be a b**ch.

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