Markets Turn ‘Shockingly Dysfunctional’

Markets Turn ‘Shockingly Dysfunctional’

If you get the feeling markets are dysfunctional, it's not just your imagination. Over the past week, both bonds and stocks have been a mess, for lack of a more sophisticated adjective. To a certain extent, this isn't new. Pain and abject confusion has been the story of the year for rates, while unpredictable twists and turns on the road to re-opening engendered episodic factor volatility and thematic reversals in equities for most of 2021. That said, the last month was especially nauseating
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3 thoughts on “Markets Turn ‘Shockingly Dysfunctional’

  1. Between two parties, it is not uncommon for there to be a gap between what party A tells party B they are going to do (often what party A thinks party B wants to hear) and what party A actually desires to do. Often party A will act in a manner just below the point where party B would become upset by Party A’s actions.

    I continue to doubt that the Fed will do anything that would cause a significant problem for the US stock market – because if they do tighten too much- fungible investment money will move to another, more accommodative country and/or equity market. This would not be a desirable outcome for the US government. It is not just wealthy people who are invested in the US equity markets. Anyone who has a pension (teacher, public servant, police, firemen, union member, etc.) indirectly depends on the stability and long term upward direction of the US equity markets.
    It will be easier for the US government to supplement the finances of lower income people through less taxes, more credits or outright grants. Public healthcare for all?

    1. I agree. Our consumption economy definitely depends on rising home equity, stability/depth/liquidity in our capital markets and cheap credit(that’s readily available to people who generally don’t need credit due to the strength of their personal balance sheet). Public healthcare is definitely a much bigger necessity than pre-K “education” and many other programs we could all list. But the health insurance industry and Big Pharma are “cash cows” whose generous “donations” support political campaigns which guarantees that we will have no public health care. I think the easiest approach would be to lower the age for Medicare eligibility to 50 for those who choose to “opt in” as a first step. That would be very popular with a large segment of the electorate.

  2. H-Man, tomorrow could be a big day on how we look forward. Hot print on payrolls + 700,000 = tapering acceleration is a done deal. Couple that with a K prediction Omicron may be bullish and we may see a run in equities that catches everyone flat footed.

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