‘Unambiguous’ Buy Signal Overshadowed By Stagflation Reality

‘Unambiguous’ Buy Signal Overshadowed By Stagflation Reality

The stock market "basically dropped by one US economy in six months," BofA's Michael Hartnett said, marveling at the scope of the collapse in global equities from the highs in November. Headed into Friday, global shares were on track for a seventh consecutive weekly decline (figure below), even as sentiment improved a bit headed into the weekend. So far, developed market central banks' push to douse the hottest inflation many young adults in advanced economies have ever experienced has done li
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8 thoughts on “‘Unambiguous’ Buy Signal Overshadowed By Stagflation Reality

  1. It is great how quickly sentiment can shift in markets. The final shoe to drop will be when the Fed is done, whenever that is, and rate cut speculation begins. Then the yield curve steepens, the $ declines, early stage equities like financials rally, and you can rinse and repeat the cycle. But in the meantime we get to watch a very bumpy economy and financial market. And real people suffer in the interim. Part of the payback for all the stimulus will end up being slow growth down the road, but we are far from that right now. And don’t get me wrong- policymakers made a lot of good decisions to get us here (no really). The alternatives were a lot worse.

    1. “The one percent” is bleeding right now. Except for the adept members who may be bleeding a little less. Isn’t that reality OK? The bottom percenters are being bled by inflation. And the middle percenters? They are nervously watching their 401k balance.
      I am down 20%. But you know, none of this is real. Trumps tax cut… was slight of hand. More of the same. There hasn’t been “organic growth” in this country’s economy in my lifetime. “We the people” look for the trick/unseen/edge way forward. Because we seek differentiation. And we are too “mental”. We eschew the difficult path of “working” and have little fortitude to see any task through to fruition. When presented with the carrot of opportunity we refuse it even as the stick is extinction.
      Can you build me a Dyson’s sphere? No, I want to go to Mars.
      More of the same. Slash and burn mentality. Leave the box after you have filled it with litter.
      Is the universe ever expanding or will it eventually collapse ?
      I don’t know. What we do here now is the important part.
      This site (we are on) is dedicated to the here and now (?). Partly, what is the economic here and now with it’s affect on “making money”. We are not really making money. Just as we are not really losing money.
      I am actually in a good mood. Not in the sense, I told you so. Although I guess honestly that too. Maybe even mostly. But also in the sense, “the Emperor has no clothes!”.
      There has been a lot of blame cast around since Trump’s Presidency.
      Let’s have some fun now.
      Let’s have some stagflation.
      Let’s see how we cope with that.
      When we get to the other side, answer to posterity, won’t you?
      Oh woe is me. No, not at all.
      It is important that the Fed continue to hike in measured, preferably .25 increments. Thereby showing a (political) commitment to taming inflation (that they can not really control). So that “the investor” is not unduly lured away from stocks in the direction of meaningful bond yields. It is important that “the market” NOT “understand” the Fed thereby being able to “call it’s hand”. There are no Unions. Volker was fighting an entrenched mindset inflation. Will Social Media be as potent a force as Unions? Hard to believe. So this inflation runs a different course.

      The mid terms are coming. We don’t have time for any of this.

      If this post is allowed, Thank you for indulging me. I have learned so much here. A place to go in retirement.
      Also, Why is this a reply to RIA’s post?
      Stream of consciousness.

  2. “Every asset class saw redemptions over the latest weekly reporting period. Bonds lost $12.3 billion, cash nearly $8 billion, stocks more than $5 billion and gold $1.4 billion.” Interesting – $8BN redemptions of cash? Where did that go . . .

    1. Well, “cash” is an asset (i.e., fund) class in this sense. Redemptions from “cash” doesn’t mean people took physical money out of the bank and “redeemed” it by fire in their backyard.

      1. I understand that (“cash” = money market funds), but it is interesting to see fund flows out of equity and fixed income but not inflow to “cash”. I wonder if we are seeing margin calls and repayment of securing lending.

    2. I, too, wondered where that $8 billion went. Taking a look at the St. Louis Fed’s economics database might give a hint. M2 could easily have declined by $8 billion out of a total $22 trillion without being newsworthy. Consider the $8B in contrast to the week of January 17-24 when M2 contracted by $183 B. It then expanded by $529 B to the latest reported date April 4. FRED posts M2 reports monthly. The next report will post on Tuesday.

      That leaves me with jyl’s question unanswered. Maybe the Fed sucked it out of the monetary base, but I couldn’t consider that possibility without current M2 data. So, where did BofA get its $8 B number? And, is it significant as anything more than a barely visible wobble in a trendline?

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