Goldilocks And Other Summer Stories
There's talk of an autumn "reaping" following a summer stock rally which, depending on who you ask and what day it is, was either a "classic" bear market bounce or evidence of investor irrationality in the face of the most aggressive Fed tightening campaign since Volcker.
In reality, of course, the rally was a squeeze perpetuated by familiar, self-feeding dynamics, as systematic cohorts re-leveraged and re-allocated with the trend and receding volatility, forcing under-positioned funds to chase
Smells like soft landing.
As much as it terrifies me to suggest this, it kinda does. I almost see a soft landing as the most likely near-term outcome followed by a very uncomfortable stretch of ~4% inflation and >3% fed funds, until the next shock, exogenous or otherwise.
Relatedly, I’m starting to think that when it comes to shocks, superstorms and pandemics are becoming more likely than credit events, overtightening, bubbles, etc. It just feels like a matter of time before a hurricane comes along that’s — you know — off the scales entirely, or one of the hemorrhagic fevers gets “loose.”
H-Man, I agree with the read on the future but think inflation may be more sticky than the Fed anticipates which may keep tightening going longer than anticipated. I am concerned climate issues here in the US may be the weak link in our food chain. Right now there is a serious water problem that doesn’t look like it will be fading any time soon.
The meme stock rage of today looks a lot like the era of Jersey penny stock boiler rooms I remember from the 60s and 70s. They did not go away all that quickly, even with SEC pressure.
Lucky One: An early example of free markets being stymied by ham-handed government interference!! Followed by the crackdown on OTC commodity options vendors in the later 70s.
BTW – a free market hero of mine from that golden era was Robert Vesco. A visionary capitalist pioneer!
I agree that Putin is bogged down in Ukraine but he has Western Europe in a judo chokehold of an energy crisis with winter fast approaching. EU, particularly Germania, is in a recession by any measure. So EU is in weaker position than he is and I would bet that EU is more likely to offer him a grand bargain that includes opening NordStream2 and letting eastern Ukraine be his buffer zone.