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Stocks, Bonds One Dovish Catalyst Away From Squeeze
Bonds and stocks could both be set for a squeeze in the event recent economic data proves a tough act to follow.
Regular readers know the story: Even if the wave of forthcoming macro figures for the US still suggests the economy is running hotter than it "should" considering the scope of delivered rate hikes, January's data set the bar so high that true upside "surprises" will be hard to come by.
That goes double when you consider the mark-to-market exercise likely playing out among economic t
The last time I was in an actual doctoral class in finance was in the winter of 1968. None of that prepared me very well for today’s financial world. Reading the last three posts here induced me into a modest epiphany, that there are just too d..m many models out there grinding mountains of data … and all getting different answers. OK, it took me awhile to get this, but amateurs who don’t access someone connected to many of the best ones, like our RealHeisenberg, are in LaLa land. The financial sector is like Oz, mostly behind the curtain, and more important from my perspective, is that this Oz is six times bigger than the global economy. Main Street isn’t even in the game. In the long run we’re all price takers. An earlier chart on this site showing excess money at $15T over current demand, shows this surplus at nearly one year’s GDP.
This is getting way too complicated and what’s really scary is that the popular pundits out there mostly don’t know anything. Information is so overwhelming it’s astonishing. My advisor can look up the availability of anything I might want (presently, insured muni-bonds paying at least 5% with an extended call date) in like 15 seconds and two minutes later I own it. When I want to order it, Wells (my banker/broker) can run me an 80 page report showing my entire portfolio’s location on the efficient frontier, based on the behavior of every position I own. I usually wait a day for that. When I was in grad school the fastest computer in the US would have required days to run the math for that report. Meanwhile, our less than bright government officials and think-tank melon-heads are trying to figure the over-under on taking on China, hot. That creeps me out. Are there any smart adults left in this country, besides here, of course? Back in the Nixon/Reagan days Russia was the great Satan who was rewriting its history and threatening our very lives. Now, we’re the ones rewriting our history so kids won’t find out we once owned slaves, killed 60 million buffalo, disappeared most of our indigenous people,etc. Today I see an article asking me if I knew how much money I’d have if I had invested $3,000 in BRK.A stock all the way back in 2020. Today the stock is priced at over $477k for one share so who’s stupid enough to buy $3000 worth? The world has become the Gordian Knot (young’uns, think Alexander the Great) times a million. Thankfully, we can come here and pick up the requisite sword.
“OZ is six times bigger than the global economy.”
Do we truly need so many intermediaries skimming off a bit here and there? And all of the funds going into fintech with a goal of skimming a bit of the skim?
Not that I have any reason to complain about it, having made a comfortable living in that world since 1977.
To be fair, investing is actually quite simple for one reason: index funds. All the average investor really needs to know is how to buy a low-cost index fund and utilize tax-advantaged retirement accounts. Everything else is noise unless you are a high net worth individual, but then you can just hire other people to manage all the models and loopholes for you.
The part that’s complicated for most people is figuring out how to earn enough money so that they can actually invest.
Incredibly well expressed, Mr. Lucky… my read of current environment is that we are living in the era of mass distortions, and that speaks to the galactic ideas and interpretations that H helps us all synthesize… investment wise I do my best to stay balanced while the higher human and automated market driving powers continue to sort themselves out…thanks for all your efforts too…you are a gem…