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Grenade Jugglers
If you get the feeling various downside scenarios are having a difficult time "realizing," you're not wrong.
Everyone is cautious, and for good reason. From the macro to policy to geopolitics, ambiguity is the only constant. And yet, day after day, week after week, the tail risks fail to materialize in any meaningful way.
Ukraine would beg to differ, so would the handful of banks which failed recently. Kyiv, Credit Suisse, SVB and First Republic would all tell you their respective bear cases h
Man plans. God laughs
Sell in May and watch profits go away?
~17% fear a Systemic Credit Event. Maybe this all works out but the thing that comes to my mind when I think of our situation is those plate spinning entertainers that you used to see on the Ed Sullivan Show. Those performers stopped at the point where it would not get out of control and finished the routine successfully. I don’t have that feeling with our real life entertainers.
The disconnect is all about the doom-scroll loop. Each of us, every day, is sucked into the worst that could happen — and then we regurgitate it, throughout the day, to our friends and followers. The 30,000-foot view, the big-picture view, the life-is-not-as-bad-as-you-think view are vanishing species (mixed metaphor alert). Such a shame.
I agree with the doom-scroll loop assessment. However, just discussing the worst-case scenario as a form of entertainment is one thing. Quantifying the probability of a future event happening in order to allocate a portfolio is another. I am no expert on the political process, but it seems to me there is a 40% chance that the committee assigned to work a deal will actually complete their assignment by the June 1 deadline. I believe that this negotiated deal then has to be voted on and approved by the house and senate. I believe the minority of republicans that hindered the process for selecting a house Speaker will then step in to get their voices heard and their names in the paper. That will delay the process by 7-10 days. I would assign a 75% probability to that scenario occurring. Please correct me if my assumptions are incorrect and tell me everything will be alright.
“To mix Proverbs”
Dude, you are too much.