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The Santa Melt-Up Blueprint
In "Canaries And Key Levels" and also in "Stocks Look Beyond GDP Barnburner To Price Slower Growth," I spent some time editorializing around the juxtaposition between ebullient US macro data and the bad vibes from the equity market.
It's not just that the S&P and Nasdaq 100 have corrected. Indeed, that's not the story at all, although corrections for the benchmarks make for good headlines. The story is stumbling small-caps. The story is ominous underperformance for cyclicals. The story is p
Since you wrote two articles abouts Santa today, a proposal comes to my mind: Can you provide your readership a Christmas gift? I name that you discuss about your metaphysics thoughts, and other readers have other preference. The final topic can be reached through a poll.
I own a batch of stumbling small-caps. Their fairly predictable up and down trends have rewarded my patience through many cycles, buttering my bread for 20 years at least.
I’ve been able to foresee the coming monolithic changes in the world. The effects of Russia’s invasion of Ukraine and the collapsing economy in China were obvious enough. But throw in a fight between Israel and Hamas, along with an attack by Iran on US military positions in Syria and Iraq and we have amplification of some existing and bothersome issues. Oh, and let’s not forget the idiots running the House of Representatives.
Over the years, the US Federal Reserve has worked magic in managing US dollar stability and lending rates. I’m sure they still have rabbits in their hats that they can produce to surprise us in a good way. But I fear they may not be sufficient. The volume of contentious issues in the world, and to a significant extent, parallel ongoing political issues in the United States may create risks that the American economic ship finds difficult to absorb.
As I’ve said many times, my fingers are crossed. But there are storms out there on the world’s financial “seas” that can roll the US economic ship, causing our markets to heave. It’s a “maybe.” But over the coming months, guiding the US economy to keep its balance may be more than Jerome Powell and Janet Yellen can do.
The US House of Representatives represents a distinct problem in the face of global economic issues. Getting through the US political mess will be quite a trick in itself. US (and Chinese) involvement in these global wars must be limited to small tactical assistance, if at all. But this is what’s on the table, and it’s going to persist for years. These things can’t be good for the US economy and markets in the long term.
Peace, please.