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See No Evil
Global equities hit new record highs on Friday.
MSCI's gauge notched a fifth consecutive weekly gain -- and a ninth in 11, for whatever that's worth.
As the figure below shows, this year's rally counts as inexorable. I realize I've used that adjective quite a few times in 2024, but it really is apt. It's just gains on top of gains on top of gains. The only setback was in mid-April. And it proved fleeting.
The policy outlook helps. The most aggressive rate-hiking cycle in a generation's over
Nice touch about Dec 2021. And, agree, it doesn’t matter much where we draw the causal lines around stock price movements and inflow.
The greed bug is spreading fast. More and more people openly talking about “playing the market,” etc. A couple weeks ago, a journalist I met said her husband is interested in learning about the stock market and trading. He’s an engineer w/ a solid job, degree from good university, etc. He’s taking an “online course” to learn more. What he told her about his plan led her to say, “It sounds like gambling,” to which he predictably replied, “No; it’s different.” Not knowing the guy or wanting to wade into that minefield, all I said was, “It’s definitely about risk.”
Before the crash in 1929 famous financier Bernard Baruch remarked on the risk in the market when he noted even cab drivers will give you (stock) tips. Shoeshine boys know and recount all the day’s financial news while they give you a polish and a buff. we have been warned.
Let’s hope the engineer subscribes to H, like this one does
Most investors don’t pay attention to the grand sweep of politics, and some who do are all smiles and snark.
What they see:
– Soft landing in progress
– Fed manna inbound
– Estimates going up
– Market can’t sell off
– Charts up and to the right
Well, until the shooting starts, there’s not much to do about the stuff H mentioned…
As to the political instability, my proposed solution for my customers is – invest only in the US. Maybe Switzerland/CHF. BTC/Gold too. Now, Trump might still screw up the US too but, well, that’s the best I can come up with right now…
The rest of the world is doomed as no one has the imagination, smart, grit and wherewithal to solve the structural problems creating the issues that has the electorate so agitated.
If we can just resist the most extreme of options (i.e. Le Pen and Trump) this will partially self correct in my view and opinion.
Part of the problem is inequality. The effects of which can be greatly ameliorated by economic seasonal change and the political system focusing on taxing the rich. I see some movement on both of those fronts.
On the seasonal changes, the most wealthy are the least able to change their bets. They have too much invested to quickly make a change, therefore they act more like frogs in heating water. Increased interest rates which then drop after sucking them in will drain capital during both moves. The energy transition to near zero energy cost will drain investors who have invested in the old carbon intensive businesses. Workers on the other hand will maintain the same low level.
The political system is starting to wake up to the piles of money hoarded by the wealthy. Upstarts like Bezos and Musk are well known but it is the less well known which benefit the most from our stable society which can be taxed fairly. Defunding the IRS should be seen for what it is, the last desperate act of people who are losing the political fight over taxation. They have nothing to stop the people acting like Jesus Christ and voting in systems that protect the least advantaged. The wealthy cannot leave these districts as they benefit too much from the relatively stability and anonymity wealthy societies provide. They are stuck and will need to pay.
Our greatest risk at this stage is destruction of our system. The Supreme Assholes (blame Mitch McConnel and the Federalist Society) have undermined the delicate balance in our system of laws. They have supplanted historically proven to fail philosophical principles and ego for the wisdom of thousands of hours of effort by our progenitors. There is still time, but more effort is required to undo the damage than was expended to cause these instabilities.
Our life here in the USA is at risk but worth preserving. We are the wealthiest country in the world. And not just financially wealthy, we enjoy “All men are created equal.” A vision that we have gaslighted ourselves to include all people regardless of station or gender. Such freedom has never been known in the world. It is worth preserving.