Inflation, a Hawkish Fed, Spiking Bond Yields, War, China and Acute Instability. Where to begin? When it appeared less likely the War was spiraling out of control, it was time to squeeze the shorts and force an unwind of bearish derivative positions. Longer-term developments – including a momentous reshaping of the “world order” – are essentially irrelevant to stocks.
Only the Fed’s balance sheet has the capacity to operate as “buyer of last resort” in the event of serious de-risking/deleveraging. But with today’s powerful inflationary biases in consumer and producer prices, wages, and energy, food and global commodities markets, another bout of monetary inflation risks general inflation spiraling completely out of control.
Market dynamics suggest a fundamental secular change in commodities derivative markets… This points to powerful inflationary biases throughout the commodities universe. Moreover, central banks risk throwing gas on an inflationary fire when they respond to financial market illiquidity with additional QE/monetary inflation.
A key question is whether this secular shift in commodities markets portends a secular cycle downturn for financial assets? I believe it does.
Contemporary finance showed its Ugly side. Acute instability is worrying, to say the least.
Going back three decades to the Greenspan Fed, the almighty Federal Reserve seemingly had a solution for just about any problem. Wars, financial crises, economic downturns, terrorist attacks, and a pandemic… At least for financial markets, crises were no longer something to fear. Indeed, they were money-making opportunities.
In the heat of battle, Zelenskyy is demonstrating extraordinary courage and leadership. The neophyte politician is in an exclusive club (seemingly of one): A national leader willing to face down Putin. And it’s difficult to believe Putin saw this coming, and it makes a tremendous difference. This is not Crimea circa 2014. The Ukrainian military is fighting ferociously – against all odds. David vs. Goliath. Loyalty and Honor. Heroes everywhere. The Ukrainian people are an inspiration.
Structural impairment caused by Bubble excess escalates over the life of the boom.
The pain and dislocation unleashed during the bust is proportional to the excesses of the preceding boom.
The global central bank community has been wrong on inflation. Their analysis lacked objectivity and analytical vigor. Groupthink. Flatfooted. That policymakers would so misjudge on something fundamental to monetary management is a major blow to cr…
Wednesday’s FOMC meeting made for a hawkish week, at least within the headlines. “Banks Scramble to Change Fed Rate Calls After Hawkish Shift.” “Rate Traders See Risk of More Than Four U.S. Fed Hikes This Year After Hawkish Powell.” “US Stocks Drop in …
Markets this week provided inklings of a potentially far-reaching Critical Juncture. Before this is over, astonishing amounts of perceived wealth will have vanished into thin air. Tens of millions of unsuspecting “investors” will lose meaningful amounts of their savings. They bought into the mania, threw caution to the wind, and will suffer the consequences. Blindsided.