Wednesday, March 17, 2021


There has never been more combined fiscal and monetary heroin coursing through the veins of Disney markets as there is right now. The Fed's plan is to allow markets to "run hot". So be it...

Yet again we are reminded that today's monetary policy is solely aimed at managing markets at the economy's expense. Most of today's critics blame the Fed for this policy, however these apologists for corruption should be aware that the majority of today's wealthy have no complaints whatsoever. Regardless of who gets the blame, what so many of today's pundits call "running hot" would have been a deflationary depression at any other time in U.S. history. Now that debt is fully conflated as "GDP", the Fed must at all times be mindful of market reaction regardless of the level of long-term unemployment. Now, the market IS the economy. Once again, long before any of the long-term economic damage can be repaired, stock market overvaluation and bond market decimation will require stimulus reversal. 

Today however, the Fed was again dovish meaning they are choosing to allow risk markets to "run hot". Clearly they have no fear that risk assets are becoming overheated. That fear is reserved for moribund economies. 

One might ask, why are Tech stocks bid in light of the Biden stimulus and the Fed easy monetary policy. After all, aren't Tech stocks inversely correlated to interest rates? Yes they have been inversely correlated for months, however one must keep in mind that this week and today in particular is peak stimulus. The point at which the majority of stimulus checks are deposited into brokerage accounts. In other words, lucky gamblers got both their stimulus check AND a dovish Fed on the same day. MAXIMUM monetary and fiscal heroin.

And yet amid record combined fiscal and monetary policy, the S&P 500 eked out 11 points on the day. The Powell curse was avoided today and all it took was $1.9 trillion in stimulus. Needless to say, when the sugar high wears off, I remain somewhat skeptical as to what happens to overheated risk markets.

And, as always us skeptics of Disney markets are in the minority.

“The younger you are, the more I’m begging you to take an aggressive stance on something speculative”

On Cramer's speculative buy list for newbie gamblers he has both Snowflake and Gamestop. Two things that go great together. 

This morning even Cramer was saying that the SPAC market is totally out of control. He says this amount of issuance is going to crash the market at some point. Junk overload.

This marks one year and counting without a RISK OFF event.

In summary, today's Fed actions combined with stimmy overdose just cranked the stock/bond ratio to full level '11'. Meaning an unwind is now unthinkable for trapped gamblers. 

They better hope it's going to infinity, because that is now their consensus bet.