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We've been screaming towards the top of the channel like a runaway train. Our engineer (the Fed) is now desperately attempting to apply the brakes. The odds of a soft train landing seem incredibly low. Beware the rapidly approaching Deadman's Economy Curve. We're likely to derail!
Some might argue that we've already derailed. The worst is now behind us. I'm not convinced. Since when has maximum pain been achieved with near record low unemployment? It seems to me that we still have plenty of pent-up depressionary pain potential. Surely the unemployment rate has not achieved a permanently low plateau, especially given all the financial pain both the stock and bond markets have recently dished out. In fact, it's entirely possible that the pain party might just be getting started. Perhaps the Great Recession will be followed up with an even greater one. *cringe*
This is definitely not financial advice. I am and have been very concerned about our long-term future, much like many must have been during the fall of the Roman Empire. Who is responsible? We all are.
No single raindrop believes it is to blame for the flood.
14 comments:
Wow. Take a look at XBI.
I’ve been watching it. The Great Unknown made a great call!
Blew through $70.
It’s been giving me much food for thought about equal weighted ETFs.
Thought experiment:
What happens to an equal weighted ETF if half the companies in the fund eventually go to zero? You constantly sell the winners to load up on the losers. That’s what.
Not saying that XBI is doing that. Just something to think about. I’ve been thinking about it a lot lately, lol.
https://fred.stlouisfed.org/graph/?g=PjKk
Pretty clear chart for when the Fed is pumping the brakes.
RIP IoP 2010-22?
I have a very, very imperfect understanding of how money works in our economy. I suspect 99.9999% if not everyone also does too, tho there's probably some guru out there with the actual dope on it.
QE boosts M0 aka 'high-powered' money, then the banks expand that via lending, but without agent-level modeling of this I don't think anyone can actually form a close understanding of the process; I mean, M3 went up $5T since C19. but ~where~ exactly is this new $ sitting now??
Just got my Mac Studio yesterday (literally been waiting for a minitower Mac for 20 years!) so I think I'll start working on this as a research project. Actually had a brief Twitter exchange with Steve Keen about this and he IIRC admitted agents would be a key part of increasing the predictive power of his "Minsky" project.
Also been buying a bit of yen via wise.com. 0% interest rate but I want to travel there regularly starting later this year so want the FX hedge, and don't get taxed on gains like FXY.
This time, it would seem it is the bond vigilantes who pumped the brakes. After all that braking, the Fed finally decided to tap theirs too. Better late than never I guess, lol. Sigh.
Yes. I generally avoid ETFs unless I want exposure to a sector, but don’t want the risk of holding a specific stock due to risk. A good example would be biotech and XBI (like XBI).
I’m not sure $70 was a good call since it blew threw that level!
It’s $68 right now. If it holds around here, it will have been a legendary call. Even if it goes to zero, it was a good call. I don’t think many (including me) even had $70 on their radar. Seemed a bold prediction, and yet here we are.
In my opinion, the Great Unknown knows more than most. ;)
Well… you know the old saying “even a blind squirrel finds a nut now and then.”
Even a clocked squirrel finds a nut exactly twice per day, or so say the mixed metaphor enthusiasts. :)
Some investors are learning the hard way that consumer staples are not necessarily risk off.
VDC is down 6% today. Does not bode well.
If you pour $3.5 trillion into a stock market, everything is a bubble.
It’s kind of like pouring 3.5 pounds of sugar into a toddler,
Lots of extra activity followed by a crash.
Unfortunately, we’ve reached the vomit phase of our economic recovery experiment.
Who knew the global pandemic wouldn’t make us permanently more prosperous? Seemed like such a sure thing!
The worst thing is that most of the consumer staples companies are still overpriced
https://www.youtube.com/watch?v=fhcflDSUMvc
Maybe we’re coming at this problem from the wrong direction. If safe isn’t safe then maybe risky isn’t risky. Let’s go all in on Luna! To the moon! And beyond!
Gallows humor.
https://m.youtube.com/watch?v=jrg1UAixGaM
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