The Switch from Anticipation to Reality

This has been the transition week, where the markets will start looking at things in a new way. It looks like we were a day early but I would rather be early than late with something this big.

How the Game Unfolded to Date

Some of this is back seat quarterbacking, a look at how the game unfolded to this point.

  1. First, we need to look at what happened in late March, when the FED and Treasury picked up from where the first manipulation hit us, Bernanke’s QE2 in 2011. In a whole bunch of ways this was multiple’s more manipulative.
  2. In a sense, the short term sense, the FED and Treasury have been hugely successful, they succeeded in getting market participants to look over the valley and go back to the Old Normal paradigm.
  3. The problem is, the Old Normal is not coming back, there will be a New Normal and this will be a complex change. It will involve a new administration that will operate from basic fundamentals, not manipulation. It will involve working with unworkable legacy issues from the Trump era, issues like a huge fiscal debt load, a huge FED balance sheet, and a tax schedule that is not in sync with reality.
  4. In a sense it will be somewhat like the Jobs program that came after the 1929 Depression. People will have to be deployed to areas that embrace essential industries that tie to the two biggest problems facing the country, climate change and comprehensive health care.
  5. So simply, the New Reality will be a switch from Manipulation and Speculation on Wall Street to Main Street based real Growth.
  6. There will be a lot more to talk about that will grow out of this outline.

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