Infatuated with the Old Normal

That is what I see in the market action this week, except for the Robinhood excitement. I guess it is too bad that the Robinhood traders had not read the Bunker Hunt silver story from the 80’s, but now they got to experience it.

But looking at the more important things, here are a couple of things to ponder today:

  1. Our Fed Influence chart updated. As you can see, the overall impact has been treading water since August 7, 2020. Stocks and commodities higher, gold and Bonds lower. What that means to me is that the stock portion of the economy is about to see its time in the tank. We will do a more in-depth look at the factors involved later this week.

2. As a start to a more in-depth look at factors that will affect stock valuations, here is a look at M2 money supply and how compared to a year ago growth is strong, however recently, growth has slowed sharply.

3. And a third forward underlying factor in stock market valuations is the velocity of money which has been declining ever since the FED has been trying to goose the markets in the late 90’s.

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