Lack of Senate Cooperation-
is the biggest reason for market concern now.
There is no sense of the situation that is facing America at this point and the fact that things will only get better if everyone works together.
If I were President I would have started with a package of massive labor redeployment into a major infrastructure program that would be partially self financing.
That program would go way beyond roads and bridges, but key on climate, health, education, data transmission, and green energy projects. And to start to balance the cost, rebalance tax rates towards levels of forty years ago on corporations and individuals. Euphoria measures show there is plenty of funny money sloshing around.
So if you want to “GO BIG” go big on ideas, not the amount of money you will have to borrow.
Instead, Biden and the Democrats have let themselves be cornered a into negative “fix the obvious little problem” approach that has a fatal flaw of giving out too much money to those that don’t need it. Many of the unemployed will never get their jobs back, why not get them working on something we need. Maybe redeploy some airline pilots to jobs digging holes.
If you think things are bad for 80 % of Americans, just look at pickup and SUV sales. The vast majority are either flush or borrowing because they think they will be flush.
OK, so much for Politics, how about these markets.
Here are a few things I see:
- Leverage is being pulled out of the markets. Look at what I call the FED Influence chart, which is really the amount of money being thrown at the economy, which includes, cash, the Fed, and leverage. We know the Fed has not yet changed their approach so far. That leaves the decline in this chart as a function of leverage being drawn out as things wind down. We have shown this chart many times since the August 7, 2020 apex in the values.
2. In a sense the markets are acting very strange in that asset prices have held up much better than one would expect with the interest rate rise that we have seen. What that means to me is Euphoria focused on the end of the pandemic and hoped for reflation remains in control. See this Depression / Euphoria chart.
3. And, we all know that the five Fang stocks and the other fifteen Fang wanna-bee’s have been the biggest drivers of the market. Here is their chart updated on the close yesterday.
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