Below the Radar..

“Below the Radar” the market needs to fly faster and lower until it is safe to go to altitude. That may be the alternative to the “Hard Landing” and “Soft Landing” scenarios out there.

So as the market operates in “Stealth Mode” we are in a position to observe what I have mentioned before recently, and that is this is as a time in history that seems to rhyme in a macro sense with 1946 at the end of the Big War.

In a sense we all have been fighting a different kind of Big War, a war with a number of parts, but all in parts that have compressed the populace and by definition were political in nature.

Part 1: The supply-side movement that started in 1980 and got another kick in 2018 with tax cuts for the upper levels of the economy, in total moved a lot of money to the private equity side of the ledger. (no doubt is the root cause of economic anger that manifested itself with the Trump Movement and the sale of red hats.)

Part 2: The Funny Money program hatched by the FED in 2011 with added levels in 2020 COVID actions.

Part 3: The Ukraine War whose root cause is in the belief that based on the Putin-Trump relationship the West was headed in a direction that backed autocratic actions.

All this brings us back to what would it take for the economy and the markets to break out of the “Stealth Mode”.

I would suggest that a surprise ending of the Ukraine War is number one.

The second possible surprise is that all the big private equity money that owns commercial real estate and are short stocks as a hedge are blasted out of the water and are forced to cover their short stock positions which are at high levels. See chart here.

The third possible surprise is that the economy moves forward in spite of the FED raising the 3 month rate. (the primary sector being hurt is banking due to the differential vs market rates).

Leave a Reply

Your email address will not be published. Required fields are marked *

nineteen − 16 =