It’s a Pig

A little biased, non-analytical editorializing from the intro to this week’s edition of Notes From the Rabbit Hole, NFTRH 573, before we got into the actual weekly work…

It’s a Pig

The US stock market is a bubble. It is also trending up and bullish as long as that is the case. I trade and even invest in stocks, long positions have consistently and significantly outnumbered shorts and the market is what it is.

But this newsletter has a funny name for a reason and that reason is that we are not going to be caught being part of the conventional herds, applying and putting full faith in traditional measures like P/E ratios, economic growth or what have you. That is because it is not the traditional measures that are the bubble; it is the non-traditional measures. Namely, the bubble is and has been in ever more involved and intrusive Central Banking.

The bubble has been blown in aggressive and hyper-sensitive monetary policy and I for one am not able to quantify how the effects – when they finally lose control – will play out. People, including your letter writer here, throw around the terms “inflation” and “deflation” as if we know what we are talking about. We don’t. We can’t.

Hyper-aggressive policy, most intense since 2008, has seen to it that we’ve gone off the charts, lost our breadcrumbs for finding our way back, and that is just the way it is. When the final act (for this system) plays out there will be many people who will have been right about it. For example, if it ends in a deflationary (and final) reckoning of the debt system there would have been many analysts and observers who’d expected it… for years and even decades!

Going the other way, the Crack-up-Boomers will have foreseen the hyper-inflationary result of all that debt sloshing around the system and all those Central Banks pumping the monetary spigots 24/7, 365 days a year, 10 years a decade. They will have been right… after years of a Goldilocks backdrop (not too hot, not too cold) providing calm seas for the Good Ship Lollipop to sail on.

This chart comes courtesy of the Chart Store by way of a public piece by Bob Hoye.

The inflation has gone into financial and corporate assets. It has also gone into healthcare system costs and the costs of many public services and necessary products. The corporate and investor classes have benefited while the Everyman has fallen behind, today to the most intense reading on record. This after the Everyman elected a president to drain the swamp and even the playing field. It’s not happening.

This bubble, known far and wide as the “Everything Bubble” will either continue on, sowing the seeds of ever more discontent (discord at best, violence at worst) or it will terminate. Our Central Banking heroes stand ready to promote more of the same. It is aggressive Central Banking after all, that since 2008 has violently increased the divide between the rich and the poor, the haves and barely making ends meet folks.

The picture above is an abomination. I have a nickname for the S&P 500 that I usually keep under wraps because it would show my bias as I try to write in an unbiased manner. That nickname is simply “the Pig”.

American workers have been completely shafted since 2008 and again since the 2016 election (this is not an anti-Trump screed; he’s a minor or non-factor in my opinion) in relation to their ability to buy America’s prime equity index. It’s a bubble, and it’s a Pig.

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