Happy Days are Here Again!
Democrat over performance in the elections (to what degree, still unknown) was surprising enough to bring back their song regarding happy days. Markets seemed especially ebullient in terms of the week they had. As expressed in our regular table:
|ASSETS||7/26/2022||Last Week||This Week||Week||From 7/26|
Everything was up, especially Tech which was hit so hard recently.
I can make little sense of the week. Euphoria seems to have overcome fear. Is the Fed going to stop raising rates next month? Little has changed other than minimal effects of a new election (the results of which are still not fully known). Inflation shows no sign of being under control! The economy shows no sign of energy.
Is everything suddenly fixed? Is the big bad Fed going to return the punch bowl?
No one knows what the Fed will do (likely including the Fed). It is less an economic agency than a political one. To preserve its existence, it must please the powers that be, regardless of political party. Its primary purpose is to remain alive and it likely will do whatever is necessary to survive. Only coincidently (and rarely) does that make proper economic sense. It has never met its stated, original purposes.
Is the economy better? Politicians would like you to believe so, especially those within the ruling gang. However, there is scant evidence to support that wish/propaganda!
The economy remains in a rut. Inflation is still at nearly 40 year highs. Yet, apparently so was market enthusiasm, at least this past week.
Looked at in terms of the cumulative performance, the only number that makes sense is the cumulative drop in bonds of 16.2%. But from that same column, everything else seems wrong. Both the rise in Gold and the decrease in Tech seem too low. Why DJIA increased is just another puzzle.
I don’t know what is coming this next week. No one does. However, it is times like these that make John Maynard Keynes tolerable. His observation that “markets can remain irrational longer than you can remain solvent” seems to apply in spades!