I Had to Get it on, Man; Inflation Was Making a Move

Prior comparisons to bull runs in stocks amid higher rates miss the mark insofar as the debt-to-GDP ratio being in the stratosphere this time around, not to mention a prolonged period of QE/ZIRP/"stimmies" policies enabling plenty of companies to not only survive but thrive when they otherwise would not have lasted a year or two in normalized rate environs--And make no mistake quite a few firms are still destined for the Pink Sheets before this is all said and done with rates. 

A major part of my deeply held conviction this cycle centered around just how sticky rates have been despite the melt-up in the Nasdaq and the plethora of traders who converted bear to bull since last January. If the new bull market theory is correct, then rates should likely have gotten crushed. Furthermore, the rally should have broadened out considerably by now, as new bull markets do. Instead, we have biotechs acting poorly while regional banks and high yield corporate bonds are not far at all from 52-week lows. 

This morning's spike in rates above 4% on the 10-Year has taken aback quite a few pundits and traders who pounded the table that rates and inflation had both peaked for this cycle. But I continue to take the other side, convinced that the pain trade is actually another surge in inflation and rates. In 2008 it was oil spiking which eventually broke the back of the market and consumer. This time around I suspect it will be rates. 

And all of this is happening with QQQ still above its 20-day moving average, and META MSFT green. 

Indeed, turning around this tape is akin to turning around the Queen Mary. It's taking forever but once it truly changes course we would all be wise to get out of its way or ride alongside it.