21Sep10:50 amEST

Human Nature Repeats for a Reason

It was not too long ago that market players (newcomers and surprisingly a ton of veterans, too) were proclaiming a new era where "stonks only go up," (sic) mostly due to The Fed, fiscal stimuli, and a plethora of retail participation speculating on easily accessibly apps and platforms taking on tons of risk via margin. 

Currently, a chunk of those retail players are long gone, having closed their accounts with either a negative balance or having wiped out a significant portion of the money they had during the go-go days. But those who still have capital have not yet likely capitulated fully, as always happens at bonafide bear market bottoms. This is all happening as we head towards an FOMC later today where The Fed is expected to make another historically high interest rate hike amid historically high inflation, all the while Europe and Japan having crises of their own brewing as their currencies get slaughtered on a daily basis versus the surging Dollar. 

While we all have our own theories as to how FOMC Day will play out, I frankly care much more about the bigger picture--We remain in a bear market which has the making of a deep, epic one, given the lack of retail panic yet. Thus, whether we rally or crater today is not as significant as some may think.

Furthermore, the Bank of Japan meeting coming up overnight also carries a ton of risk and significance given the Yen action of late. 

While the investor class is begging Powell to hit the brakes after this hike and go easy or at least wait-and-see into the midterms, I suspect Powell made up his mind last month to give a tough, brief Jackson Hole speech and then back it up into autumn. 

As for Putin and Russia, what people are missing now is that he MUST escalate--Any retreat now means the Moscow hard-liners (even those of his own ilk) will put him out to pasture (if not worse). To expect NATO and the West to be immediately forgiving after a retreat is also, frankly, naive and unrealistic. No, he MUST fight for Ukraine now, not just as part of Imperial Russia's manifest but also for his own legacy and survival.  

Overall, I am not likely to do much in front of the FOMC. I am playing the larger trends in stocks and bonds and will let everyone else try to outsmart themselves. 

Human nature over time in markets and war repeats for a reason--Just when folks think we have reached new world with new universal themes, the same, old one rear their heads to teach lessons which will be painful but, ultimately, forgotten again by the next generation. 

What if None of it Has Been ... Stock Market Recap 09/21/22 ...

 
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