I think no better chart represents the long-term state of the asset markets than this one.
Let’s bring out the actual S&P 500 chart to hammer out the analog:
- The virtually uninterrupted ascent from March 2020 until November 2021 corresponds to the Mania Phase shown above, peaking with the New Paradigm (think crypto, NFTs, etc.) and tinted in magenta below;
- The drop from November 2021 through October 2022 is the Denial phase, terminating in the Bull Trap, tinted in yellow below
- The lift from October 2022 through this very moment is the Return to Normal, tinted in green below
It would be terribly easy to convince a visitor from another planet that these are normal times. People sure are acting optimistic about the future. My view is that things are far, far from normal, and are instead borderline psychotic.
This was made clear to me last night watching the SOTU address. I was absolutely flabbergasted at the heckling, taunting, yelling, and name-calling. I don’t care if the guy standing at the podium is a registered Nazi or a member of the Peace & Freedom Party, but he should be granted 90 minutes in the entire year for everyone to act respectful and let him speak. Instead, we got chaos.
I was instantly reminded that when ONE, count ’em, ONE person shouted ONE thing in Congress at the President 14 years ago, it was front-page news. Indeed, the person in question has a 12 page biography on Wikipedia, but right there at the top in the summary is what he’s best known for doing.
And those were decidedly different times.
The other item that left my jaw hanging yesterday was the softball, pandering, fawning “interview” that this clown Rubenstein gave to Jerome Powell. I’ve never seen such a cloying interview in my life. One of the things which stood out for me was when Rubenstein asked Powell what his salary was (which I think is garish, if nothing else) and Powell seemed to have to think about it and offered up an estimate of “something like $190,000.”
Rubenstein went on to attempt to make the point of how tempting it must be for someone making such a modest salary to not exploit his knowledge of the Fed’s doings and make trading profits off of it. Powell assured him that their ban against trading was “state of the art” (as if it was some kind of experimental semiconductor technology instead of words on a piece of paper saying Don’t Do This.).
Powell’s fumbling answer was meant, I suppose, to suggest that, gosh darn it, Powell doesn’t think about such things, and gee willikers, he’s just happy to have the honor to serve the American people. What’s nauseating about the entire exchange is that Powell is worth about $50 million, and he couldn’t give two shits what his paystub says every couple of weeks. The notion that Powel has to stay up late at night trying to make ends meet with the family budget is vomit-inducing bullshit. He is in the ultra-high-net worth category, and I’m certain, absolutely certain, he would be happy to have the same job for $0.00 per year, considering the power and prestige it gives him.
These aren’t normal times. These are times of mass delusion. We all have a purpose here, and I see mine as trying to throw a little reality into this house of mirrors. Thank you for being with me, and I hope we can all make it to the other side in one piece.
