The relentlessness surge to ever higher heights across all major stock indexes (aka “markets”) was, once again, another example of just how untethered they are to anything once known as “fundamentals.”
What was also driven home, once again, was the complete repudiation to anyone such as, yours truly, as to try and apply any sanity for postulations.
It’s (i.e., applying logical conclusions to illogical nonsense) now morphed into a futile exercise much like trying to convince a drunk driver to “stay in their lane” by honking your horn as they swerve nearly taking out not only you, but the oncoming traffic or bridge abutments. When you do get their attention? They just look at you and wave “the one fingered salute” while shouting two words that aren’t “Happy Holidays!” as they merrily speed and swerve on up the road.
And yet, so far, they see it as “The winning move!”
Day after day, week after week and so forth they are being proved not only correct for not caring, but rewarded so handsomely, not only are they able to afford better or higher “top shelf” selections. But rather, some have now earned enough to buy the entire bar, liquor store, both, or a chain of both. That’s where we are, end of story.
How it ends is easy to anticipate. When? that’s the problem, just like my hypothetical above. For there really is no difference in the premise if one truly thinks about it. They’re both the same.
For those that may not fully understand my insinuation, think of it this way…
Imagine you’re a family member, friend or just casual observer of the “driver” in my example, where you’ve been arguing to either them (the driver) or telling others: “In their condition, they’re not only going to hurt or do worse to themselves, but probably others!” And the response comes back from both “the driver” as well as anyone else you’ve made this argument to, “You’ve been saying this same thing for years, and look, not only has nothing happened. Rather, since they’ve now cancelled any insurance policy on the car, they’ve now been able to upgrade to an even newer and bigger car! So they’re now saving money, driving a safer car so they can drink even more!”
That’s where we are. It’s really as simple as that.
However, does one no longer ever comment? Again, ever? While it is a debatable issue for efficacy, what it has morphed into, for myself, is more along the lines of: I understand that I might be proven wrong, again. However, for those that like to point at me and say “You’re wrong!” all I’ll add to the conversation is this…
Yep, our “driver” made it home Friday evening safe and sound after partying all day with even more money in their pocket than when they left. However, I know you don’t care, but I think you should be aware that all last week, they were driving with one tire low on air. Today? The car has two low tires and one was completely flat. I tried to point it out, but they, once again, gave me the “middle finger” and just left heading for the highway with a bottle between their legs with hardly any sleep.
But there’s nothing to see here because they do things like that all the time with no consequences so, why listen to me. Right? I probably shouldn’t even say anything for it’s just wasted breath it seems.
That is, unless you or a loved one is about to go driving or walking along our “drivers” favorite route. Then, no matter what happens, at least you know what you need to be alert for. Changing your “route” is entirely your prerogative, but you would like to know, correct?
Actually, anyone with more than two brain cells would. But that ain’t how our “markets” are currently functioning. Rather, all that most want to know is “What’s the brand name on the liquor bottle of our “driver,” and is the company public so they can buy shares?”
I’m really not that far off, but I digress.
So now, many might be wondering what does all the above really have in relationship to the “markets” going forward? Good question, and here it is…
It is quite possible that the push ever higher was in reaction (aka relief rally) to the proposed legislation of $1.2Trillion known as the (phase one) “Infrastructure Bill” which appeared to be “dead in the water.”
I’m not saying it was, I’m simply pointing out that that is not an unreasonable conclusion. Remember: It really wasn’t about this initial Bill, it’s about the two of them in conjunction setting the stage for well over $3.5Trillion in not only spending, but other embedded, highly socialist and taxing directives for the U.S.
Again, whether for it or against, it has the components to fundamentally change the U.S.’s once envy-of-the-world arrangement between government, business and citizen – forever. And no, that’s not an overstatement.
Here’s why I’m alluding to this possibility…
From a technical analysis perspective (trust me, no one gets the inside joke more than me) the “markets” ended on what used to be a highly reliable signal to suggest buying exhaustion known as “a spinning top.” There are others (shooting star, etc.) but this was about as reliable as properly formed head-and-shoulder patterns. In other words, before the advent of “free money” technical analysis regarding price action had quantifiable insights. Today? Beer pong maybe more informative, but below is what I’m addressing using the S&P 500™ as of Friday’s close. To wit:
And here’s the same chart only in closeup as to show what used to known as “a text book spinning top.” Again, to wit:
What happens next, I have no idea. However, what I do know is the “markets” ended on one seemingly foregone conclusion (i.e., legislative deadlock) and will awake on Monday morning to an entirely different one. e.g., “Phase One” on “Build Back Better” has passed and “Phase Two” may be all but assured, which brings me to my next point. e.g., Unassailable.
Regardless as to whether one agrees with the current legislation, party or anything else concerning the political – one point has been made clear and is unassailable.
(Note: This is not in any way, shape , manner or form – a political stance. This is an apolitical observation of the current facts. Period.)
House Speaker Nancy Pelosi has just earned herself the top spot in all that is political. Again, regardless as to if one likes Ms. Pelosi or not. She showed that not only can she get things done when the odds are against her, but when even her own party is against her, she can tactfully execute getting massive, foundational changing legislation passed against all odds and opposition from both members in her own party, but also, form a party that was, supposedly, in lockstep to delivering her a publicly viewed crushing, humiliating defeat to maybe end her career on.
And, she in turn, flipped it and used the other parties votes to circumvent it all and passed it.
Whatever happens from here on out Ms. Pelosi doesn’t need to do anything. Everything is now passed and is now in the hands of the Senate. The final (phase two) can pass the House on a party line vote and the entire agenda of the current administration, as well as the so-called “Squad” and others, has been all but assured to now be a “done deal.”
It’s now all in the hands of whether two senators (of her same party e.g., Democrat) either not cave to their now stand against, or, “get their heads right” and change to a “I’ve given this a lot of thought, and for both the country and my constituents I feel I should not be the lone voice to oppose what so many others have voted for. So, count me as ‘Yes.'”
For all that has been said regarding Mitch McConnell as “The master of procedure in the Senate.” Or, even other great tacticianal Speakers such as Newt Gingrich, Thomas “Tip” O’Neill and many others. With the passing of this latest via opposition within her own party – and gaining more than double the votes needed via the opposing party, after her own party was, supposedly, shellacked and delivered a refutation to the idea of a socialist agenda. Ms. Pelosi, from a purely managerial aspect, not only didn’t give up – she delivered in the face of certain, well stacked against her odds.
Again, whether you like her, the legislation or not – it doesn’t matter. Ms. Pelosi, quite reasonably, has the ability to end her career with the title “Most effective House Speaker ever, bar none.” You could also argue, politician.
Mitch McConnell with all his prior accolades for tactician and procedural prowess has all but been reduced to “has been.”
And that’s being kind.
I have a feeling Monday is going to be very, very interesting indeed.
© 2021 Mark St.Cyr
Note: This is not trading or investing advice of any sort. This commentary is for “big picture” discussion purposes only. Please read, or re-read the “About This Site” page for any questions or clarifications.