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Olduvai III: Catacylsm
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Mismatch

Oh dear. People are embracing the bubble and, as it happens in every bubble, fantastical narratives are emerging to justify the valuations and the price momentum as folks cannot square reality with non stop levitation in equity prices. Never mind that the final price spurt in any bubble is the most dangerous and most deceiving.

And with these fantastical narratives suddenly debt no longer matters because MMT. Inflation is declared dead as central bankers keep missing their inflation targets yet consumers are well aware of inflation in their daily lives, and yield curves no longer matter because they are simply a play thing of central bankers who can now prevent recessions forever:

“The Fed has the power to “prevent or quickly undo” an unwanted inversion, the BofA economists said.”

If debt doesn’t matter, inflation doesn’t exist, and yield curve inversions can be prevented by an all powerful Fed we must truly live in a world of milk and honey.

After all:

United States weekly jobless claims just hit a 50 year low. The economy is doing GREAT!
— Donald J. Trump (@realDonaldTrump) April 20, 201

Things are so awesome we are experiencing some of the loosest financial conditions in history:

And global liquidity keeps running at record levels:

No wonder stocks are celebrating and flirting with record highs, indeed record highs are already seen printed on tech and consumer discretionary:

No wonder investors are chasing after money losing IPOs like it’s 1999:

And are piling in their cash after a 24% rally off the lows:

After all Q1 GDP is flying higher to unforeseen levels.

The Atlanta Fed’s GDP forecasting model, always having an adventurous relationship with reality, is now forecasting a 2.8% GDP print for Q1, following a 0.4% projection just 6 weeks ago:

Looks like Alan Greenspan is right. Get a big rally in $SPX and suddenly your GDP looks much better.

 …click on the above link to read the rest of the article…

Olduvai IV: Courage
In progress...

Olduvai II: Exodus
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