12/08/2020 — The Market Is High

The market is high. Anyone with the ability to count can plainly see it flying high. It’s new all-time highs (S&P 500 and Nasdaq) spit in the face of a global pandemic, mass unemployment, economic uncertainty, and an upcoming first quarter of 2021 that will likely see a surge in lockdowns. The lockdowns will lead to crumbling businesses, which will lead to joblessness, evictions, bad haircuts, and general societal malaise.

I know that Wall Street couldn’t care less about death, disease, and American decline, but I believe that at some point overall economic withdrawal should begin to weigh on the lofty numbers that the stock market has been boasting of late. Not everyone lives their lives on Zoom, works for a tech company, or orders their meals from Chateau Amazon. And when these newly jobless, homeless, and despondent people stop participating in all economic systems not related to drugs, gambling, or pornography, one might assume that would finally give the market pause.

It wont, because the market is also high in the sense that it is intoxicated. Like an Elon Musk on a Joe Rogan podcast, it has been smoking so much Fed that it can’t see straight. Like the drunkard who hasn’t realized that he’s bleeding profusely, or the heroin addict that is about to keel over, Wall Street has quaffed so much cheap Fed that it can’t stop itself from blindly falling up. With no real interest rate, where else can money go but into the market? If you ask me, I think it’s crazy.

But don’t ask me, my performance over the last two weeks has been anything but high. Instead, please ask yourself these two questions:

Heading into 2021 and a long-tailed pandemic hangover, other than a near-zero interest rate policy, what would convince average Americans that a market at all-time highs is a good place for their hard-earned cash or savings?

And…

If this Quantitative Easing continues to show ever diminishing effects on the “main street” economy — outside of the narrow scope of the stock market — should we be concerned that the only reason that the Fed continues this practice is not to prime the economic pump, but to stave off the catastrophe of managing our burgeoning debt at higher interest rates?

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