Another Hot Print

It's too close for comfort
This heat has got
Right out of hand
--Bananarama

Measured inflation still coming in hot, with monthly CPI printing at +8.3% YOY. This is far higher than the 'expert' predictions in the 6% range as pundits postulate that 'peak' inflation has already occurred.

Futures immediately sold the news, as the knee jerk reaction is that the Fed will have to behave more hawkishly.

That said, I wouldn't want to be short here. Seems like there's a lotta bad news already baked in--at least in the near term.

There is also the question about how far the Fed can actually raise rates without breaking the system. I personally suspect the answer is much lower than current consensus.

Bear Crowd

Well, I got one foot on the platform
The other foot on the train
--The Animals

Tend to agree with this post. Lotta bearish sentiment. When sentiment gets this lopsided, trend reversals are often imminent.

AAII sentiment chart pictures the extreme field position.

Have been nibbling long here and there.

No Refuge

You got me running
Going out of my mind
You got my thinking 
That I'm wasting my time
--ELO

Bitcoin has been proposed as an alternative money. Such a money should have little correlation to other asset classes--particularly risk assets.

However, the correlation between Bitcoin and tech stocks is high and has been getting higher.

Anyone seeking refuge from current stock market volatility by owning Bitcoin has been sorely disappointed.

no positions

Proud Moms

Her children rise up and call her blessed.
--Proverbs 31:28

A beautiful Mother's Day that doubles as a special Graduation Day.

I can think of at least three moms who are very proud today.

Speech and the Despot Franchise

"You can break a man's skull. You can arrest him. You can throw him into a dungeon. But how do you control what's up here? How do you fight an idea?"
--Sextus (Ben-Hur)

Escalating pushback against free speech reminds us once more of just how radical the notion of liberty is. The history of the world has been dominated by those who desire to dominate. Authoritarians who seek to control others through use of force.

Our founding ancestors developed a constitutional framework that proposed otherwise. At the top of the list was speak and write with no government interference.

Authoritarians despise this freedom to no end. They understand that minds exposed to alternative viewpoints threaten the despot franchise.

As current events demonstrate, statists will stop at nothing to silence dissent.

Whippy Trippy

Jared Cohen: Sam, how long under normal operations would it take your people to clear that from our book?
Sam Rogers: What?
--Margin Call

After the +900 Dow pt day post Fed on Wed, Thurs saw -1100 pts. This am the Dow opened -400 in the hole only to claw back to even.

Chatter is that there was forced liquidation yesterday--which makes one wonder about the force behind the post Fed announcement rally that serendipitously brough higher prices for the folks who needed to sell...

On the Zoom

Well she ran into this guy
Who was down at 54
Had a lot of gold and chains
And he got her in the door
And he knew so many people
Who made her lots of pretty promises
--Don Henley

FOMC announces 50 bip hike in the fed funds rate and QT to being on June 1. QT will be capped at $30B in Treasuries and $17.5B in agencies/MBS for the first three months, and then doubled after that.

Let's see, $90B monthly in runoff on a $9T balance sheet--with the stipulation that the Fed intends to "maintain securities holdings in amounts needed to implement monetary policy efficiently and effectively."

Seems to me that the FOMC is signaling that the it will take its sweet time pulling down its balance sheet--inflation or not.

Maybe that's why stock and commodities are zooming post announcement.

Three Peat

When my back is broken
When the mountain moves away
All the dreams and promises
That we give
We give away
--INXS

Ten yr yield touched 3% yesterday. Not terribly high by long term historical standards but noteworthy given recent context. Last time at 3% coincided with Fed chair Powell folding like a cheap suit and reversing the Fed's tightening policies in 2018.

The above chart shows the relative field position then vs now. Last time, the Fed had already raised rates several times by the time 10 yr yields touched a 3 handle. This time, we're at 3% after only one measly 25 bip increase.

More fuel for the argument that the current tightening campaign will cease far sooner than currently forecast.

Supplying War

War, children
It's just a shot away
It's just a shot away
--The Rolling Stones

Country A is at war with Country B. Country C's government begins supplying A with military resources (e.g., firearms, military vehicles).

Country C is no longer 'neutral.' It is now at war with B.

Disinformation Governance Board

Funny how I blind myself
I never knew
If I was sometimes played upon 
Afraid to lose
--Talk Talk

In what could hardly be a more overt validation of George Orwell's 1984 message, the federal government has created a 'Disinformation Governance Board" under the Department of Homeland Security. The objective is to 'police' what is deemed (by the overseers, of course) to be 'misinformation' or 'disinformation.'

The censorship drumbeat among progressives has reached a fevered pitch, pushed over the top by Elon Musk's buyout of Twitter (TWTR) announced last week.

How the establishment of such an agency is not a direct violation of the First Amendment is beyond me.

 At the same time, we should also note that this is not the first time the feds have sought to thwart free speech through formal structure. John Adams' Alien and Sedition Acts, Lincoln's muzzling of unfriendly press during the Civil War, Wilson's Committee on Public Information and Sedition Act of 1918, information shapers in FDR's 'brain trust,' et al.

To borrow Locke and Jefferson's term, this 'train of abuses' has been running in fits and starts since the ink was newly dry on the Bill of Rights. And in the most noteworthy authoritarian regimes in history...

I hope this is challenged in the courts. Meanwhile it will be interesting to see how much legitimacy this agency acquires from the people. 

Stated differently, widespread rejection of the Disinformation Governance Board by the citizenry could bury the censors and vault awareness of liberty to levels not seen in some time.