Hope all goes well… “No one has real risk on,” said the CIO, dizzy. “We’ve all been through the laundromat.” Equity long/short managers owned all the wrong stocks. And held the wrong shorts. “We got tumbled.” But they’re not selling their darlings like Facebook, Google, and Amazon. In fact, they love those stocks even more at these prices. “The reflation names we were short we now want to buy.” Financials, infrastruc

“Investors have outsourced risk-management to central bankers,” he said, pacing at the pension plan. We were discussing the challenges thrust upon large institutions by today’s new investment paradigm. They had built portfolios for secular stagnation, and awoke November 8th to something profoundly different. Trump’s victory marks a seismic shift from a world in which monetary policy was the sole driver of markets and

Overall: “Now we’re feeling what not having hope feels like,” lamented America’s First Lady to Oprah, as another hopeful stock picker paid 22-times trailing earnings for the S&P 500. “America needs a grown-up in the White House who can say to you in times of crisis, ‘Hey it’s going to be ok, let’s look at the future, let’s look at all the things we’re building,” continued Michelle. Infrastructure stocks consolida

Hope all goes well… “Monkey see, monkey do,” said the CIO to himself, picking something small from his buddy’s scalp. “I’ve never pretended to be anything other than what I am,” he mumbled. “That’s the only way to survive in this jungle,” he thought, grabbing a vine with his left foot. “What’s overbought today becomes more so tomorrow.” He paused, not sure what that even means, but enjoying the sound of it. “I don’t

Overall: “These are the same people that said Saddam Hussein had weapons of mass destruction,” said Team Trump, discrediting the CIA for reporting that Russia had interfered in our presidential election. Team Trump’s claim is nonsense. They’re not the same people, they’re members of the same institution. And that makes all the difference. Because people come and go rather easily. Institutions do not. Institutions are

“America’s Massive Policy Error,” said the CIO. “That’s the title of the book someone will write in ten years about what’s happening today.” Never in economic history has a government implemented a fiscal stimulus of this size at full employment. “The Trump team and economic elites believe that anemic corporate capital expenditure is the root cause of today’s lackluster growth.” It’s not that simple. If credit to fir

Hope all goes well… “Want the good news or the bad news Daddy?” asked Teddy, eleven, sad. I braced myself, sizing up the situation. He’s too young to own bank stocks, and wouldn’t know how to short crude oil. “Gimme the good news first my little man,” I said. “The clouds parted and a ray of sunlight shone through when I buried Lundy – I think he went to heaven,” said Teddy, tears rolling. I bit my lip, suppressing a

Overall: “These visitors to that city on the Potomac do not come as white or black, red or yellow; they are not Jews or Christians; conservatives or liberals; or Democrats or Republicans. They are Americans awed by what has gone before, proud of what for them is still a shining city on a hill,” said Ronald Reagan, eyes sparkling, on the eve of his 1980 election. Back then things were brutal. Reagan’s optimism lifted

“We’ve become anesthetized to the absurdity of Chinese growth,” said the CIO. The accelerating rate of credit expansion relative to GDP has no precedent. “They’ve run off the cliff so fast that people seem to think they’ll actually make it to the other side.” China figured out the fiat currency game. “A government can monetize its debts, provided it avoids two extremes internal to its economy; inflation above the soc

Hope all goes well… And that you had a great Thanksgiving. Dusted off an anecdote from 2014 about confidence, trust (see below). Back next Sunday with full weekend notes. Week-in-Review (expressed in YoY terms): Mon: South Korea’s Park moves toward impeachment, EU inflation expectations 11mth high, May acknowledges “UK businesses need Brexit clarity,” France foils terror attack, Sarkozy knocked out of French primary