Down goes the Dow

Surgery went well. Doc pleased with connection of plumbing (what leaked before). He said he was exhausted from spending four of the six hours of the procedure releasing scar tissue. Said my wife will be happy. I thank him for taking care of my love of fifty years, married for forty-eight, and on Valentines Day. Looks like the rest of the week before she comes home. I am headed to spend some time with her once I have a room number.

Thanks for the kind thoughts.

Igy

Great news, Igy. Thanks for letting us know.

That is very good to hear. I hope she is comfortable and able to go home real soon. 

the way corrections usually end is boredom. The weak hands sell, the bad news runs its course, people get bored of whatever has caused the correction, and they start playing the long side again because that's how you make money and PMs will get fired if they trail the index. 

So that's what will happen, eventually. The question is just how long it takes for all the weak hands to get shaken out and how long it takes for people to get bored of the negative news. 

2/10 yield curve gets flatter and flatter. 40 bps now. Basically nothing. 

And the Fed is about to raise the short end, which might make it even flatter. Although maybe not...Fed rate is much shorter than 2 years. 

What a conundrum. Fed needs to raise rates but doing so could invert the 2/10 which could *cause* a recession. 

I guess the Fed could sell long term bonds and hope that drives up longer term rates. 

but right now bonds are saying that we're in from some very, very low economic growth. Raising rates into a slowing growth situation is...ah suboptimal. 

Impossible situation. I suppose you just go slowly and hope the market adjusts on its own. 

Good stuff, Igy.

She must really be something to have put up with you for so long. And congrats on the 48, we are only at something like 30. We travel a bunch, but I hear your warning to travel while you can, it is resonating loudly in my heat at the moment. All the best.

And agip, here we have the crux of it: bonds. I listen to Gundlach when I can, he often makes some sense to me, although he is obviously detached from many things, and has only a 70,000' perspective. This "conundrum" is why you have many commentators saying that the Fed has "backed itself into a corner". It is also why I have suggested that "the answer" does not lie with rates, or at least not solely with rates. IMO people have staked out their territory too rigidly, and are unwilling to use every possible tool in the toolbox. I don't see anybody advancing any substantially interesting ideas, or promising paths forward--which is why I have been in the process of jumping ship for some time now. I have managed to move a fair amount out of US assets, and hold no USD-denominated instruments except for those I-series, and hopefully nothing catastrophic will happen during the 1-year lockup period.

The big question of "what to do" is being asked by everybody, but nobody has an answer. The answer is to be prepared to change yourself, which is something that nobody wants to think about. Move. And if you can't move, change your "lifestyle" accordingly. So much of what we do as we go through life is unexamined. We believe that we examine it, but we usually do so through the lens of our limited conceptions of what life can be, and so the examination results in tinkering around the edges rather than any substantial change. And that is fine, of course, if you want to try to roll with the punches and think that you can do a good job of it. Everyone has their own assessment of things, and how they can manage them.

I keep hearing about Japan, and how the market still hasn't returned to 1989 levels. Of course the return will be different than the level, and I haven't seen Japanese jumping ship to everywhere else in the world, because...psychologically, they just can't. It is totally beyond their conception, for all but a handful. Even me--I have tried to pare some things back to essentials, but I keep getting roped into things because I don't live in isolation. Striking the balance can be tough, though--at least for me.

I guess what I want to say is that many people are looking for guidance, if not a solution, for the direction their lives will take for the next few years. IMO those to whom they are looking are out of ideas for the everyman, and we have been hung out to dry. I will not be abandoning the US, it is the US that has abandoned me. I still have, and will maintain, my tax residence here until it absolutely makes no sense to do so, but I will make that switch in a heartbeat.

And yes, the ROW is not immune to the boffo moves the Fed has made, although it seems particularly bad here--a luxury afforded by the world reserve currency. IMO the govt-expansionist mentality (something embodied in both US parties) needs to come to an end, which it of course will not until such time as it crumbles under its own weight, and who knows how long that could take. The country could still be floated for quite some time, but I don't want to be a part of the fiction anymore, it makes me uneasy and unsatisfied. I have even held off on a business project, that I will now be pursuing overseas instead, because there, there is at least some environment of stability in which to move forward.

Here, I have this feeling that everything is up in the air, and the bond action shows how things can change.

IMO

All the best to Mrs. Igy for a speedy recovery. She is obviously a very strong woman.

Thanks. I met her when she worked at Foster’s Freeze across the street from where I trained with the Santa Monica Track Club. I was 20 and she was 16. Started first as friends and dated a couple years later, married short time later.

We lived in some unusual places when running and coaching. Spent six months in Lake Tahoe just running, and she would cook homemade meals. That was 1975 when far less populated. I am a very lucky guy.

I am sitting by her and is doing well.

Igy

Thought I would check in here.

Good to hear she is doing ok.  Does she still run, or is she smarter than we are?😂

Yes. She had a knee injury a decade ago; acts up from time to time. We do a mail box fartlek thru the neighborhood. Needless to say that didn’t happen last year. I’ll do that as a second workout. She has talked about getting after it this summer.

Thanks J Hardy. Much appreciated.

They're the largest CONTRIBUTORS not components. They only COMPRISE 7.89% of the CPI's relative importance; Food and Shelter are 46.3%.

Cure to higher prices? Higher prices.

Wild rumpus goes flat on reports some Russian troops headed back to base. Equity futures up big, yet yields higher….

apparently this is the same news that is driving the market up today. Weird that it is having more impact today than yesterday. 

It's not just one report driving the news tho.

Anyway, if we open here, we're up 2.5% from yesterday's low. That's a lot.  

Given the totality of my posts, yours does mot meaningfully improve the understanding of the issue at hand. The message it sends (at least to me) probably isn’t the one for which you were aiming.

Yeah, futures up...because it seems that some have decided that good political hay can be made at this time. Although doing well, i am still wary of these markets. Any rise today could be reversed by the weekend, if this is all it takes.

But I will have a fun day, nevertheless. Yesterday was a good buying day, hopefully there will be others in the future. Euro indexes are up healthily, but nothing great. Maybe waiting for the US to take the lead.

I took the opportunity to be a Grumpus and added to my short position.

Speculating that the rise of crypto is two fold: Super Bowl ads and Ukraine. Ads are a silly reason when viewed against history. Like stadium and bowl naming rights. What could go wrong?

Hmm XLE down. Take profit? Up 66% or so still