May is coming up soon and we may be getting a changing of the guard at the Federal Reserve. Powell might fight to stay on, but Trump will be pushing to replace him with someone who will reduce interest rates.
Talk that we are no longer living in inflationary times is highly controversial. Say it enough, and maybe people will believe it. But the high costs are being FELT and nothing need be said. It's falling on deaf ears.
What should be up is down, what should be wrong is right, what should be normal is abnormal. Pick anything really…it's the opposite that the United States supports. The rest of the world is being bullied into accepting that.
Middle East war is never going to end. But one thing is for sure, there are a lot of people out there who simply can't see the deception. Their gullibility is causing them to buy high, sell low. Savvy traders know that ceasefire announcements are unbelievable, but drive the market up on it….and most of us sell into it. Then when the inevitable "Trump lied" news comes out, it gets driven down…and we're all buying. Past 2 months have been like taking candy from a baby.
Beyond the online, everything and everyone is generally normal. People are going to work as usual. Restaurants and stores are getting traffic, and highways and roads are busy too. Sure gas is up, but that hasn't slowed anyone down. But the stock market is living in the paranormal…as in Stranger Things, if you want to get anything done successfully, you have to enter it. It can be scary for those who have never been there, but if you aren't scared and know what you're doing, all the money to be made is there.
Posted by pajamageorge
3 Comments
The ceasefire trade observation is accurate, that pattern has been remarkably consistent and repeatable over the past two months. Announcement drops, algos and retail buy the headline, savvy money sells into the spike, retrace follows. Rinse and repeat.
The disconnect between street-level economic activity and market behaviour is real but not unusual. Markets price expectations not current reality, which is why you get situations where everything looks fine on the ground but volatility is elevated.
The paranormal framing is apt, you’re not trading what is, you’re trading what people think will happen next.
The Fed chair situation is the one worth watching closely. A Powell replacement who cuts aggressively into still-elevated inflation would be a significant regime change for how to position. Bond market reaction to that appointment would be more telling than anything the replacement says on day one.
The buy high sell low crowd you’re describing aren’t irrational, they’re just optimising for a different thing. Most retail money is optimising for not missing out, not for returns.
Understanding that is what makes the other side of those trades available.
Alright that’s enough Reddit for today.
Both can be true. There are still many stocks that are undervalued relative to their earnings last year and if Q1 is strong they have some room to climb despite the outside pressures.