Winter of Volatility
I’m neck deep in these things called wireframes, and frankly I am not very good at it. But it must be done, and done it will be. If I’m still struggling to learn new things I’m still young right?
But it also makes it a great day to be distracted by the monetary policy circus, and timing for that couldn’t be better. FOMC minutes out at 2:00. Powell on the tape at 2:30. Market up 200 bps pre-market two days after a 7.4% two day decline to intra-day lows followed by a 4% mid-session squeeze. Oh to be an options market maker during the winter of volatility.
Volatility is in the air. The steady march of Keynesian interventionism might be hitting it’s first wall in 30 years as political pressure from its resulting inflation and wealth gap widening has hit levels that the masses will no longer abide.
Only the most devoted and deluded Keynesians - the same crowd that didn't understand how slow the inflationary cycle moves and how long it takes to kick in since QE1 back in 2008, that same crowd also doesn't understand how slow the cycle is and how long it'll take to reverse now. They are gonna learn the hard way. We are all gonna learn the hard way. It is no light switch that you can flick on or off!
Powell will give lip service to the Fed mandate of price stability, while pretending that price increases are synonymous with price stability. You know what creates price stability? Asset prices that are offered close to intrinsic value. Inflated prices are unstable prices.
The winter of volatility extends beyond the markets. Politicians are banging the war drums for Ukraine, for reasons I am told I should care very much about. Supply chains are said to be on the mend, while tens of thousands of truckers are gathering in Canada about to embark on a coordinated protest of the country’s cruel and ineffective vaccine mandates.
The official Covid narratives are crumbling. Our institutions that saw their prestige and trust under attack during the Trump presidency came back to assert their expertise and effectiveness with authority. And they failed spectacularly.
Volatility is in the air. It is in the markets, it is in politics, and we can all feel it around us. Meanwhile, like the dance band playing as the Titanic sunk, I’m working on these wireframes while we watch the global markets swing wildly based on the word choices of a single 70 year old lawyer, just like Adam Smith intended.
Free markets no more. Institutions losing the public trust and holding on harder as they lose their grip. In this winter of volatility.