Queasy
Posted on Sunday, December 5th, 2021
December 17th is going to be a big day. We are primed and ready here in the Reilly house. Our oldest is graduating from college. It also happens to be her birthday. She has taken a job in mid town Atlanta with a manufacturing/supply chain consulting firm. She is super excited and can’t wait to get an apartment in mid town. Dad is – not so excited. My little girl living on her own in the big city is not a comfortable thought. For some reason all that I see on my news feed now is crime in Atlanta. Great! I remember all the “old folks” telling me when I was younger that the years would just fly by. They were right and now I’m the “old guy”. I really do wish that I had taken more pictures along the way but who had time? Time is, by far, our most precious commodity.
Speaking of commodities we have seen some major moves lower in the commodity complex. Is inflation about to start tapering off? Not as far as the Federal Reserve is concerned. In Jerome Powell’s congressional testimony last week he admitted that perhaps it was time to “retire” the word transitory regarding inflation and that the threat of persistently higher inflation has grown. Now that the Federal Reserve is in the game I think inflation may be easing. The contrarian in me thinks that the Fed is late to the game. I see inflation sticking around but at a more palatable level.
It is amazing to me that central bankers who have advocated for 2% + inflation readings for ten years now have it and want to put a stop to it. It has been my opinion that central bankers would be forced to live with higher than normal inflation because backing down from those policies would be too politically painful. I may have underestimated the political pain of letting inflation run as that has become as equally untenable. If Fed lets their current policies continue then stocks can continue to march higher backed by loose fiscal and monetary policy. If they and Congress back away from those policies stocks may fall. It all depends on where the political pain resides.
(Last week) The market is still in negative gamma which means that any move in the market is accelerated. Volatility is the name of the game when we are in negative gamma. The Dow Jones was only down 0.9% for the week but it sure felt like more. The roller coaster had some feeling a little queasy and wanting to get off the ride. That is negative gamma for you. For those of you wanting to get off the ride you are going to need to be patient. The market continues to be stuck in negative gamma. Volatility is here to stay for the time being. The countdown is on until the next major expiration which is the third Friday in December. That is December 17th. It’s going to be a big day!
I think we aspire less to foresee the future and more to be a great contingency planner… you can respond very fast to what’s happening because you thought through all the possibilities, – Lloyd Blankfein
A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty. – Winston Churchill
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Disclosure: This blog is informational and is not a recommendation to buy or sell anything. If you are thinking about investing consider the risk. Everyone’s financial situation is different. Consult your financial advisor.