Morning Note: System-driven

In this week’s main message we pointed to things that just don’t make sense during recessions, and that have occurred this go-round nonetheless.

One of those things was rising personal income.

Here’s that section:

Personal Income:

Let’s zero in on that last one:

Note the huge spike in personal income March to April, when stimulus checks and extra unemployment benefits first hit. Then the dramatic trailing off. Then the huge spike when the December stimulus checks showed up. When this graph updates no doubt we’ll see a similar decline, then a big boost on the recent $1,400 per person round.

Should we suppose that the anomalies illustrated in these charts have virtually everything to do with the unprecedented largesse hurled into the spending — and the speculating — side of the economic ledger?

Then of course there’s the question you just asked yourself: What happens on the news that this form of stimulus simply can’t last forever?

Well, I suspect that it will correspond with the passing of a $3 trillion dollar infrastructure plan — which may indeed delay the inevitable demise of the most bubbly areas of the equity market. Operative word being “inevitable.”

Well, the graph updated (through February) this morning, and like I said:


But no worries, new checks have been issued…


Asian stocks rebounded overnight, with 13 of the 16 markets we track closing higher.

Europe’s in rally mode this morning as well, with 17 of 19 bourses we follow in the green as I type.

U.S. major averages are looking to close out a volatile week on an up note: Dow up 144 points (0.44%), SP500 up 0.43%, SP500 Equal Weight up 0.50%, Nasdaq 100 up 0.35%, Russell 2000 up 0.97%.

The VIX (SP500 implied volatility) is down 4.19%. VXN is down 3.40%.

Oil futures are up 3.48%, gold’s up 0.09%, silver’s down 0.43%, copper futures are up 1.61% and the ag complex is up 0.59%.

The 10-year treasury is down (yield up) and the dollar is down 0.02%.

Led by metals miners, oil services, wind companies, emerging markets and banks, our core mix is up 0.60% to start the session. The yen, utilities and silver are our only positions in the red so far this morning.


I like this quote from Albert Rutherford’s excellent book Learn to Think in Systems. It reminds me, as I scapegoat the powers-that-be for blowing up an epic, and epically dangerous debt bubble, that they’re simply functioning within a long-established, ever-evolving system:

“Nobody can be personally held responsible for these problems, although we love finding scapegoats in the political and economic fields. These issues are simply coded in the function of the system.”


Have a great day!
Marty

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