The Recession of the Recession
Investors should beware of what everyone else is aware of and be aware of what other investors are ignoring.
Knowing the Known
Everyone now knows there is a recession, as shown by the Market Semiotics Slogan Search shown below. Slogan searches measure the contrarian potential of ideas in financial culture.
But investors should beware of what everyone else is aware of and be aware of what other investors are ignoring. The recession slogan wasn't on the radar a few months ago. Now it is The Meme, The Buzz, The Who and The How. It looks like it has already peaked, in terms of popularity. Indeed, it was the propaganda that Mr. Market used to top bonds, bottom stocks and correct commodities. Therefore, there is no recession, for now, since it is already known and already traded. Since it is already known, it has no power, near term. Recession has receded. Stocks have discounted the stag, for now, but not the 'flation.
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The Davos Diagnosis
I have the benefit of being in the Meta-Davos, a.k.a. Vermont. It is colder here than it is in Davos, thus it is easier to think more clearly. What do the Davosians know that we don't? Markets are simple really: Stocks are in a bear market. Commodities are in a bull market. The curve is steepening. Gold is the unique asset for these times and harder times, should they come, and they will. That is the essential secular market structure. What else do you need to know?
Thus, I can now sign off from Davos... er, Meta Davos. I saved the airfare, the dry cleaning bills and all the faux pleasantries of trying to impress and be impressed. I cast no aspersion on those of you, and you know who you are, who are actually there in Davos. But, really, the snow is better in Vermont, it is colder here and I have better wines in the cellar, at better prices, than in Davos.
I explicated here last week that the acme of purgation is capitulation. Purgation produces an emptying of all risk appetite. This unpleasant process results in a catharsis, which is the experience of purification. Equity markets were purified on January 23. That pure emptiness resulted in the return of risk appetite. Thus stocks are recycling back up.
Stuff Setback is Normal, Stock Setback is Not
Commodities turned corrective, but not for long. It looks like a normal correction in the greatest bull market of all time. However, the alacrity and degree of the stock swoon suggests that it may turn out to be abnormal. After all, if this is the biggest stuff move in history, what kind of Paper Puke is possible?
Over and out from faux Davos. Long live the short-lived equity recovery into the next tactical high. (Mr. Market has constrained me from revealing the day and time of the next tactical top. But Toddo will likely know when the time comes.)
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