Serenity seemed to satiate calm markets as S&P recorded record highs. At the same time Oil prices continued to firm as we've outlined all year; and that is a contributor to the overall view that 'general' inflation is not transitory (while some aspects especially in commodities and computer chips are temporary).

Biden beaten back on his infrastructure plan; and with Covid unfortunately in a resurgent mode, makes it tough to convincingly argue any particular future outcome; although the alternatives should be obvious. We favor growth and the new approach to making gains in under-exploited 'Roaring 20's stocks.

Most orthodox analysis can't accept such low Treasury rates with continued growth; but that is what we have; with internal corrections for stocks. Rates may even fall a bit more; because the 10-year has broken a nudging-uptrend persisting all this year, which did nothing but calm the S&P's upside zeal; an expectation we've had anyway. As I said as 2021 began; slightly higher rates are not an impediment to growth or business activity; and they do not ensure that a 'recession' or double-dip occurs; not to say it doesn't eventually loom.

At the moment we have the opposite as the market has telegraphed since our bottom of March 23rd 'last' year; and reinforced by the Fed that very week as well. Clearly at some point the Fed will taper a bit and might start by trimming their mortgage bond buying program; and then some will blame the Fed for a bit of slippage in the real estate housing market (which is already occurring in most areas that were excessively hot). I will dispute media reports that deny this by citing an example of San Francisco; where inventory has risen just as I have suspected for more than a year; but where price is reported up too. The reporters fail to note that many recorded sales are very pricey properties that skew the average or median data; because it's been a wealth evacuation to a degree. New York had a similar situation; but is actually starting to revive a bit.

This is part of why so many don't get that growth & low rates can coexist for now; though ultimately (and that doesn't have to mean this year) challenges will ensue. That's also distinct from what the Fed terms 'transitory inflation'.

The Fed obviously needs to get this right; or there will be hell to pay later. It's already at levels that pretty much require M1 (up parabolic for some time) monetary velocity (turnover of the money supply) to remain high for growth. If the market changes its mind about inflationary concerns; a lot will change.

The Fed obviously needs to get this right; or there will be hell to pay later. It's already at levels that pretty much require M1 (up parabolicaly for some time) monetary velocity (turnover of the money supply) to remain high for growth. If the market changes its mind about inflationary concerns; a lot will change.

Of course the Fed doesn't want to choke-off economic growth so prematurely; and would prefer to gently wean monetary policy off extreme expansion. Also it may be concerned that if Covid really reverses the present trend (ponder 2 cruise ships presumed to be 100% negative and vaccinated which each have 2 passengers testing positive for Covid during the cruise); well there's nothing that's priced for a serious slide back into the darkest days of the pandemic.

Speaking of, some have properly pointed-out that 'more' people died from this horrid virus in 2021 than in 2020; and that's an incredible statistic if they mean all of 2020 vs just shy of half a year of 2021. We know that Covid lock-downs returned to a few places, and large parts of China itself interestingly. Expand it globally a bit more; and a lot of the loosening in travel etc., will be reversed.

Before I overlook this; you should know that China passed a new Law aimed at any corporation doing business in China that compels a company to decide to follow Chinese law, versus American sanctions. This could be a big deal.

The new week 'is' the FOMC meeting; and that is the primary reason benign behavior dominated the past week. Yes we got a record S&P which nudged a hair higher. But projecting this weeks ago I suggested new high by just a tad.

Against this backdrop keep in mind the 10-year broke the Channel; so if the Fed barely chatters about 'tapering' (which is how it should be given Lagarde at ECB essentially said nothing happening anytime soon); you can shuffle for sure in the wake of the Fed's statement (and more important news briefing); at the same time the 10-year is pointed toward a 1.30 approximate level; not higher; and by the way it's not quite the conclusion of this monetary policy but is a reflection of it.

That's my main point: this is the Fed not a reflection of business conditions. I'd discussed inflationary numbers, lower 'distant' U Mich. consumer sentiment expectations, and we know there's antitrust risk with some tech stocks. But to all who say technology will be out; that's rediciulous. It never is. This has been a hot 'housing' market; a very hot Oil market; and the problem with technology is what it has always been: technology. (Someone doing something better.)

As to the so-called Reddit crowd and similar (groups even on Facebook that it seems are ignored by the pundits); some of that may be a needless effort in a sense resulting in chasing 'games' already played; and as discussed before, the engineered moves (short squeezes or not, or partially) may be less merely group aggregation, but a form of manipulation by hedge funds or others. That may be illegal or unethical but some may be doing it.

The only reason I mention it here is that I am not critical but endorse younger investors (ok traders) entering the market with a focus on volatility and risking a bit on prices moving sooner rather than later. We all try that a bit but for the so-called anti-capitalist trend, nothing could be more capitalist. Speculation is the 'art' of free enterprise; with realization can go bust in the process. When I was in my teens and had sizeable gains in airlines stocks and later my first Oil stock (OXY before the Libyan discovery run-up was confirmed), I took a view that 'if things didn't work out I could always get a job'. Well I got a degree and ended up with a job anyway, but along the lines of my passion (didn't exactly know if that was stocks or broadcasting at one point; so maybe I pioneered a bit by expanding the nascent financial TV realm then.. it was lots of fun).

So yes, this is on my mind recognizing, including because of messages sent while I was recovering, that our younger members (or kin) want high potential; not merely (that's what they say) dividend or long-term gradual appreciation. I know that's not entirely the case; and we tend to focus on the broader picture anyway; but it does illustrate the nature of the current market which ignores S&P, for now. And I get it; they take risks and can always get a job later :) . It also means speculation will hit the proverbial wall; not exactly like Bitcoin did (and I projected its most recent collapse too); and for the S&P might be soon.

While the S&P may be stable-to-firm early in the week; most will be on-hold in suspended animation ahead of the FOMC midweek decision on rates and of course the 'tone' of Chairman Powell's remarks at the News conference. If we are going to get a June shakeout (remember my S&P call for up and peaking roughly in early-to-mid June; it could well be a few days from now. Then after that we'll possibly rebound into early July.. oh let's address that later on haha.