Mischaracterized inflation by economists and politicians has contributed to a rolling argument, though there's really no case to be made for 'transitory' as a word to describe this inflation. Our view of 'enduring' continues to prevail.

Pixabay

Evidence continues to accumulate: our view not only of 'enduring' but reckless spending. So maybe we'll get some mitigating into mid-2022, but not a retreat to a '2% Fed-proclaimed target'. That's out of the question based on what we see in the real world now, and have anticipated for months. Sorry but Yellen and a few others (even Powell) are delusional if they expect just 'transitory'.

Hence the Fed's behind the curve in reducing or even removing US monetary policy accommodation. On the other hand, the Fed has locked itself in, with a regime in which it won’t raise short-term rates until after the tapering of asset purchases is more than initiated, which could point to this coming Spring for a Funds rate hike. Of course the stock market will be (or already is) somewhat jittery about that (SPX).

And there are other issues that could topple things prematurely. Such as 'war' in Eastern Europe. You've got NATO warning Russia over pressing Ukraine, a not dissimilar movement of troops similarly threatened Georgia then Crimea a few years back. France is vowing to fight for Ukraine (why they specifically did issue a comment I'm unsure, perhaps to reinforce NATO's words).

My take is that this is a tactic to combine military forces of Russia with those of Belarus, and thus the 'migrant encroachment' on Poland is a diversion to the main objective, which is to bring Belarus, which failed to oust the dictator, into a solid Russian 'orbit', and if they can get away with it, also Ukraine.

Overall this was a quiet day, one is which not much was happening, so those flourishing upstarts tended to dominate the market interest, but that's also the sign of speculation. Perhaps Tesla's Elon Musk exchanging 'tweets' with Sen. Bernie Sanders reflects not so much Elon's resistance to high taxes, but that might reflect his desire to diversify his own holdings, and sell more stock (TSLA).

That wouldn't be entirely surprising as he knows 'real' effective competition is coming, and that is not just Lucid on the higher end (with reliability questions based on auto-reviews I've read, so they must be sure to maintain quality and not become known as a finicky product when it arrives), but there will be lower end products probably proliferating in about two years, but awareness sooner. I'll devote some comments on that topic soon, but suffice to say new batteries improve on the concept that Tesla uses, and will mean greater range, which is a key shortcoming on most of the offerings out there (such as Audi which has a poor 220 mile claimed range on the otherwise-elegant eTron GT).

I should note that one company does the testing of the Silicon Carbide wafers found in Tesla, and they are made by ON Semiconductor (ON) which uses AEHR for burn-in testing. I'm optimistic our 'pick of the year for 2022' AEHR will be new large contracts as we move into 2022. It's quadrupled since we initiated coverage back in August this year, to be the best performer period. Smallish I know, but for the moment they seem to have an edge over any others (AEHR).

I should note that one company does the testing of the Silicon Carbide wafers found in Tesla, and they are made by ON Semiconductor which uses AEHR for burn-in testing. I'm optimistic our 'pick of the year for 2022' AEHR will be new large contracts as we move into 2022. It's quadrupled since we initiated coverage back in August this year, to be the best performer period. Smallish I know, but for the moment they seem to have an edge over any others. (COMP)

In sum: 

This remains a challenging extended market, slightly less a debate of monetary policy (though that dominates the discussions), and more individual stocks that are not overvalued, versus those that are just trying to hold. Sure I focus on the S&P, but it's so influenced by the mega-caps that it really doesn't represent the market (that's not news), so even when/if it cracks or rallies, that doesn't necessarily reflect much on the speculative behavior of small stocks.