Wealth-effect lovers are livid at the prospects of our projected Trump advance of well over a year ago now; languishing and failing to rekindle their libido for higher stock prices. In that respect the institutional stance seems to push aside monetary policy as if it was a 'fling' that would not interfere with the relationship between an uptrend and lust for more.

In a sense money managers (or algo-systems) really have avoided what might be called a pre-nuptial agreement for the investment arena. They have a lot invested in the 'relationship', and can imagine a Fed or other mediator somehow defining what happens to assets if 'things change'.

Real interest rates are going to go up if you get the kind of growth that's needed; and that's the spousal interloper most are focused on. Ironically the Street tends to argue that investors should stay 'married' to holdings basically permanently; even as the hedgers and others churn things in a faster manner, that almost any realize. Furthermore they borrow upon a future of 'perceived bliss', as if wanting to make the relationship persist, regardless of monetary policy or other considerations.

The Cialis Market

And they're doing this at an advance late-cycle phase by normal equity big-cap measures; although here I do believe that the prospects of this becoming the market version of a 'Silver Anniversary' are enhanced 'if' dynamic growth and initiative actually revitalize the market sufficiently.

It is something that won't be known for awhile, but with the bloated debt (we all disdain in-theory); at least there's a chance to get a growth level actually kick-started (the seeds of that have already been implanted) to a degree that it revives the market's libido; and hence love-affair able to push equity prices ultimately to higher levels that are actually justified.

But at the moment this market is still nursing what needs to be sort of an evaluation of how the relationship (credit and equity) is going; seeking a sorting-out of underlying profitability prospects, as well as the technical aspect of stimulating the market (leverage and policies can become the Cialis of the market; ready to kick-in when the time is right).

On this Valentine's Day there's fundamental confusion about the volatility relationships to valuation levels; whether the glue holding a relationship together is breaking (the Fed having dampened volatility for so long that complacency dominated management approaches).

In sum: the '7 year itch' sort of hit the markets; as they now go through a phase of reconciling and reflex efforts to 'get together again', as part of a process of deciding where it wants to go next.

It's not a 'coiled spring' like you get with lust early in a romance; but it is a market looking at the fundamentals of a more mature relationship; that of course can keep the parties together; even if they have to reconcile a questionable affair or two; or merely a waning of the long-term libido.
 

In the end the interests of staying together may prevail (the market's not a young whippersnapper after all); but it was time for a rough spell and it is in mediation to determine whether the relationship flourishes anew.