E Market Briefing For Wednesday, May 12

A massive reversal lagged for a couple hours before catching a 'real bid'. Once it did great, but not very broadly, so the prospects for this being just the kind of reprieve I talked of before today is enhanced. To wit: a relief rally.

Leading into these past few days of erosion (preceding washouts normally as I tried to outline), the large caps (especially FANG types) under-performed for at least a couple months, and corrected more going into late April / early May, which happened to be my ideal time-frame for such selling to accelerate.

It's also 'why' I pointed-out yesterday that the acceleration is typically closer to what you see at the end of a shakeout than the start of anything big, with just a few historical instances where bottoms totally fell out. This wasn't and isn't one of those. And barring some exogenous event (like China invading Taiwan for-instance) this phase, even if it has another effort to break of test today's lows, is not the catastrophe so many keep looking for.

I don't blame anyone for questioning the debt structure of excess valuation. I'd do that too and often have mentioned these issues. But this is not the mania a lot of analysts think it is, although it clearly was in that handful of 'momentum' stocks. Today I heard Stan Drunkenmiller call this a 'mania like no other'.

He's a smart guy but I must disagree with him as far as the 'broad front' (while he said everything is going up, that's the departure, everything is not although it did for awhile, and ironically that was while he was still negative and admits it, coming off the March 2020 lows). Then he got with it as it climbed higher, a time that we didn't get bearish (still not really) but having bought the low didn't see any reason to chase price higher.

Again I concur with most of views that he shared, but not all of them. Actually I was reinforced by so many issues we feel similarly about. Foremost is what's the insane 'policy' of 'wanting' inflation, which is horrible for the poorer people in our society. Stan said he will always afford fresh vegetables while poor folks will have to buy less expensive frozen vegetables. Honestly I have never even compared fresh vs. frozen, so have no clue as to price differences. (A bit of a tongue-in-cheek comment, as long as Calif. Pizza Kitchens can make my very fresh chopped Italian salad I'm fine with their locally-grown fresh ingredients.)

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William K. 4 weeks ago Member's comment

I think that this is the first time I have seen the comment that "inflation hurts the poor people." More correctly, though, is that it hurts them the most, because it does hurt ALL of the "non-rich" people, but not as much as those who are poor. ( the definition of poor here is sort of relative.)

At last it is announced that the goal of the federal reserve gang has been hurting some class of people!!! This is not something new, ithas been going on for a long time.