Good Monday AM,

Bonds continue to move from bad to worse and are now a full two standard deviation away from their mean. In English this means we have moved beyond a point that is considered normal or healthy and a bounce from here is likely (yes, I know I said the same bounce was coming last week, I mean it now). Dan Rawitch said succinctly that “Investors continue to confuse the stock market with the economy and while there should be a resemblance, there has not been one since the advent of STIMULUS, aka CRACK, aka a massive drag on the economy which continues to drive the stock market up.” He is on point. The stimulus is fueling everything. The government will have to continue to provide stimulus to keep the recovery from stalling and falling backwards. In the meantime, concern over some inflation down the road is driving bond yields up. More from Dan Rawitch (he’s seems to be right more often than wrong) “The issue here is that while stimulus drives up stock prices it also drives a huge wedge between those in the 20% upper financial bracket and the other CRUCIAL 80% of our population. The workforce continues to decline, and job creation is non-existent. There is absolutely no way this economy OR stock market can sustain a ten-year bond at this current level. The Fed will need to drive rates across the yield curve to zero until we see jobs created, fuller employment and income levels rise. Otherwise, the wealth gap continues, and it will not end well. The Fed knows this. Take a deep breath, sell what you have and not what you used to have or what you believe you will have.” Keep in mind, based on the current trajectory, we will get a bounce of a few points.

Continue playing defense.

Please remain safe and healthy, make today great!