I have explained this in past articles such as this one, but the main point is that sentiment is what drives the market and places the spin on how the public views any of the fundamentals.
According to Bank of America, news emerged that China is planning to further consolidate its rare earth industry, combining the existing six state-owned enterprises to just two, split between northern and southern regions.
Evergrande, the debt-limit civil war, supply chain disruptions. All are conspiring to take the markets lower. We live in an unscripted world. Not like the movies. We discuss.
It surprises me that, after months of inflation that haven’t abated, I still have to argue with some people that inflation is hot and is not transitory.
Six months ago, few Americans had heard of Evergrande. Now many worry this Chinese property developer’s downfall will start an economically devastating chain reaction.
This is not going to end well. Eventually price inflation is going to sink the economy as households are forced for budgetary considerations to stop spending money anything other than absolute essentials.
To reiterate, central bankers have extraordinary inside information on the matters of interest rates and money printing done in furtherance of propping up the equity market, so why should they be allowed to trade equities?
A prominent U.S. Senator just called the head of the nation’s central bank “dangerous.” Unfortunately, the true dangers of U.S. monetary and fiscal policy were lost on everyone involved.
