Well done Robert Armstrong

In this piece, the author explains why ESG investing is not going to work. Basically, ESG funds have outperformed because they are stuffed with FAANG stocks (which are notionally green, although often have terrible corporate governance). This is not going to work forever. The article is a counterblast to the “open lettter” written by Blackrock

Does the Fed have any influence on stock prices?

J Powell emphatically answers “of course not” (yeah, right) but the correlation between M1 (which the Fed definitely can influence) and the NDX is spooky:

The Fed is putting some of its tools back in the toolbox but it’s total assets have once again reached an all time high.

MMT

Exactly who and when this is depends on whether the debt is inflated away, defaulted on or paid back via taxation (i.e. forcing individuals to consume less than they produce). Stephen King wrote a piece in the FT today which points out that when government spends (i.e. uses resources) someone somewhere gives up resources as a consequence. The article is a hatchet job on MMT. The article says that Covid spending will have to be paid back, but if there really a demand deficit in the economy it might be the time for the government to commandeer those resources to produce physical capital which will have a positive return in the future.

Wrap

Another risk on day with the exception of commodities, which paused on their upward trajectory. Standout performer was $CCR, up 9.4%. CEIX was up 8.3%. Both are coal miners. $SDC was down 6.3%, although it’s down only 2.4% MTD.