The day in review

Markets

US markets are trading at or close to all-time highs. This is accounted for by:

• unprecedented fiscal stimulus, including budget deficits of the sort that are barely seen in times of war,
• repression of interest rates to the point that real returns on any sovereign credit is significantly negative,
• a very successful development of a vaccine and a strong recovery in economic activity after an artificial suppression of economic activity.

The problem is that all these supporting factors are in the past. It’s hard to see how they can be sustained or repeated. At some point governments will have to raise taxes. Even the MMT Mafia agree that taxes must be levied to drain liquidity once inflation starts to be felt. If 4.2% is not inflation, what is? If the time to increase taxes is not now, when is it?

However, today saw a strong reversal of the stock market falls of yesterday, dropping of yields, and reversing of the upward move in the dollar yesterday. The EUR was back where it was last November, at USD 1.21.

Commodities were generally weak, dragged down by oil, down 3.5% by the close; maybe the restarting of the Colonial Pipeline had an impact.

European shares were generally down.

Drivers of today’s move presumably include, inter alia:

• CDC says fully vaccinated people can remove masks for most activities
• Weekly initial claims reach a new post-pandemic low, to 473K (expected 490K),

Can’t fill jobs, won’t raise wages

Employers prefer complaining to govt. to actually paying workers more wages, understandably.

From Macro Markets Daily.

Twitter

• Will Tesla ban car chargers in homes powered by coal?
• 8 men control more wealth than the poorest 3.6 billion people on earth.
• “There’s class warfare, all right. But it’s my class, the rich class, that’s making war …and we’re winning.” - Warren Buffett, 2011 (Net worth: $85.6 billion USD)

Interesting podcast

The Rodcast is a podcast, hosted by Rod. Well, everyone has one these days. But if you’re in the UK and interested in property development or financing, it’s worth listening to. I’d particularly recommend this one, as the guest explains why it’s so difficult to get financing in the UK because of it’s desperately slow, low-tech process for creating credit.