Bessent is so very, very different.
This is where discernment becomes really critical.
I mean, come on - this is hardly the end of the world…
"If you do not own index replication, you haven’t done badly in this chapter of “no put” liquidation. A lot of main street stocks have actually gone up; MCD, JNJ, PG, BRK are all fine."
Very true.
Some History
The Commercial Financial Chronicle: The Financial Situation
The prescient article below was published on a Saturday, two days after Black Thursday, when the DJIA opened down 11%, but closed only down 2%. The market actually closed higher the next day, Friday the 25th.
Then this happened:
“It does not detract from the seriousness of the situation which developed on the Stock Exchange the present week, or minimize its importance or significance, to say that what has happened has long been inevitable. The panic, as a result of which values have melted away to an extent and to a degree which has no parallel in all the numerous stock panics of the past, except that which came with the outbreak of the World War in 1914, was long since a foregone conclusion. The havoc which it has created, the destruction it has wrought, the losses which it has inflicted on so many ill able to bear them, the all-around distress which it has caused, are a train of circumstances that are the unescapable consequences of the deplorable state of things which has existed on the Stock Exchange for a period of considerably over two years.
Never before in all the annals of the human race has there been such an unbridled speculation as this country has had in recent years; never before has there been a speculation that has had such a prolonged period of existence, during which it kept expanding and ever widening in character; never before has any such speculation obtained such a firm grip on the entire world, abroad as well as at home, and never before has there been a speculation which so fired the popular imagination everywhere, and never before has such a speculation held the entire world spellbound, nor had such all pervading and all embracing influence, nor been so far reaching in its effects, the final result being that all trade and all the ordinary activities of business to the farthest corners of the earth, fell under complete subjection to it, as witness the compulsion under which the Bank of England was brought in having to raise its discount rate first from4 1/2% to5 1/2% last February, and then to 6 1/2% the latter part of September. In the last analysis its influence was for evil and it could eventuate only in the’ disastrous way which has now happened.
As prices under speculative manipulation rose higher and still higher, as fortunes were made through the prodigious appreciation in market values, old reckonings were cast aside, all reason abandoned, and it seemed as if all economic law had been suspended and a new era had opened up in which success and prosperity could be attained without any aid or endeavor except speculation on the Stock Exchange.
Everyone became seized with the idea that it was possible to get rich overnight by simply taking flyers in the stock market. Accordingly, everyone became fascinated by the fluctuations on the Stock Exchange, and everyone a participant therein. Scrubwomen, porters, elevator boys, typists, bootblacks, soda fountain attendants, clerks, statisticians, actors and actresses, business executives—in fact, all classes of the population from the highest to the lowest, the humblest as well as those most elevated in station, one and all became a prey to the consuming speculation craze. Some put only a little at stake, others their all. And now the sad awakening has come, whether the lesson it teaches has been learnt or not.
The country will now get back to a normal basis, and it is well that it should, for only in that way can there be a return to the sound conditions essential to enduring prosperity and the preservation of financial and industrial health. The process will necessarily be slow. It will, however, be beneficial. We are told that underlying conditions both in the financial world and in trade and commerce are sound, and there can be no question as to this. Nevertheless, we have been living in a state of illusion. The stock market gains which kept so steadily piling up led to extravagant spending and extravagant living, everyone feeling while stock prices were rising that he could afford to be generous with his supposed gains. As a result, luxuries have been thriving as never before. All this will have to be changed and unquestionably will involve a considerable slowing down of trade.
Corporation earnings will be on a smaller scale, and so will be individual earnings. Perhaps all this has been discounted in the great crash in prices which has occurred this week, but at all events the new situation will have to be faced. It seems doubtful if in the near future plasterers and other unskilled labor can continue to get $15 a day and make $75 by simply working five days a week, but that also is of the old order and will have to yield to the new order.
In the meantime it should not be forgotten that speculation could never have attained the unfortunate heights it did, had it not been for the easy money policy of the Federal Reserve System inaugurated in 1927 for the supposed benefit of the outside world, but which in the end proved as harmful there as it did at home; in other words, the speculation could never have thriven the way it did except for the unlimited supplies of Reserve credit that were ever on tap.
In the end the Reserve authorities undertook to apply a check, but it was then too late. Here also there ought to be a change, to the end that the same debacle may never again recur.”
Note the humility, the introspection of the above piece. I see none of this today.
I was honestly shocked this week by the complete lack of any knowledge of market history among so many Fintwit stock jockeys. Many also seemed to be crypto devotees.
As Russell Napier once remarked, "It is possible to leave university now knowing nothing of financial history, even if one has a degree in finance - even if one has a post-graduate degree." No kidding.
Many seemed to freak out over a - what - 13% Nasdaq 100 decline off all-time highs? An index with ridiculous valuations?
An index that is - as of Thursday’s close - 18 1/2 times the level of its 2009 low? Seriously?
I just wanted to shake people and say, “GROW UP!!” all week. Pathetic.
An Nvidia anecdote:
“I was at a dinner party in January with a psychiatrist and his wife, a heart surgeon, real estate flippers, and a bio-tech power couple, eight of us in all. On the way over, my wife reminded me of the wives’ names: Tom and Audrey, Michael and Mindi, etc., and said with emphasis, “Do not say anything about Trump!”
As usual, the conversation was convivial at first and focused on travel and families until the wines improved (lol)… and then, of course, Trump came up. Remarkably, the conversation was civil, even predictable. He had yet to be inaugurated, so we segued to another popular topic, NVidia. At most dinner parties, you chat with the person on your right for a few minutes, then the person on your left, and if your hostess is merciful, the evening is affable and swift. However, when NVidia came up, all ears turned to the center of the table.
I was not surprised to hear everyone owned NVidia, and because it had gone up so much, it was a plurality (or more) of their portfolios. And they agreed taxes on such gains were inhibitive. No one was a seller. They asked me about gold, and I mumbled something about its outstanding performance, to which everyone nodded as if we were favorably comparing The Mets to a real baseball team.
NVidia’s market cap was down $1.25 trillion at settlement Friday. A third of their glorious Nvidia is gone as I write this evening, Sunday, March 9, and the rest of the trillionaire sector, meaning the 10 Magnificent equities that once footed 40% of the S&P, looks like a mud fence in a rain storm.”
August 4, 2024 was a Sunday.
Over the previous week (Friday to Friday,) the S&P 500 Index had fallen 2.06%, versus 2.70% today (Monday, March 10.)
Remember these?
Way to go, Canada.
The U.S. CPI model has now been above it’s made-up “2% target” for forty-seven months. In no normal universe does this, "bolster case for Federal Reserve to cut interest rates," as the ridiculous FT declares below.
CORE CPI - linear and semi-log! - either way, number go up!
A lot of PPI was flat month-over-month propaganda Thursday. Nonsense. Next they promote week-over-week changes, seasonally-adjusted.
This is a monstrous failure of the Fed's first mandate, and the MSM cheers it all on. People have to survive on price levels, not rate of change.
Below the fold, Gary Brode explains things, we have the always interesting Greg Weldon, renowned smart person Mike Green, real estate whiz kid Melody Wright, a chat with Paul Singer, some Chris Whalen, various fascinating charts and graphs, gold(!), a wonderful essay from N.S. Lyons, crypto heists, NSA whistleblower Thomas Drake, cringeworthy videos, poignant videos, mean tweets, mark to myth, Operation Gladio and more! You just have to pay like a buck ninety-two a week. That much probably fell out of your pants pocket today in the car. I spend a lot of time on this stuff (for future historians), but I hope you also enjoy it.
Anyway, current paid subscribers - the number one reason by far people give for leaving is “time,” which I understand, BUT you do not have to read everything here. Just read the good stuff and skip over the rest. There will be no test on the contents later.
Keep reading with a 7-day free trial
Subscribe to A Havenstein Moment. to keep reading this post and get 7 days of free access to the full post archives.