The Post Fed Week

Finally a correction. People are finally re-examining the market that always went up for a year. Where do we go from here?

There are three possibilities: 1. Continue up, inflationary as that seems. 2. Sideways, flat and/or unsettled, and 3. The Bear Market. What is the situation, and can we get a clue from that?

The situation that is unwinding is an unprecedented series of Fed liquidity injections slowly but consistently being withdrawn. That led to a Government based economy, where the winners spun off of that. Government service industries created a bifurcated consumer liquidity situation where consumer discretionary spending trickled down from that. That is just what I have noticed. People with government spin-off jobs are easy to spend money while those outside that loop are a lot tighter before making any purchases.

This has infiltrated energy and fuel. The extension of that is food and the automotive/agricultural industrial sector. There are a lot of food stamps in that pie. Gasoline remains relatively low now. Diesel not so much. The enviro crowd refuses to understand the equation while they try to shortcut the solar-portable energy chain, and waste even more trying to store it in batteries. Incredibly, this is approved filthy waste though.

P.T. Barnum said a sucker is born every minute though. They are kept misdirected looking at fragile little phones as they walk over the cliff. If you want to get your message heard, it has to somehow get into that little piece of glass powered by a brain made of solid rock to emulate modern management. GOOG and AAPL rule the roost, while everybody looks to PCLN to get away. To boldly go where someone else has gone before.

Volatility has returned somewhat. It still isn't up to the historical VIX 20 average, but it is finally returning a bit towards that. Contango and volatility itself still erode VIX options, but the booty is less. In any return to normal, however stretched out or gently tapered, risk will be coming back into the equation. It is no longer a simple game where you just throw money at it. While the VVIX Index even disappeared a few times last year, it is back to front center stage.

Apparently there is also a Superbowl Effect. Everybody was assuming a Denver AFC win to continue the Bearish market . Denver didn't even show up it seemed! If you believe that, it foretells a Bull Market.

The Return of Uncertainty is almost a Certainty. Take it for what it is worth, but markets do not like uncertainty.