What’s wrong with this picture?
Consider the geopolitical chaos:
- The Middle East in bloody upheaval – thousands dead, hundreds held hostage, no end in sight
- Outright anti-semitism surging on college campuses and in the city streets
- Oil at $150/barrel next year? (according to Bloomberg)
- A new Russian offensive in the Ukraine – “Putin is having a very good October” (according to The Washington Post)
- A paralytic Congress, lurching through fiscal showdowns and budget shutdowns
Consider the financial chaos –
- Treasury markets “in turmoil” (according to the Financial Times), or is it a “meltdown”? (Charles Schwab).
- Bond market volatility surging higher than stock market volatility by “the most on record” – (Bloomberg).
- The housing market is “painful, ugly, anxious” (CNBC), “completely broken” (Bloomberg) – “a crash that can sink the American economy” (CNN)
- The banking industry – to include even some of the great pillars of the financial system – has been shaky all year, balance sheets awash in unrealized losses that will take years to work out (see below)
And Yet – on Wall Street, Euphoria Reigns…
Last week, Nasdaq had its best week in a year. Since October 27, the index is up 8.4% .
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