By Eric Peters, CIO of One River Asset Management
“You take something off the table here,” barked Biggie Too.
“Feels like we’re somewhere in peak Goldilocks,” continued the Global Chief Strategist for one of Wall Street’s Too-Big-To-Fail affairs.
“At some point you get a challenge to Goldilocks – Biggie sees things and it’s coming,” he bellowed, most comfortable in 3rd person.
“Maybe the dollar resumes its rally. Conviction trades roll over – investment grade, emerging markets. Not yet. Biggie feels a little back and forth first.”
“I ordered the Pentagon to shoot it down on Wednesday as soon as possible,” said President Biden, caving to the cries of the crowd.
“They decided – without doing damage to anyone on the ground – they decided that the best time to do that was when it got over water,” added America’s Commander-in-Chief, acknowledging that of the many terrific uses for F-22s, engineering soft landings is not one.
“Within the 12-mile limit, they successfully took it down, and I want to compliment our aviators who did it.”
The media sure loved it all.
Clicks, conspiracies, coverups.
And presumably some Americans felt safer knowing a nation that landed a rover on the dark side of the moon and tested encrypted satellite communications using quantum entanglement technology, is no longer floating a helium balloon overhead.
It reminded us that what we fear need not make much sense.
The real risks, of course, are most often off the radar.
One such risk is that the nation with the world’s most important economy and mightiest military is becoming increasingly difficult to responsibly govern.
China’s helium balloon illustrated this disturbing fact for all those tuned in to its faint signal.
But the much larger object floating overhead is the Federal Reserve’s unfathomably bloated balance sheet, which is both impossible to photograph and even more difficult to explain to the nation’s distracted citizenry.
“We’ve raised rates four and a half percentage points, and we’re talking about a couple of more rate hikes to get to that level we think is appropriately restrictive,” said Chairman Powell, at the press conference. “Why do we think that’s probably necessary? We think because inflation is still running very hot,” he added. But the yield curve remained steeply inverted, dismissing Powell’s guidance, as the bond market fears sustained rate hikes when combined with the ongoing quantitative tightening campaign will precipitate a hard landing.