Equities continue to power higher with no apparent end in sight whilst ignoring all seasonal bias. This does not come as a huge surprise as we are in the midst of a powerful low volatility bull cycle that is partially fueled by the systematic inflation of the U.S. Dollar – long term consequences be damned. Cash may have used to be king but not now it’s everyone’s least favorite step child.
One of the main problems with self destructive habits is that you get away with it for quite a long time as most long term and irreversible consequences only begin to appear once you’ve reached the acceleration point on the exponential curve. Ask your average smoker about that – or perhaps your average Fed chairman.
Equities of course are the main beneficiaries and big tech in particular is now running on cruise control. Forgive me for posting this chart on a recurring basis but short of Bitcoin and a few low liquidity commodity contracts I have rarely seen an advance that enters vertical mode and then continues to power higher without as much as a hiccup.
The VIX has been running a bit hotter over the past few days but that’s actually not too unusual given that we continue to plot new all time highs on a weekly basis now. The only difference is that this time around our lower baseline seems to be at a hard limit around VIX 22.
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