Welcome To The Goldfish Market

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by: Mark St. Cyr
Summary

It was long assumed that the memory retention of a goldfish was all of about 3 seconds.

That conclusion has since been refuted where it is now shown that fish have memories lasting for up to (important qualifier there) five months.

The BTFD'ers (today's goldfish/guppies) seemingly can't remember past two or three seconds and see every dip as floating "fish food" to be consumed immediately.

It was long assumed that the memory retention of a goldfish was all of about 3 seconds. That conclusion has since been refuted where it is now shown that fish have memories lasting for up to (important qualifier there) five months.

This is an important point of clarification because, if we can now prove scientifically that goldfish have up to five months, we can now use this same research to help quantify the behavior of today's "market" BTFD'ers (but the f'n dippers).

The BTFD'ers (today's goldfish/guppies) seemingly can't remember past two or three seconds and see every dip as floating "fish food" to be consumed immediately. Those with longer lasting memories of "up to" five months seem to be the mainstream business/financial media, next-in-rotation fund-mangers, Ph.Dd economists and assorted buzzer-kings. And this "up to" qualifier seems to be legitimate settled science. For I ask…

"Does anyone not part of the gill-bearing species remember just how awesome everything was told and sold via the Fed while emphasizing it was to continue way back in the ancient history of about five months ago?"

If you do? Consider yourself as passing today's aquatic version of a "Turing Test" and take solace as to being free of any further association with the lemming class.

If not? Then your school of thought (see what I did there?) can only be one thing: you believe the Fed. (and all central bankers for that matter) know what they are doing. Maybe, loss of memory can be bliss, no?

To help those with a short memory. It was only back in early October, you know, just about five months ago, when both the Fed along with its Chair voiced how well the economy was doing. It also signaled that everything the Fed was doing, watching, contemplating and more in regards to rate hikes, balance sheet normalization and so forth was running so smoothly that everything was to be assumed as "steady as she goes."

Then, suddenly - a new term entered the "markets" vernacular that was a bit of a mashup of another from ancient history and all but forgotten. i.e., "Brace for impact - because this suckers going down!"

Within weeks the "markets went from all-time highs to bear market status culminating in more newer, revised old terms such as "historic sell off" and more. But alas that too is now consistent with ancient history status if not forgotten entirely. For proof, all one needs to do is peruse the aforementioned media outlets. I mean: who needs an aquarium when you can just leave the TV running on any market/business channel, right?

Today, the Fed and many of its players have taken to this same media and are now making convoluted arguments as to why the economy is both on sound footing, as well as precariously positioned. Why everything the Fed has done has been "the right thing" while at the same time is ready to jettison it all should their latest interpretation for health ends up incorrect, subsequently killing the patient in the meantime.

Another is that there are both current and past Fed members giving completely opposite interpretations of current policy. One says "nothing to see here, just move along please" another says "we need to reverse course and pause" and still others giving the impression that they already have, but know they have done nothing of the kind.

And the "markets" have taken the bait hook-line-and-sinker buying anything and everything in sight. That is, those with the now scientifically proven expanded memory of a fish. Everyone else?

The outflows are showing conclusively that they are not of the marine species and remember all too well how fast an "everything is awesome" pool of fun and money-making can turn into a whirling cesspool of money and profits down the drain.

Allow me to jog the memory of those of the aquatic craniate family with one word: December. Or, is that also being swept into the memory hole of never-to-be-seen-again status of the ancients? Looking at these "markets" of late, it would appear rightly so.

Speaking of "looking." Let's do just that, shall we? Sometimes all one needs to jog one's memory is to be shown a picture. And, since that's what they call them in Silicon Valley, let's look at one. You know, "for the memories" as we like to say. To wit:

(Chart Source)

The above is the S&P 500™ as of this writing where the bars/candles represent one-hour intervals. As you can clearly discern, we were at "never before seen in human history" highs when the Fed announced that the normalization was going on as scheduled and would increase to the now $50 billion per month light-speed status. The market reaction was near instantaneous.

Then the "markets" bounced or should I say ping-ponged in what I coined as the "manic - depressive" region of 2600 - 2800 as Mr. Powell attempted to clarify his remarks pertaining to Fed policy.

That is: until in December, when he uttered the word "autopilot." And the market never looked back.

That is, until both he, as well as many others, could get to a microphone, camera, or keyboard and state as forcefully as they could the word "pause." And since then, once again, the "markets" have not only forgotten about the normalization process (QT) but have subsequently gorged on the idea that rate hikes and QT are now a thing of the past, as in nothing more than the equivalent of a bad dream. i.e., "it wasn't real." Hint: the genesis of the "nightmare" still lives.

QT is still running on "autopilot." It has not been altered via any current reporting. And the higher the "markets" continue on their current accent - the more likely that March turns from the illusion of "paused" back into "live." Again, for it needs to be repeated for those lacking any memory: All while the balance sheet continues in its "autopilot" status.

Should the "markets" not be able to pierce the now obvious demarcation line above 2800 and reverse? By the time the Fed meets in March to say "Hey, see we didn't hike!" but the balance sheet shows another $100 billion gone? Let's just say old memories of "this suckers going down!" might begin to rush back into those now gorging BTFD'er guppies.

And lest we all not forget what usually is the last memory of many a goldfish and guppy. For those that need a hint?

Rhymes with the word: flush.

Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.