Trying to make sense of the current markets can lead to schyzophrenia.
On the one hand fundamentals that triggered the financial crisis haven't changed one bit. The housing market is still in the doldrums. Banks are still sitting on piles of rapidly deterioting toxic shit. The banking system is still bankrupt. Occident is drowning in debt. Some call for a biblical debt jubilee, but really inflation is taking care of that for us.
On the other hand we are now experiencing the impact of QE. Or "printing money" by the federales and the Chinese, who print money tit-for-tat to keep RMB in line. QE as a simple effect, it makes all USD numbers go up. This makes the dollar worthless so that from the outside, FX sees a constant or shrinking US economy. This is pure monetary inflation. But will the stability afforded be enough to mend the economy?
But it even looks like "recovery", "end of recession". But is it just inflation with recession. Of course, the "numbers" say there is no recession, because the numbers go up. All that matters is that markets are going up. What started as a monetary spark is now looking like a bona-fide ponzi fire rally, where momentum investors pile on. The Federales wanted stability. They get a bubble.
But really are we just in the midst of the biggest government led bubble? Back in April I wrote about the government wanting us out of cash, bullying us into buying shit with QE. It is the very definition of a sucker's rally but really who am I to fight the government? I feel like a sucker for doing the smart thing?
So my trades reflect my schyzophrenic understanding of the economy, monetary policy and the markets. On the one hand I buy puts on equities to reflect a bearish view of autumn, on the other I sell puts on commodities to reflect a bullish view on those. I stand ready to reverse these trades. I don't know what I am doing, really. I am buzy investing. I am a little scared. The panic button is not far.