"Everything Everywhere Happening All At Once" -- March 19, 2024

Locator: 46806COMMENTARY.

Updates

March 20, 2024: Supply chain inflation. Exactly what I said below in the original post -- even the “80%.”

Original Post

Wow, wow, wow -- this has simply been amazing for investors -- "this": the first three months of this year.

This is like Wayne Gretzky: skating to where the puck is going.

So much is happening right now. The fog is beginning to clear. 

For me, while everyone has been focused on the Fed -- which has told us nothing about where the puck is headed -- I've been focused on one thing: my favorite chart. 

Like "the Bakken," Wall Street, Hollywood, etc., "my favorite chart" is a metonym. "My favorite chart" has to do with all the money waiting on the sidelines and where it's likely headed, not not just that money in the money market funds earning a paltry 4.5%.

It started with all that money "under the curve."

I first noted the phenomenon November 20, 2022.

That's when I knew, for investors, things had changed. What had changed? Simply this: huge amounts of money sloshing around. 

And simultaneously another observation / realization: inflation at 9% was not due to the government printing too much money; it simply can't happen that fast. Rather, that 9% inflation was due to something else. 

Inflation is simply too much money going after too few goods. 

That 9% inflation was due to two things: 80% (pick your own number; it's a wag) was due to supply chain disruption due to Covid-19; and, 20% (pick your own numbers; it's a wag) was due to something else. The 80% was transitory; the 20% was stickier, less transitory. 

In my book, 80% is much bigger than 20% and that's why I've always argued that that 9% inflation was transitory. It was. Well, at least 80% of that 9% inflation figure was transitory. The part that was less transitory, stickier, doesn't matter. And a lot of that stickier inflation is due to one-offs, like the price of used cars and the price of eggs -- neither having anything to do with the government printing money or the government printing money (those $1,500 stimulus checks). 

So, I observed two things in 2022 and to some extent perhaps, even earlier: a) that inflation would be transitory; and, b) there was a lot of money sloshing around.

The rest of this rambling will have to do with "a lot of money sloshing around" and not much, if anything about transitory inflation.

So, "a lot of money sloshing around."

I already mentioned that I noted "under-the-curve" money as far back as November, 2022.

But even before that something else. Some huge corporations had huge amounts of money sloshing around, notably, Warren Buffett's Berkshire, Tim Cook's Apple, and many of the Big Oil companies. 

So, that's the first two examples of huge amounts of money sloshing around:

• "savings under the curve"; and,
• a few specific corporate coffers.

Earlier, I had already noticed "my favorite chart." August 23, 2021. I noted that earlier than I remember, LOL. How prescient. No one else seemed to talk much about it. Perhaps I didn't really make all that much of it until I saw "savings under the curve" and then connected the dots.

Okay, so now we have three biggies -- all that money sloshing around. 

• "savings under the curve"; 
• "my favorite chart"; and,
• Warren Buffett's and Tim Cook's cash hoard.

So, this was back in 2021 -- 2022. What was the rest of the world focused on back in 2021 -- 2022? The Fed. Inflation. Stagflation. Wow, that's all they talked about on CNBC.

I don't recall any discussion about all the money sloshing around. 

I saw that again today. One of the most amazing days ever on the market and what was CNBC's Brian Sullivan, "Last Call" -- the last business show of the day-- all worked up about? Whether the Fed will cut rates this year? 

I give up.

Whatever happened to the Apple - Google "Gemini" partnership? Yesterday.

Whatever happened to the Cramer - Huang AI interviews today? Today.

And Brian Sullivan is asking about the Fed rate again?

It gets tedious. 

A bigger story broke at the end of the day. 

Is anyone following Saudi Arabia? Three stories, in the last few days alone:

1. Saudi Aramco is considering buying the national Saudi airline, Saudia. SA must have a lot of money sloshing around:

2. Saudi Aramco wants TikTok. SA must have a lot of money sloshing around.

3. And now this, being posted everywhere: Saudi Arabia "fences off" $40 billion for AI. Yeah, SA has a lot of money sloshing around.

I'm going to stop there for now. 

But this changes everything -- adding all that Saudi money to the AI pot. 

Maybe we'll call this Part I.

Real movers and shakers are skating to where the puck is headed. And its not the Fed rate.