Stillwater Capital, LLC

GrowIn th Busting Through


Markets          

This week, Wharton finance professor Jeremy Seigel, went on CNBC and did what he does best, scare the hell out of those who don’t want to miss out, and the bears that try to stand in the way. ‘Enjoy the ride..’ was the call, as this longtime bull thinks stocks could rally another 30% before there is a chance of a correction. The reason? You guessed it; the Fed has no choice but to go hammer down on the liquidity pedal, even it means 4% to 5% inflation.

Jerry the Bull

For anyone, self-included, who makes their money in two-way markets, this is a pretty scary thought. First, the ‘buy anything’ mantra works, until it doesn’t. But that mantra can last a lot longer than anyone who bets against it can stay solvent. Second, unless someone wants to point to any other decent reason otherwise, we are probably going higher, valuation be damned. If that’s the case, we will challenge the prior high set in the dot.com era.

‘To what end?’

The Economy         

We’ve been talking about the ‘not so Special K’ recovery for a while now. And our song has remained the same, reflation has been great for those with assets, and horrible for those without. Case in point, the cost of food has spiked 25% since the pandemic took hold. Rich or poor, everyone has to put food in their mouths.

Wanna Eat?

The fact that 70% of the wealth created in 2020 went to the richest 10% of households, while the bottom half received only 4% doesn’t surprise us. And with that little bit of data, we say once again that the Fed has ceded any right to ever lament the problems that income and wealth inequality have on society. Because you can’t really lament the thing you have contributed to mightily. Trickle-down economics is dead, long live trickle down!

Ronnie Rides Again

This week, Fed Chair Powell pushed his hand even further, saying that even with markets in great shape, and the risk of this not being a ‘great economy’ is high enough to keep rates at or near zero through 2023. Forget the rolling upgrades of economic growth across the board, and around the world, according to Jerry, the Fed isn’t flinching. The economies shown below that are going to be bigger by the end of 2021 are the ones that matter most. Come on Italy, get your stuff together.

Boom Again

Crude Oil          

Speaking of inflation, have you noticed what happened with oil prices as the world economies have begun to bloom? From a low of $20 when we looked into the abyss a year ago, to back into the range it had been for four years, the world’s most important commodity is signaling that things are back to normal. The problem is, they aren’t.

Crude Oil

While California is its own freak flying indestructible economy, the sight of $4 gasoline can’t be something that the Golden State driver is really happy to see right now. Having driven through Los Angeles several times recently, the roads are still remarkably open. With that in mind, we can’t imagine what things are going to look like once they fill up again.

Sky High

The Hwanger Saga          

Holy sweet baby Jesus, has the story of Bill Hwang losing $20 billion (with a ‘B’) gotten incredibly interesting, and very religious. It turns out he was a rather simple man who liked the Lord…a lot. In a quote recorded on video for his church in 2019 Hwang said, “I try to invest according to the word of God and the power of the Holy Spirit.” I would love to know the kind of leverage the Goldman Sachs prime brokerage department offers him, we mean God of course.

Careful with That

The Masters          

The Masters is thankfully back in full’ish swing at Augusta National in Georgia. We add the ‘ish’ simply from the perspective that galleries are only somewhat back, which is fine by us. No grandstands equal better viewing for all. Who wouldn’t miss seeing a flock of WASPs in their Vineyard Vines best coming to you live in high def? What we would however miss is the fun on the 16th during the Wednesday practice round as players try to skip the pond onto the green. While we didn’t see any hole-in-ones, we always enjoy seeing Phil as he ‘chomps gum and drops bombs.

Hooded Four Iron 

As has been widely covered, and at a very interesting time in Georgia history, 86-year-old Lee Elder joined Jack Nicklaus and Gary Player for the ceremonial first tee shot of the tournament. Elder was the first African American to ever play in the Masters. Keep in mind, that first round was in 1975. Not that long ago and only a year shy of our country’s 200th birthday.

Well Played, Lee

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