Hey Mister Tambourine Man, play a song for me
In the jingle jangle morning, I’ll come followin’ you

Take me for a trip upon your magic swirlin’ ship
All my senses have been stripped
And my hands can’t feel to grip
And my toes too numb to step
Wait only for my boot heels to be wanderin’

I’m ready to go anywhere I’m ready for to fade
On to my own parade cast your dancin’ spell my way
I promise to go under it.

Bob Dylan, Hey Mister Tambourine Man

Stocks took a dive today, with a broad wave of selling with about 450 of the SP 500 stocks going lower. What was odd about this was that there did not seem to be any flight to safety, with bonds and the precious metals flat, and the US Dollar lower.

The catalysts for the selloff were relatively slight for such a broad reaction.

Facebook is implicated in a misuse of its users profile information by Cambridge Analytica who used it to craft tailored political campaign messaging in the last Presidential election.

There is also quite a bit of tension on the international and domestic political horizons that are making the markets edgy at these levels. 

There is also a two day FOMC meeting this week, with an expected 25 bp rate increase almost certain. But all eyes will be on the ‘dot plots’ this Wednesday afternoon to try and discern if there will be three or four rate increases this year. The markets are already starting to price in four.

The stock market bubble has been fueled by the Fed and the US monetary and fiscal policies. They have been pumping quite a bit of money, top down, with most of it (if not all) being snagged by the one percent and put to their own uses, which do not favor broad demand or real GDP growth. We have seen the usual growth of monopolies, non-productive deal-making, and paper asset bubbles.

So at the end of the day, the reason for today’s big selloff is that there is another financial asset bubble in equities as noted here previously, led by the FANG tech stocks.

Narrowly led bubbles lead to wild volatility swings before they finally revert to the mean. And that reversion in this case is likely to be in the neighborhood of a 20%+ stock market correction.

Financial reform is not only being neglected, the GOP with the help of corporate Democrats are rolling back the mild financial reforms from the widely disappointing Obama Administration. This is not going to end well. And they are driving huge deficits to benefit their cronies and donors. Not that Obama did not essentially do the same thing for Wall St.

Hillary was in India saying the usual tone deaf and elitist things that are so popular among Beltway Liberal Democrats these days. There are rumours she will run again in 2020. She may still have the raw power within her hapless and self-referential party to get nominated, but barring a GOP selection of some even more outrageously bad candidate I don’t think her chances will be good. She is the poster child for the kinds of things that the public wants to change.

The times they are a-changin’. And at some point the winds of change may start blowing a hurricane.

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