BIDEN WANTS TO DISINCENTIVIZE BUYBACKS; YIELD CURVE ON THE VERGE OF INVERSION

I switched to all long this morning, covering my shorts and going long tech because tomorrow is an off day for Russian-Ukranian diplomats, which means a holiday for stocks. It would shock me to see stocks lower tomorrow, on the eve of what might be the end to hostilities. Ergo and this goes without saying, I will be BULKING UP longs into the close.

But after the sugar high dissipates, we will once again be forced to focus on the following headwinds:

Biden wants to create disincentives  for share buybacks, which would prohibit a company to buy stock and then see the officers liquidate as is the case for compensation purposes. Given the market has enjoyed $200-300b in annual share buybacks for years, this would pose as a substantial blow to stocks and could unravel many quant trades that are focused on exactly this dynamic.

Lack of supply for vital commodities will cause prices to remain elevated even with potential demand destruction.

The emergence of the Petrol-Ruble is cause for real concern for dollar hegemony.

The 2-10 yield spread is on the verge of inversion — which means potential recession looms.

The US housing market is in a bubble.

All of these things point towards friction and this friction is bound to cause higher unemployment. One battle at a time, I know. However, you’d be remiss if you didn’t at least think tomorrow was a “free day” for stocks — a break from the pangs of reality, which comes Thursday.

Tread carefully and find solace in knowing “The Fly” is always winning one way or another.