The more markets rise, the greater is the gap to consumer sentiment
We are used to explaining this in terms of a K-shaped economy
But together with record profit share and margins and the narrowness of the equity rally, it is also consistent with monopolization, regulatory capture and enshittification
This helps explain why not only labour but also consumers are suffering, implies a critical role for politics – and ultimately paints a more fragile picture of society collapsing towards technofeudalism
Markets are reeling from a monetary triple whammy: repo tightness, a faltering of other forms of credit creation, and a record $900bn in reserves drainage
But all these sources of monetary tightness ought to ease
The question is whether this episode drives a more enduring reduction in risk appetite and fund flows
In a narrow technical sense, the FOMC was indeed hawkish
But in the cessation of QT and through questions, it more broadly reconfirmed a reaction function at once deeply asymmetric and completely oblivious to asset price inflation
This paves the way for a further melt-up in risk assets and havens – and for more assets to exhibit the sort of exponential sawtooth boom-bust recently seen in gold
