Sadistic Narcissistic Rally

The Bloomberg News headline reads: "US STOCKS ADVANCE ON PROSPECTS OF POST-ELECTION GRIDLOCK", which strikes me as rather, well, disgusting. For, so the logic goes, with gridlock comes more of the the same. Essentially, more large budget deficits, no new taxes, no new energy taxes, no energy policy, no universal healthcare, more military spending, no pharmaceutical regulation, no attempt to rectify international imbalances, and certainly no policy initiatives to attempt to deal with any of the structural risks to international monetary system. It does mean, more inflation, continued negative real interest rates, all of which [for the immediate moment] is the perfect environment for stocks, not to mention all other assets, hard or soft. Under the Gridlock scenario, optimists can look forward to the housing slump being rather shallow for house prices in nominal terms will not fall very much, even if turnover drops. And as inflation accelerates (though interest rates lag with the Fed squarely behind the curve), housing inventories will be consumed as they begin to look attractive once again.

All which conjures images of sleazy "Cock fights", the Gladiators in the Forum of Rome, "bare-knuckle-boxing" or Smash-up Derby" where inexplicable sadism is rife and the seeming focal point of spectators' (or in our case Stock Traders & Investors') maccabre pleasure. Keep an eye out for Emperor Nero, for his is surely lurking nearby.