Nothing else matters

Happy Friday!

The Quarterly Update was released this week. As always, reach out if you’d like a copy. The TLDR version is that just as Metallica taught us long ago, it’s all up to the Fed, and nothing else matters.

What happened?

I was on the runway when CPI was released yesterday. Just as futures started to tank, we took off. I sat there annoyed, knowing that when I landed, my day was going to suck.

I was flying United, so the internet was obviously not working. Hence, I had to wait like four hours before I could check the market. Upon landing, I mentally prepared myself for a bloodbath.

But that didn’t happen. The reversal was so dramatic that I spent most of yesterday trying to confirm my gut theory of why that didn’t happen.

To be clear, this is somewhat of an impossible task because nobody – I’m talking nobody – can know for sure what drives the daily moves in the market. But everyone in this business tries – especially on a day like Thursday. 

Three minutes into the open, the S&P 500 wiped out two years of gains, then reversed course on a dime. The S&P 500 gained 5.5% during the trading day from the daily bottom to the top. That was the second-largest point reversal in history (courtesy of Eddy Elfenbein’s blog).

My guess is that so many of us were waiting for this CPI report that when it confirmed what I think most of us were thinking – that inflation is sticky – the reaction initially caused the S&P 500 to break 3,500.

Maybe that level triggered short sellers to cover. If so, the algos and high-frequency traders (HFTs) who can move billions in fractions of a microsecond would have seen it and added fuel to the rally. 

In English, yesterday seemed to be 100% technical and 0% fundamental. That may not be the “Aha!” answer you were looking for, but as I said, nobody knows with any certainty what happened yesterday. So, your guess is as good as mine.


The most recent Fed meeting minutes were released on Wednesday, which spawned headlines like these:

Keep in mind that this is the same Fed that in 2021 said, “we are not even thinking about thinking about raising rates” until 2023 at the earliest.

The bottom line is that the Fed meeting minutes are worthless to anyone with an investment horizon longer than a few days.


The Fed takes a lot of heat for the market volatility this year, but I’ve felt for some time that there was a deeper problem. And I don’t mean margin debt, an exploding money supply, excess bank reserves, repo facility, etc. 

None of those seem like they could be the root cause for such an awful year, but I’ve also been unable to put my finger on what it could be – until this week. I’ve found the missing piece of the puzzle, and it goes something like this…

New York is the financial capital of the world, and even with the advent of working from home, most big trades get executed in or around money centers. This implies that the world’s most important traders are still somewhat tethered to New York, London, etc.

New York is also the city that never sleeps. While many attribute that maxim to the nonstop energy of the concrete jungle, the real reason nobody sleeps on that island is that everyone is hooked on prescription drugs. It’s the only way to keep working those hours and paying the rent. 

So, when I read this week that there is a nationwide Adderall shortage, everything came together. It now makes sense. 

The big traders – those that matter to market stability and integrity – are sobering up and not by choice. They aren’t used to trading with a clear head and, as a result, are wreaking havoc on the global financial system.

Cathie Wood’s open letter to the Fed this week should have gone to the FDA instead. Jamie Dimon should have voiced his economic concerns not to CNBC but rather to Teva Pharmaceuticals because the solution to market volatility has been right in front of us all year. 

The financial world needs more Adderall.

Enjoy the weekend…