Law of Diminishing Marginal Utility Debunked!? Buy the Dip is back??? 

Law of Diminishing Marginal Returns Debunked!? Buy the Dip is back???

Market Updates 14th October 2021

Every another bite of the cake is less delicious than the previous however it is said that money is an exception to the rule. Though really is it? Depends on how you look at money and what you want to do with it. Billionaires are in the race to amass it and not spend it while Fed wants to spend it and not gather it on its Balance Sheet. Lets see a few charts.

Fed Assets & M2

More money Fed prints, more if it seems to be making it into Feds Assets. Is Fed trying to be the richest bank in the world? Well they already are. They are trying to spend it or rather have people, natural and artificial have it on their assets but it seems to be all making it back to vaults. 
 
Looks like Fed is getting the point and its Taper Time!!
M2 & Fed Total Assets (Source : St. Louis Fed)

M2 and Labor Participation

The more money Fed prints labor participation seems to fall. While correlation is not causation, it does seem that we have hit a point of diminishing marginal returns. And even though financial assistance stop, those jobs are not going to get filled up quick. Labor though it seems inhumane to mention, behaves like a commodity on graphs. It will be time until we put all the square pegs in square holes and round in round holes.
M2 & Labor Force Participation (Source : St. Louis Fed)

Labor Force Participation and Job Openings (Non Farm)

Measuring once and cutting twice, here is one more graph proving the point that though job openings are at an all time high labor force participation is not catching up. One has to wonder if everyone is going to stay at home even after mass vaccinations and no financial assistance?
Labor Force Participation and JOLTS (Source : St. Louis Fed)

Who is Afraid of Big Bad Taper?

The Fed is and the reason is they do not want to make a mistake. Measure Once and Cut Twice is the time tested SOP to reduce errors and in case of Fed even a small error even if in just timing is a blunder.

The Market certainly is not afraid of tapering or so it seems. Fed is going to end all stimulus by Mid 2022 . Perhaps out of hand inflation is a bigger worry even for Markets and perhaps this is a welcome news.

E-Mini S&P 500 Index Futures (Think of Swim Platform)

Net Net

Market climbs the wall of worry and trades on anticipation. Inflation will be contained if Fed Tapers and interests rates cannot rise for now as the cost of servicing debt by the government would get too expensive. Looks like it may be time to get bullish with a lot more than a dash of salt.

May Lady Luck Smile on us all and if not on our portfolios.
Remember, this is not investment advise.

– Mr. Egg Head
NJ, USA – 14th October 2021

PS

Not Investment Advise
Forgive my grammar

Mr. Egg Head

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