Things That Make You Go Hmmm… Like Fed-Induced Sugar Crashes

In the first act of the movie “Willy Wonka and the Chocolate Factory,” Bill, the owner of the sweetshop, sings a song called “The Candyman”, which praises the wonderful world created by Wonka and espouses the pure joy of living in a place where everything is deliciously sweet; miracles, dreams, and rainbows are ubiquitous; and any sorrow is separated and discarded in favour of cream… pure cream. As Bill hands out free candy to a group of wide-eyed kids, you can see in their eyes the pure joy that only comes of living in a world where everything is wonderful and nothing bad ever happens. Ring any bells?

Yes, the US equity markets have bought firmly into the idea that everything is right in the world and that nothing will ever be allowed to go wrong.

…the market likes it when there are no negative surprises from the Fed chairman – the corollary of which is that the market HATES it when the Candyman threatens to stop with the sugar – last month’s Taper Tantrum being the obvious and most recent example.

But in its adherence to whatever is being handed out by Bernanke, the market is failing to pay attention to signals that would ordinarily call for caution.

That is the danger of getting kids hooked on candy: rationality tends to fall by the wayside and behaviour becomes harder and harder to understand until, ultimately, a sugar crash occurs.

In Grant Williams’ excellent TTMYGH letter, we see the risible nature of this new utopian society blessed by the modern-day candyman in light of the following ‘reality’ facts…


TTMYGH – Candyman


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