Mollycoddled——Or Why Wall Street Expects A Fed Band-Aid On Every Boo-Boo

I’ve been puzzling over the peculiar reaction the market had on Monday to the savage attacks that took place in Paris. Never would I have dared imagine that assets across the board would excitedly zoom upward following this brutal mass killing in one of the most beloved cities in the world. It just made no sense.

This morning, as I was doing my usual 5:30 a.m. walk of my big dogs, it dawned on me:  the market rallied because it knew it was going to get pampered. Over the past several decades – – and the last seven years in particular – – the market as a whole has been trained by the central banks and national governments of the world that Big Daddy Is Going To Make Things Better, and that if bad things happen (like Long Term Capital Management, or the Internet bubble bursting, or AIG going up in flames, or the twin towers falling, or civilians in Paris being mowed down by automatic rifles) then the paternal overseers that are ostensibly our leaders will give us a kiss, put a band-aid on our boo-boo, and make it all go away.

Let me digress by introducing you to this gentleman:


A chubby old dude shaking hands with a Marine, right? Well, this is Mr. Jack Lucas. Let me tell you a bit about him.

In the summer of 1942, World War II was heating up, and young Jack wanted to join the fight. The problem was that he was a 14 year old kid. He was a tough-looking hombre, though, so without even asking his mother, he went off to the Marine recruit depot, lied about his age, and was shipped off to Parris Island.

Although he did superbly well in training, he grew weary of not getting involved in any actual fighting, so he went AWOL in early 1945 (a reward was posted for his capture). He sneaked aboard a boat and told an officer who he was. Instead of arresting him, the commander allowed him to stay, and Jack turned 17 years old (the age he claimed to be when he originally signed up) while at sea.

A few days later, the craft landed off the coast of Iwo Jima. He and three other guys got on to the island and, hunkered down in a trench, they were attacked by Japanese. A grenade fell near them, and Jack Lucas threw his body over it. Observing a second grenade nearby, he grabbed it and shoved that under his body as well. (I think most of us would admit doing this would not be our first instinct). He quickly pushed the grenades into the volcanic ash beneath him, and they exploded.

His buddies were certain he was dead, and they got the hell out of there, but, incredibly, Jack survived the blasts. He was evacuated to a hospital ship and was sent back to the United States. He underwent 21 different rounds of surgery, and the doctors deliberately left over 200 pieces of metal in his body (meaning, among other things, Mr. Lucas could never pass through an airport’s metal detector without some serious explaining).

He was, at the age of 17, award the Medal of Honor by Harry Truman………..and then he went back to finish freakin’ high school. He went on the other military adventures later in life, including an instance in which neither of his parachutes deployed (he survived, naturally). So the old fellow you see above was a complete badass.

Contrast that with today’s college students who are whining and screaming about “micro-aggression” and are all worked up that the victims in Paris are getting all the limelight while their bitch-fest has been shunted aside as uninteresting.


Indeed, I had never heard the term “safe space” until just a few days ago, but apparently it’s a big deal these days. From what a gather, it’s a zone in which free speech is completely forbidden, for fear of hurting the feelings of some special snowflake. For instance:


Two-spirited? I feel out of step with the times, I must say. And then there’s this:


I could look up cisgender, but I’m not going to bother. Considering me “questioning”, which apparently entitles me to visit the aforementioned safe space.

And let me be clear about something: I am anti-bullying, pro-civil-rights all the way. But, sweet Jesus on a cornbread muffin, people, don’t you think this is all a bit much?

The way college students are demanding to be mollycoddled aligns perfectly with the attitudes of investors as well. They simply will not tolerate any meaningful down-move in the market, and the central bankers have pandered for so many years to this kind of thinking, they simply keep doing the same things month after month, year after year. The equity markets have become the ultimate “Safe Space” for adults.

Thus, after the Paris attacks, the knee-jerk reaction (which lasted only moments, and was actually quite sensible in a normal world) was to sell everything except gold, which itself got bid up nicely. The collective mind, however, knew that the succubus Janet Yellen and her kind would swoop in and let equity investors suckle at the dangling teats of fiscal accommodation, thus eradicating any true price discovery and any risk for the soft-as-downy-fur traders out there.

There is no free lunch, however, although it’s easy to understand after all this years why one might think otherwise. But if parents protect their kids too much, never letting them stand on their own two feet, you wind up with a guy in his mid-30s still living with his parents and trying to find himself. Such a man will, in fact, ultimately fail, because he was never allowed to grow up (and I daresay would have had his ass kicked all over the yard by 14-year-old Jack Lucas).

So, too, will equity markets. They have been mollycoddled into a state of moral flabbiness. If in 2008 all support was taken away and the market was forced to cleanse itself as God intended, we would on this very day be enjoying true prosperity and be many trillions less in debt. As it is now, though, we have to simply wait it out, anticipating the day when equity “investors” finally realize that the safe space around them has disappeared, and there’s no brave soul around them who is going to throw their body on the grenades tumbling down around them.