WEDNESDAY THOUGHTS
Futures up decently but one must remember, since Wednesday’s midday high, in just 4.5 days, the DOW dropped 9.1%, the S&P 10.9% and the NASDAQ 12.2%…again, IN JUST 4.5 DAYS. Just to give a price context, the DOW dropped 3,012 points. So if we get a 1,000 point rally, do not get too excited. It would be normal. Price is again stretched and extended beyond the beyond. Bounces, even vicious bounces would be quite normal.
On the other end, yields are overbought so it would be normal after a two+ week romp to the upside that yields pull back some. Did you know that the 10 year yield, in just 11 trading days, moved from 2.708% to 3.483%? This move is an unreal move, a no confidence vote on the man who unfortunately, will be front and center today.
The only area that potentially may be in the bottoming process is the CHINA ADRs but we must be cognizant of the China government and their decisions. Trust with the China government is low.
“90% of the coins will drop 90% or more with most going to 0” We feel we need to keep repeating what we have been saying for the past 2+ years because the many that are leveraged and crushed keep trying to tell the masses it is now a value and you should dip your toe in. We have news for you, those smiles are fake and they do not know what is next to come. Soon, you will see a ton of the advertising slow and some of the arena names come off. You are already seeing big layoffs. Good to see Mr. Gates finally chiming in calling it “the greater fool theory!”
We need to get to the point where these central bankers do not matter. They have been the opponents of savers, opponents of free markets, opponents of price discovery and have been found out to be everything we have complained about, easy money, money printing, distortion making, bubble makers. They are now forced to roll back all their mistakes…AND ARE STILL MASSIVELY BEHIND.
The president sends a letter to oil companies complaining about price. Where are the letters to companies that produce or sell used cars, chips, dips, chocolate, meat, poultry, coffee, paper products, cotton, corn, soybeans, wheat, cereal, rice, plastics and the thousands of other products that are way up in price?
The president is sending the US ENERGY SECRETARY out to hold an emergency meeting on oil refining capacity. This is the same woman who, live on tv, laughed her — off like she was watching a Chapelle stand-up comedy show when asked about raising oil production.
As predicted, the housing market is now more than cooling. That unwind has just begun. We just saw mortgage rates above 6%.
Just to repeat, in just 4.5 days, the DOW dropped from 33,156 to 30,144, the S&P from 4,160 to 3,705 and the NASDAQ from 12,235 to 10,733 to the lows yesterday. 10 year yields went from 2.708% to 3.483% in just 11 days. It will be as normal as normal could be for stock prices to bounce and yields to fall back just to provide some relief from these amazing moves. Any relief rally will not change the main trend/big picture at this time.
Before most last week, we stated Mr. Bubble would raise 3/4 of a point. (He is forced to) That number is now the chalk. Just know while he will then be at a still very easy money number of 1.5% while the 1 year yield, yes, the 1 year yield..is above 3%. The other problem is that the ECB makes Powell look like Volcker with their continued negative rates. Is it any wonder the dollar is near parity with the euro? It’s a great time to visit across the pond.