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RANDOM THOUGHTS ON EVERYTHING

ByGary Kaltbaum
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Never forget one of our most important mottoes: IT’S NEVER BAD UNTIL THE MARKET SAYS SO.

Did you notice the national media seemed overjoyed by the big drop yesterday? They seemed happy talking about a possible recession. Must be watching a little too much Bill Maher. Speaking of that, capitalist Elizabeth Warren seemed all thrilled because recently she said a downturn is coming. Of course, if a downturn does come, much of it will be because of the debt capitalist Warrren and the rest created throughout the years. Cause the problem and then predict problems are just ahead.

After yesterday’s action, markets are massively oversold. Sentiment has become decidedly bearish. The permabears are all out calling for their end of world scenarios. Inverted yield curves…recessions…deflation…and all that crap. Just because markets are beyond oversold and sentiment is bearish, it does not mean markets have to bounce. It just means the conditions are there for a good bounce.

This whole inverted yield curve crap did not come out of thin air. It has been moving that way for quite a while. It was just a matter of when. The fact is this 2 year/10 year is problematic as it does have a great record.

Over 600 new yearly lows. This is amazing since major indices are only down in the mid-teens. It just tells you how weak markets are underneath the surface. We have highlighted for you how weak the small and mid-caps have been relative to the large caps. We have highlighted for you how weak foreign markets have been.

Overpriced, over-hyped, money losing IPOs are now being scorched. This leads us to another one of our mottoes: IN BEARISH MARKETS, THE CURTAINS COME DOWN ON MOST COMPANIES THAT LOSE MONEY. You may not know this but a ton of money losing IPOs that came public in the last year are now down 30,40,50% and even more. We have been quoted as saying UBER stock should be in the teens. It may be headed that way.

This latest drop started with President Trump putting the 10% tariffs on China…July 31. Up until then, major indices were near highs. As usual and as we told you, he has already pulled back the tariffs on the most important products but the market may just be pissed off enough that they don’t care. Too many flip-flops?

Cisco Systems smacked in after hours today.  On its China business: “We’re being uninvited to bid!” “We’re not being allowed to even participate anymore.” Don’t worry! It’s only Cisco Systems. Trade wars are easy!
We can blast the fed. The president should not. Think about this. The president called the number 1 money man in the world “clueless.” And he thinks markets will be happy about this? If the president stopped jawboning the fed, maybe they will cut sooner rather than later.
Speaking of that, we continue to believe an intra-meeting rate cut is coming if markets take another leg down. WITH THE 10 YEAR UNDER 1.6, THE FED HAS PLENTY OF COVER TO CUT NOT ONLY 1/4% BUT 1/2%. Every day they wait is another day they are way behind the curve. The fed cannot help the economy at this point but can possibly help markets…possibly!
If at any time the recent lows get taken out, expect institutions to recognize the next leg down leading to more selling.  We said these same words on December 7, 2018, right before another major leg down in that bearish phase.

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