The Last Last Opportunity to GET OUT!

Wayne

Active member
Aeromir Expert
I am getting a lot of emails from clients and friends about the excitement of a fed pivot. The data is not pointing to that being a bullish thing for equities. So far we have had mass selling of bonds that have helped prop up the blue chips. When bond yields do slow down it will attract more capital to them and less to falling and failing companies that are fighting slowing growth and bankruptcies. Welcome to the bear market blue chips, cough cough, GOOG, MSFT, AAPL.

This rally is the exact moment I was talking about in the last GET OUT post. We have some small positive elements on the macro front like positive GDP. The models were spot on with that and we will find out tomorrow that GDP was very positive last quarter.

To sum it up... The Fed needs inflation to cool off and the economy to contract. Core CPI accelerated last month (opposite of what the Fed needs). Unemployment is solidly at the low end of the historical norm (opposite of what the Fed needs). We have no data except for falling asset prices to say that CPI inflation is coming down at a reasonable pace. All we have is a lack of runaway inflation. The Fed is still hiking into a global recession. We will talk later when they are discussing cutting.

We are entering/entered the collapse stage of the recession. As a refresher... Note: All stages are cumulative of all previous stages.

Stage 1. Deleveraging (Banks and institutions rotate from High beta assets to lower betta assets and bring up cash levels)

Stage 2. Demand Destruction (commodities sell-off and Oil drops as production slows)

Stage 3. THE COLLAPSE (All assets fall in unison as earnings shink and the reality of the recession sets in. It's really bad out there and it is not going to ever get better)

Stage 4. Capitulation/ Monetary Intervention (Central banks attempt to spur inflation or save assets from falling. Bonds rally, stocks sell faster and small caps stabilize. We begin to see the first signs of "risk on" late in this stage while equities still sell off as a whole.)

Stage 1A. Bull market to be continued...
 

Marcas

Active member
yeah.
Imo, it's an indicator of cracking markets. At least it is not as it used to be. Holding significant risk in those conditions is more risky than usual (frankly: not the way to go). The shorter, the better.
 
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