Obama Death Count Still Rising in Ferguson, MO

Obama started his presidency by killing 20 civilians with drone strikes and the death count is still going higher.

Unz: The Ferguson Effect Has Almost Tripled Traffic Accidents on ... Ferguson's Main Street

As you’ll no doubt recall, being my readers, with the rise of BLM at Ferguson in August 2014, the Obama Administration set out to nail the Ferguson PD for racism. They looked and they looked, but couldn’t find anything.

So, the White House declared Ferguson instead to be … a speed trap.

After the Ferguson PD was condemned repeatedly by the national media for enforcing laws against speeding, it cut back.

More speeding ensued, followed by more traffic accidents...

The greatest irony is that more blacks are killed every year because of anti-racism. The people who scream about racism the loudest have more blood on their hands than anyone else. But you must understand, the KKK killing a black man was evil because it was motivated by hatred, while the Baizuo and BLM causing the deaths of thousands upon thousands of men, women and children of all races is motivated by love. Love wins.

XLY Next Stop $120

Repo Fails Rising

Alhambra: Is It Recession?
Because so much of what was bought (and put into inventory) at the margins came from those outside sources, Real Final Sales of Domestic Product, everything which was made or served by Americans and American businesses sold to anyone anywhere, also dropped like the headline in Q1, underscoring just how much all that stuff shown above really is propping up the public’s visualized sense of the overall economic situation.

As has been the case since the last recession, spending on goods may be up though spending on services is not. Therefore, combined, consumer spending adjusted for prices (and seasonality) is barely keeping up with the pre-2020 trend. This lackluster outcome the clear result of Americans having to pay more for goods in order to get fewer of them, leaving them unable to complete the services recovery.

Below is the repo fail chart from the article, along with two earlier ones to put it into context.
The winning move in inflation is to not chase the false price signals.

USG is at War with Russia

Market Ticker: We Are Now At War With Russia
By agreeing to provide direct weaponry that can be and will be used in the waging of war by one of the two parties to same we have entered the conflict. That our GIs are not directly there is of no consequence.

This is no different than shipping arms to Britain during WWI in the Lusitania or the lend-lease provisions in early WWII that ultimately led us to get involved there in Europe. Indeed Pelosi directly referenced those early WWII provisions indicating that she knows damn well the implications of what Congress just did.

In fact it was lend-lease of March 1941 that led Hitler to come after the United States; we had entered the war as a belligerent by officially agreeing to supply war material to Britain.

In those two wars there was no realistic means for the Germans or other Axis powers to hit us directly on our own soil. But they did in fact do that in response when they sunk the Lusitania, which had a bunch of Americans on board. They could reach that ship, did reach it, and did sink it. They did so because we were supplying England with munitions.

We claimed at the time we were not, we were lying and that is now established as a historical fact.

The Germans hit a legitimate military target despite our and Britain's claims at the time otherwise.

Today the situation is different. Russia can hit us here and not just with nukes. They can hit American assets that are by any reasonable international standard military targets all over the world and that includes military command and control which by our Constitution includes all members and facilities of both Houses of Congress along with the Executive, never mind obvious things like the Pentagon.

I don't think Putin is crazy enough to do it right up front but do not mistake "doesn't" tomorrow morning for "can't" -- the door is open.

Don't kid yourselves folks; such a strike, if it occurs, is entirely legal from an international law perspective under the laws of war. It is legitimate for a belligerent to strike the military elements, direct and indirect, of an entity supplying its opposing military.

People who want to start wars with Russia should remember how things ended for Hitler and Napoleon. And if you think the authoritarianism won't ramp up at home, think again. It will be illegal to dissent against war with Russia and you will go to prison if you dissent because the lives of these politicians instigating this war will be on the line. First because they could be targeted by Russian, and probably Chinese, Iranian, North Korean and so on assets in the USA (nice job with the open borders, dipshits). And then by the angry American public if the war goes poorly, which it inevitably will.

If you know anyone who is falling for this Ukraine and Russia propaganda bullshit, try to wake them up because we could be months away from WWIII. Once it starts, you cannot dissent unless you're willing to be a martyr who goes to prison. That's not necessarily a bad thing, but if you have a family and responsibilities, probably not a great idea. Would Assange have made different decisions if he knew his fate? I don't know. That's up to each individual.

Being bearish on assets, being seen as anti-U.S. dollar will also likely become illegal and imprisonable offsenses. The Biden admin has already created a "...Disinformation Governance Board to coordinate countering misinformation related to homeland security, focused specifically on irregular migration and Russia." You will go to jail if you dissent from anything the government says. So be real sure that you want to go to full on nuclear war with Russia because once you make that choice, you own it, and you are going to have to 100-percent support the most retarded, incompetent ruling class in the history of the United States. You are tying yourself to the mast of clownworld and you will go down with the ship.

American patriots, your duty is to defend your land and your families and your nation from all threats, foreign and domestic. Russia hasn't signaled it is a threat to the American nation yet. We are not at war with Russia and have no plans to be at war with Russia.

Platinum $10,000

Platinum is the cheapest of the precious metals if it can return to its former ratio with gold. If gold hits $5,000 and platinum hits its old peak ratio, it will reach $10,000 per ounce. If you look at fundamentals, you'd pick palladium over platinum though: Palladium set to rally for years on shortages, top miner says
Prices of palladium and rhodium are poised to rally for years as a supply squeeze tightens for the metals that are key to curbing vehicle emissions, said the head of the world’s third-largest producer of platinum group metals
Platinum prices, for which South Africa is the world’s top supplier, are likely to remain subdued in the medium term until automakers switch from using more palladium in catalytic converters, he said.
The chart and some cycle events argue for platinum. First the chart.
The metals are correlated, but platinum and palldium have different phases of leadership. Palladium peaks in 2001, platinum in 2007, palladium in 2020 (with a brief overshoot in 2022). Palladium peaks in 2001 after oil falls below $10, the Nasdaq tech bubble pops, Russia defaults on its debt, conincident with a top in the U.S. dollar index. What has happened in the past two years? Oil fell below $10 per barrel, the Nasdaq tech bubble is popping, Russia defaults on its debt, the U.S. dollar index is not yet making, but is inevitably heading for an important top.

The platinum analog playing out now would be the 2001 low before the bull market entered its manic phase. Platinum bottomed two years earlier, rallied and then consoliated those gains. A proportional conslidation would take platinum down into to the $800 to $850 area.

The fundamental bullish case for platinum will emerge after it has already run. Watch the chart.

Wikipedia is Biased? Tell Me More!

Wikipedia's Bias

Infogalactic was started several years ago by people who saw Wikipedia's bias long before the mainstream figured it out. Wikipedia is open source and anyone can copy it, so they made a more politically neutral version of the site.

There is an extension in the Chrome store that works on Chrome and Brave browsers, called the Infogalactic Transporter. Since the site is still growing, they don't always have the most updated information, but if people join and contribute, that can change. The transporter will automatically send you to Infogalactic from any wikipedia link, and then you can click the Transporter icon to jump to Wikipedia and see the entry there. Anyone using Wikipedia as an unbiased source is a moron.

China Next to Print Negative GDP?

The Sounding Line: Leland Miller: China Q2 GDP Could be Negative. Data Looks “Grizzly”
The number for first quarter GDP beat expectations and I think people got complacent based on that, but the Q1 number didn’t include really any of the lockdown… April is a disaster. Half the country is shut down. Things are looking bad. If they can get the lockdowns over by early May then we won’t be talking about this. But if were still talking about this two, three, four weeks from now… you’re looking at zero percent or contracting growth for the second quarter. Will they announce that? We don’t know, but we are looking at pretty grizzly data for the second quarter.

Assume Everything is a Psyop

Scary Mommy 2020: From A Doctor: We Need To Talk About Gas Stoves And Indoor Air Pollution

E&E 2022: N.Y. governor backs nation’s first statewide gas ban

Scary Mommy 2022: Researchers Are Ripping The Gas Stoves Out Of Their Houses For Their Kids’ Health

The anti-nuclear movement caused the most climate destruction over the past 40 years by permanently damaging nuclear power. From the same well of stupidity came anti-coal, anti-oil and anti-gas movements, some of them funded by Russia (the irony is *chef's kiss*). Economic mistakes of the past 50 years were repeated. Nw teh two are fusing into food and energy supply problems.

The big mistake America made was psyopping itself on equality. People are equal to the extent we all have a right to be treated equally under the law and to make our own choices. You do not let stupid, emotional and irrational people have political power though. Since everyone is irrational to some degree, political power should be strictly limited as the Founders intended. Instead, modern American went "communist" and lets people who will rip stoves out of their homes, wear useless cloth masks and fall for fake and lame "Red Scares" make decisions for all of society. Or more to the point, these people allow the modern authoritarian technocracy have a fig leaf of legitimacy.

Who is this woman? She's the head of the Ministry of Truth:
DHS is standing up a new Disinformation Governance Board to coordinate countering misinformation related to homeland security, focused specifically on irregular migration and Russia. Nina Jankowicz will head the board as executive director. She previously was a disinformation fellow at the Wilson Center, advised the Ukrainian Foreign Ministry as part of the Fulbright Public Policy Fellowship and oversaw Russia and Belarus programs at the National Democratic Institute.
If you are red-pilled you see that resume and immediately know you're dealing with a professional liar. All the worst people in the American govt have been involved with "helping" Ukraine and working against Russia the past 10 years or so. Now they've created something straight out of 1984 to silence all political dissent.



Russell 2000 Loses Support, Next Support 10pc Lower

Next support for the Russell 2000 is 10 percent lower as long as it is below support. Caveat: Apple earnings are after the bell.

The Federal Reserve and USG Wrecked the Economy

I should have thrown more caution to the wind. I predicted the recesssion started in Q1, but I thought it would come from revisions, not on the first estimate.

BEA: Gross Domestic Product, First Quarter 2022 (Advance Estimate)

Real gross domestic product (GDP) decreased at an annual rate of 1.4 percent in the first quarter of 2022 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis.

Has the Recession Already Started?

As of April 5, 2022, the Atlanta Fed's model projects 0.9 percent GDP growth in Q1. Government economists don't have to be massively undercounting inflation for this to be a recession already. At an 8 percent CPI, it would only take a 12.5 percent error rate to wipe out all the growth. The nominal GDP climbs 9 percent and 8 percent of that is price increases, there is 1 percent real growth. If inflation is 9 percent, zero growth. If inflation is 10 percent, the real economy contracted 1 percent. I'm not making a call one way or another. I merely wish to point out that a small error wipes out small growth. That prices are experiencing volatility unseen in 50 years. That price, economic and geopolitical changes are happening faster than models can account for.
The BEA announcemnt shows this is exactly why the economy contracted:
Current‑dollar GDP increased 6.5 percent at an annual rate, or $379.9 billion, in the first quarter to a level of $24.38 trillion. In the fourth quarter, GDP increased 14.5 percent, or $800.5 billion (table 1 and table 3).

The price index for gross domestic purchases increased 7.8 percent in the first quarter, compared with an increase of 7.0 percent in the fourth quarter (table 4). The PCE price index increased 7.0 percent, compared with an increase of 6.4 percent. Excluding food and energy prices, the PCE price index increased 5.2 percent, compared with an increase of 5.0 percent.

Why is Inflation Bad?
Everyone focuses on prices during inflation, but prices under inflation are the least valuable. They are distorted by the inflation, but they do not capture the inflation properly. It's not like everything goes up in price by 5 percent. By creating price distortions in the economy, people chase after things rising faster in price. If food prices go up, what do they do? Hoard food. So the price goes up faster. Yet, there is actually no problem with the food supply. The move is a created by price distortions.
There are some real problems with food supplies, but the fact remains that inflation alone can cause food shortages. It destroys price signals that allow the trasmission of important economic information. This crisis is wholly the responsibility of the Federal Reserve, along with USG for both its spending and lockdown policies.

In The Price Illusion, I discussed Jeff Snider's work showing Japan's imports and exports are terrible once price is taken into account.

The stats out of Japan put a giant exclamation point on the price illusion caused by inflation. Exports rose 15 percent, imports 30 percent. Back out price effect and exports fell 2 percent, imports unchanged from a year ago. They're paying 30 percent more for the same volume of imports...now the tumbling yen makes perfect sense, right?
Way back in December, the odds of recession were high. All spikes in inflation produce recession, it's a 100-percent guaranteed signal: High CPI Screams Recession and Bear Market
Here's another similar chart, but with different variables: PPI minus CPI. Every spike like the one underway now (and this one is the biggest) produced a recession and major bear move in the stock market.

...People say the Fed is walking into a policy error. Their errors were already made when they pumped the market. The question, as always, is the one asked by Von Mises: will they voluntarily abandon the inflation or will they eventually destroy the currency system? Right now, the Federal Reserve is signaling voluntary abandonment. For however long that lasts, look out below. My expectation, my forecast, is that the Federal Reserve is going to wait longer than the bulls expect because it does not want to launch QE5 with the PPI still running hot. Whether that is in time or price, I cannot say. IF it takes longer, maybe crude at $50 is good enough for the Fed (an exmaple). If crude plummets to $40 by February, maybe they will reverse course much sooner. Either way, when Powell's "printer" is away, the bears will play.

Another important post was this one on the Restoration Hardware earnings call: Wall Street Ignores Margin Collapse Warning.

Here are profit margins with a regression line. Notice the surge following the pandemic. Inflation always looks like a boom at first. Corporations appear more profitable because inflation hits them first, in a good way. The first impact is rising demand. Every producer benefits because supply is constrained in the short-term.

Here is profit margin versus the S&P 500 Index:
The RH CEO tells us the benefit for the end stages of production is gone. Inflation is turning into a destroyer of value:
There's already evidence the recession may already be underway in the distribution stage.

ZH: Looming Freight Recession Sparks Plunge In Trucker Stocks, First Post-COVID Job-Losses

I didn't expect the recession would be visible yet, but it was. Most of Wall Street and economists, if they even predicted a recession, were saying much later this year or next year. I said Q1 2022. I was right.

Now you're going to hear calls for rate hikes or the Fed to slow down. Here's what you need to understand: the inflation caused the recession. If the Fed pauses, then lower your forecasts for the economy. The recession will get larger and deeper down the road. If the Fed instead signals this GDP report changes nothing (what they should do), then odds are a major recession could unfold. That would be a great buying opportunity in the markets. If instead the Fed does back off on their currency policy stance, markets could rally for a time, but as with the economy, the eventual low for stocks will be much lower than it would be if the Fed kills inflation now.


Oil and Stock Tops Lined Up

The chart lines up the June 2008 oil peak and Decemebr 2021 stock peak, 200 months total. Playing around with Crude Oil’s 10-Year Message.

What the Teck

2009-2011 rally and 2020-2022 rally.

BGI Genomics

Down to less than 30x earnings assuming earnings don't crater, though they could along with the everything else. Still, looking through to the next bull cycle...

Peso and VIX

If that's an important base in USDMXN, that's also an important base on the VIX.

Archegos Tried to be the Fed and Wall Street

ZH: Bill Hwang Arrested: Archegos Owner Charged With Racketeering, Securities And Wire Fraud
Archegos, through Hwang and Tomita, effected this scheme by dominating the market for its Top 10 Holdings, as well as by “setting the tone” (i.e., engaging in large pre-market trading), bidding up prices by entering incrementally higher limit orders throughout the trading day, and “marking the close” (i.e., engaging in large trading in the last 30 minutes of the trading day) and by other non-economic trading, all with the goal of artificially inflating the share prices of its Top 10 Holdings.
That's a description of how the stock market has behaved since QE was started in 2009. The legal difference between Archegos and the stock market is the Federal Reserve and Wall Street banks acting as partners, can't be charged with setting the tone, dominating trading in its target markets, counterfeiting, wire fraud, marking the close and other non-economic trading, all with the goal of artificially inflation financial asset prices. That's "public policy" carried out by a privately-owned bank and its partners because the government gave this entity legal immunity.

A similarity between Archegos and the Fed/Wall Street is these schemes always blow up when the money runs out. The Federal Reserve's existence as a quasi government institution is not guaranteed. The Federal Reserve can lost its power if it upsets enough people, for instance by wrecking the economy with high inflation. Do you think DC politicians will hang for their crimes when they can hang the Fed instead? When the money stops flowing into the market, it goes poof like Archegos. The Fed is going to start pulling its support out next month. Enjoy the decline.


Chinese Banks Cut Deposit Rates

Sina: 国有大行定期存款利率下调!专家:银行正在采取多种途径,全面降低存款成本
As the market interest rate pricing self-discipline mechanism encourages some small and medium-sized banks to lower the floating ceiling of deposit interest rates by about 10 basis points (BP), large state-owned banks have also joined in.   

Recently, the 2-year and 3-year ordinary time deposit interest rates of some large state-owned banks have been lowered. According to the mobile banking apps of various banks, the time deposit interest rates of ICBC, Bank of China and China Construction Bank have generally been lowered by 0.1 percentage points.

...At the same time, Wang Qing also pointed out that this phenomenon is also a manifestation of the improvement of the transmission efficiency of monetary policy.   

The reduction of deposit interest rates will help reduce the pressure on bank interest margins. There are two ways to adjust interest rates in the future.   

Recently, a major state-owned bank has lowered the interest rate of large-denomination certificates of deposit and time deposits. What benefits will this approach bring? Zeng Gang, deputy director of the National Finance and Development Laboratory and director of the Shanghai Finance and Development Laboratory, previously stated, "The drop in deposit interest rates, in terms of supporting the real economy and reducing the financing cost of the real economy, is actually a reduction in the loan side that banks can make profits. The space is opened up, and there is a further possibility of reducing the overall cost of the entity.”

ARKK at Long-Term Support

The Early 1980s Dollar Setup Repeats?

This thought crossed my mind and I've haven't worked through it, so consider this a hot take. But what if the setup is similar to the early 1980s? The U.S. economy is the strongest of Europe, Japan and China. It is hiking rates and capable of going higher than those countries, more ver there's a case to be made for all of those currencies experiencing major devaluations if rates and/or inflation are going higher than expected.

Normally, I'd expect a lower dollar here. A pullback definitely likely. The problem I'm running into is that the Fed hasn't done anything yet. Nobody knows what is priced in. Maybe the market is running ahead with pricing in Fed policy, but maybe not. What if the starting point for the next dollar move is a new multi-year high? Another way of putting this is, what if the Fed does its job like Volcker did? Wouldn't that shock almost everyone currently in the market?

Here's a chart that should scare everyone: DXY compared to the spread between the U.S. and German 10-year government bonds.

What do you think? Can the Fed decouple from Europe, China and Japan and keep hiking? Would it? I expect the 10-yer to fall and catch down to German yields in a deflationary scenario, but again, what if the inflation isn't done? This would have to be the biggest shock for a market that is convinced in the death of the dollar. It's also possible USG would like to induce this outcome as part of a non-kinetic war on Russia-China. They seem like they're psychotic enough to go this route, but maybe not that intelligent. Then again, the string pullers behind the scenes understand this chart and what it would mean for the global economy and global markets.

RTY At 2022 Low

1.3 points off the low at the close.

IYR Still an Island

An island reversal is a higher confidence signal, and one is more likely should IYR gap down tomorrow. MSFT and GOOGL will decide it.

Short it NOW

Well maybe nmot right now, I don't know if it could bounce or not, but the target is 55 percent lower. The gap is within $10 of the measured move off the massive top.

TXG Ding!

TXG hit my target line to the penny today.

Air Balls

The setups are incredible again. The next move will be big in either direction, but a move down will be far larger and far more important. It is a new wave of selling if these stocks break lower. A short-term rally may require positive earnings. Google and Microsoft report today.

Short Roblox Into Hell

Problems at Roblox (RBLX)
Roblox (NYSE: RBLX — $38.3 billion) is a platform for children generally between six and fourteen to play online. It is also the leading platform for pedophiles.
H/T: Short Shopping. There's a chart of RBLX there. It has no support in my opinion, too new to have established any.

Bond Bounce

The 30-year treasury bond rebounded right near the low of 2018.
The script is the same as it has been since 2014. I expect big reversals except in the stock market. That should keep drifting lower. Only later will it be clear if this is a repeat of the past or a transition into a post-QE economy.


American and Chinese Governance Converge

This article has an interesting take from January now that Shanghai was smashed by the lockdowns. The convergence with the US and China is clear though, and only those who don't want to see the similarities refuse to acknowledge what is done through SOEs and direct political control in China is passed through private enterprise in the U.S., at once making China more authoritarian but also more limited in its scope versus the U.S. being seeminly more benign but with more totalitarian reach. Although thsi article makes it sound like maybe China is widening its definition of dissent...

Austrian China: Cross-Examining China’s 2021 Cancel Culture

At the same time, bit by bit China is being transformed from a country with a decentralized minimalist government nurturing a culture of entrepreneurship, competition and private sector-driven innovation into a country with an increasingly centralized big government propagating the idea that better governance is the cure to all ills.

...Before we go on to the wider societal issues, just to provide a rough idea, here are a few examples of the kinds of individuals who ended up getting themselves cancelled.

They include public intellectuals such as Gao Xiaosong (高晓松) or Yuan Tengfei (袁腾飞), celebrities from the entertainment industry such as actress Zhao Wei (赵薇), but also increasingly many prominent Chinese entrepreneurs with a social media presence such as Wei Ya (薇娅).

We published an entire post on the Wei Ya case, and it forms a key part of Man Tianmai’s article, as well.

To be clear, this does not mean that these people were ‘disappeared’, as adherents of the ‘China dystopia’ narrative might imagine. Just as in the West, it’s a virtual jail, not a physical one. On the ground this means that victims are blocked from a role as a public figure, be it on social media, on the screen or on the domestic Internet

...In per capita terms, Shanghai also has one of the largest contact tracing teams in all of China (3000+), and perhaps thanks to this, Shanghai has never had a Covid-19 case outbreak where the source of the outbreak could not be pinpointed. The Xi’an contact tracing team by comparison allegedly only had around 300 people for a city with a population half the size of Shanghai, and in the case of the recent outbreak, it failed to identify the source. This failure led to a city-wide lockdown under which workers deemed non-essential were prohibited from leaving their housing subdivisions.

These events left Chinese feeling that something was amiss, and yet, as Man puts it, faith in the state rarely seemed to waver for long. On the contrary, the epidemic reinforced their "religious identity" in every way. The government pointed to the chaos underway in the West, patted itself on the back for its allegedly successful “zero Covid” strategy, and those not directly affected by the resulting chaos for the most part approved.

...Are these Blackrock companies comparable to China’s state-owned enterprises (SOEs)? Perhaps not in all senses, but in many. For Western readers wishing to understand the key differences between China’s economy and that of the West, this point is absolutely crucial. Both are by definition non-competitive and subject to all the ills of central planning. Just like China’s SOEs, Blackrock has de facto direct access to the central bank’s money printing machine and their top staff regularly rotate in and out of government regulatory agencies24. For both Blackrock and China’s state owned enterprises, political considerations are the bottom line, not economic ones. In many US industries, literally every major company is controlled by Blackrock, which necessarily limits the degree of real competition.

...While there are many similarities, there is one huge difference between China’s SOEs and the Western Blackrock companies. Chinese SOEs make up only ~25% of the Chinese economy, a number which pales in comparison to the 50-60%+ share Blackrock enjoys in the US25. In the US and to a large extent in Europe – though less well documented there – Blackrock has become the central planning establishment.

Now It's Serious: PBoC Forced to Comment on Shanghai Comp Breaking 3000, 25-Year Support Busted

Major multi-decade trendlines are failing across markets.
iFeng: 央行回应金融市场波动:主要受投资者预期和情绪影响
We have noticed some fluctuations in the financial market recently, which are mainly affected by investors' expectations and sentiments. At present, our country's economic fundamentals are sound, the potential for endogenous economic growth is huge, and substantial progress has been made in preventing and defusing financial risks. The financial system implements the decisions and arrangements of the CPC Central Committee and the State Council, coordinates epidemic prevention and control and economic and social development, supports logistics smoothness and promotes the stability of industrial and supply chains, and minimizes the impact of the epidemic on economic and social development. In accordance with the principles of marketization, rule of law, and internationalization, steadily advance and complete the rectification work of large platform companies as soon as possible, and promote the healthy development of the platform economy. The People's Bank of China will increase support for the real economy with a prudent monetary policy, especially to support industries severely affected by the epidemic, small, medium and micro enterprises, and individual industrial and commercial households, support agricultural production and energy supply and increase supply, and launch technological innovation and re-lending and inclusive benefits. Special re-loans for the elderly, an increase of 100 billion yuan in re-loans to support the development and use of coal and enhancement of energy storage, increased re-loans to support agriculture and small businesses and special re-loans for civil aviation, maintain a reasonable and sufficient liquidity, promote the healthy and stable development of the financial market, and create a good currency financial environment.
Boilerplate. The point isn't what they said, it's that they said anything at all.

Elsewhere, the familiar "don't worry, please keep buying" message for the holders along with "where's the bottom?" for the nervous bulls.

iFeng: 李大霄:跌破3000点不是世界末日 恒指率先见底的希望最大

On April 25, the three major A-share stock indexes opened lower and moved lower. In the afternoon, the Shanghai Index fell below 3,000 points intraday. After 21 months, it returned to the "2" stock index and the ChiNext index fell by more than 3% intraday.

In this regard, Li Daxiao said that falling below 3,000 points is not the end of the world. When the market is rising, there will also be periods of adjustment.

He believes that policies to stabilize growth are being introduced one after another, and the market reaction will be reflected later. Therefore, we should not be overly pessimistic about the market, do a good job of responding, change from offense to defense, choose equity products that match our risk tolerance, and calmly respond to market fluctuations. At the same time, don't lose faith in good stocks, avoid stocks with high valuations, and be careful with leverage.

Li Daxiao said that the Hang Seng Index is currently the most hopeful for the market to bottom out, and the second is the Shanghai Stock Exchange 50. When conditions are ripe in the future, A-shares may rebound with good stocks as the main force. With the stabilization of the economy and the intensification of steady growth, stocks related to steady growth will return to their proper value.

Li Daxiao is like the Jim Cramer of China:
Li Daxiao’s share tips attract hundreds of thousands of views within hours of appearing on Chinese social media. The celebrity stock guru, who posts short, quirky online videos, is known to move markets when China’s army of retail investors follow his advice.

But Mr Li’s unshakeably optimistic outlook on Chinese equities has prompted scrutiny from authorities and a public backlash following the market rout caused by the coronavirus outbreak, with some investors blaming the star stock picker for their losses.

In one particularly ill-timed call, Mr Li in mid-February insisted the Chinese market was on the brink of a bull run, just days before stocks plummeted. Last year, his forecast that the Shanghai Composite index would hold above 3,000 points was repeatedly proved wrong as the US-China trade war whipsawed the market.

iFeng: A股跌破3000点何时触底?孙建波:高估值压力已基本解除 长期建仓机会显现
n April 25, the three major A-share stock indexes opened lower and moved lower, and the Shanghai index fell below 3,000 points, the lowest since July 2020. As of press time, the Shanghai Composite Index, Shenzhen Component Index, and ChiNext Index all fell by more than 3%, and more than 4,400 stocks fell.

Regarding the sharp drop in A-shares today, Sun Jianbo, chief economist of China Reading Capital, told Phoenix.com Finance that on the one hand, since the fourth quarter of 2021, the valuation of track stocks and high-valued white horses has been challenged. This challenge requires individual stocks to return to normal valuations.

On the other hand, Sun Jianbo believes that when the market falls below 3,000 points, the pressure of high valuation has basically been relieved, but for the market outlook, Sun Jianbo believes that it may further decline, and the reason is the decline. Panic inertia superimposes the current confusing economic environment.

As for where the "bottom" is, Sun Jianbo predicts that it may continue to drop to around 2700, and then there is a high probability that it will stop falling and stabilize. At the same time, Sun Jianbo pointed out that panic declines are often opportunities for long-term positions. He suggested that you should look for industries and companies with better growth in the next 3-5 years, and "build positions at lower prices during a panic decline.

Coronavirus is a big distraction for the world. The virus is real, but the overreaction allowed for a 2-year life extension on a bull market headed for the end. It is also now covering up weakness in China. As I've put it before, losing all the gains since March 2020 only gets the bear market to the starting line. All the damage from inflation and supply chains will make the ensuing bear market and recession far worse than it would have been otherwise. China is in the same boat as everyone else, and in worse shape with a currency that needs propping with falling reserves. 

It's possible China has already blown through some of those reserves with tricks if they believed the U.S. dollar bull market wouldn't last, in which case the depreciation will pick up steam. USDCNY has erased more than a year of losses in one trading week. It's taking a breather today after hitting a resistance area, but that's still a great bullish setup.

Fed Rainbow

Could teh Fed engineer a symmetrical drop in rates? Yes, if the start QT from $50 billion or more.

CCP Collusion?

The media is insane and biased, but if it was unbiased, we'd be hearing 24/7 about the Biden admin stole the election with the help of the Chinese and was implementing pro-China policies.

Reuters: Yellen says lowering U.S. tariffs on Chinese goods 'worth considering'

U.S. Treasury Secretary Janet Yellen on Friday said it was worth considering taking steps to lower U.S. tariffs on Chinese goods given the "desirable effects" such a move could have on lowering U.S. inflation, which has hit 40-year highs this year.

"We want to do everything that we can to lower inflation," Yellen told Bloomberg TV, citing steps by President Joe Biden to release oil from the Strategic Petroleum Reserve and moves to address supply chain disruptions.

Cutting tariffs was also "worth considering," she said. "There would be some desirable effects. It's something we're looking at," she added.

Surrender to China is not a good look in this environment. They whipped up the xenophobia and jingoism, now they will die by it.

The Fed Should Not Do QE or QT

The best policy for the Fed here is to freeze the balance sheet and normalize interest rates. Instead of doing QT, announce there will never be QE again like was done the past 13 years. Throw it out of the toolkit except as a one-off bailout mechanism (nobody would believe they'd freeze the balance sheet forever). Instead, QT will inevitably lead to more QE and the economy will remain trapped on the Fed's wheel of suffering.

Update: Fed Will Shrink Balance Sheet by 1pc Per Month

The stock market tracks the Fed's balance sheet since 2009. The only lengthy period of time it stopped being correlated was from November 2016 to January 2018. When Trump tax cuts boosted the market and the Fed kept the balance sheet stable. Every single end of QE and the one instance of QT produced major market corrections.

The Fed plans on reducing the balance sheet by 1 percent per month within 3 months. I get the argument that they'll quit soon after starting, but how soon?

Update: Here is the percent reductions by month during QT1. Not that the data is weekly and the balance sheet changes are lumpy.

Rope-a-Dope Round 5

Whether this is the final round or not will be determined by the low. Will it be a higher low or will it be another spectacular collapse?
Copper has 12 percent downside until it hits the red horizontal, which would be a very bullish place for it to stop. I suspect it won't, but even if I'm totally wrong and copper is going way higher later this yer, I expect it will get at least that low in this downswing.

Palladium Down 11pc

Last Line of Support

After this line, the next stop is a test of the lows. The rally in bonds, which I expect to last, will support the Nasdaq over the S&P 500 and Russell 2000. Financials and commodities are most vulnerable in a bond spike.

Lockdown Damage

I thought stocks like Haidilao might bounce following the lockdowns, but with them being extended and spreading around the country, consumer companies are rolling over. I wonder to what extent the government is psychologically damaging the public. I'd wager about 20 to 30 percent of the American population is permanently scarred from the lockdowns and propaganda, or at least will take years to recover. At some point, repeated lockdowns alter behavior because the public assumes they are possible at any time.