Crash Window Opens! The Cursed by Baizuo Market, Cramer Hits Peak Stupidity

Below 3740 the rally is all but dead. The setup is similar to June where a shock bump in rates sinks equities.

Long-bonds losing their bid overnight, though not out of the uptrend yet.

Why is the market cursed? Until about mid-June, crude oil and the Nasdaq were inversely correlated. There have been moments where the Nasdaq rallies on energy weakness, but lately the Nasdaq and oil have been positively correlated. That signals that to kill inflation, the market will also have to kill equities. Nasdaq is outperforming the S&P 500 with oil coming down, but it is relative.

There is a way to lower energy prices: abandon the GAE. End the push for global domination and negotiate peacefully with Russia. Markets are far too complacent about the role the war is playing. Here is Cramer claiming we need more war to lower oil prices: How much of the market believes this inverted logic? How much of the market knows the U.S. would literally run out of weapons and ammunition if it armed Ukraine as he suggests? My hunch is a lot judging from how widespread support for the war seems to be. If the market doesn't understand something as simple as this reality, what are the odds people are properly pricing inflation, deflation, interest rate, economic risk?

Here's the U.S. dollar and Hong Kong dollar cross. HKD is banging at the peg limit, threatening devalution. With CNYJPY at a peak, China will face rising deflationary pressure.

I discussed China's weakness yesterday. There are many articles all touching on the same problem, what Jeff Snider calls teh "dollar shortage." Bloomberg: China’s Regulators Told to Turn Cautious on Outbound Spending as Fed Hikes, Sources Say

Chinese regulators have been asked to exercise greater caution when it comes to reviewing new overseas spending and investment plans amid concerns among senior leaders that higher US interest rates could spur capital outflows, according to people familiar with the matter.

State-owned companies were similarly told that they should be cautious when spending and investing overseas, said the people who asked not to be named because they’re not authorized to discuss the matter publicly. No specific targets or limitations have been set on such expenditure abroad, they said.

A total disaster was always in the cards. I took abuse from bears for being "bullish" on a bounce here, but I was hopeful for a bounce because that would also be the best path for a healthy bear market. There is a forecaster called David Hunter who predicted a melt-up to 6000 on the S&P 500 before a 1929-syle collapse. He was rightly ribbed for predicting stocks would bounce all this year, but his mistake was his timing of QE. He didn't realize the Fed would have to wait much longer and lower for the S&P 500 to unleash it. Most bears do not want to see another QE melt-up scenario, but I fear that is precisely where the market, central banks and governments are headed. There isn't a lick of sense anywhere in aggregate, only on the fringes with independent analysts and traders. The "whole world has gone mad." Might as well go out there and pick all their pockets.