Inflation-Adjusted Possibilities

If the Fed can't or won't stop inflation, the inflation-adjusted losses on the market indexes may erase the entire 40-year bull market. A drop to the 1966 inflation-adjusted DJIA seems like a lock to me in any major bearmarket. It is about a 69 percent loss down to the 1500 area onthe S&P 500, the 2000 and 2007 topping area (I used DJIA for any data before the 1980s because it was the most watched index then), that I think can be hit in nominal terms during a front-loaded bear market. The longer a bear takes to unfold, the more losses will be made up of lost purchasing power. That might sound nuts, but consider the CPI-adjusted low in 1982 matched where the DJIA was in 1947.

The CPI is about 300 right now. What if the CPI hits 500, about 60 percent inflation, over a decade. Multiply the CPI by 30 to get 15,000, matching the inflation-adjusted peak in 1966. Zero inflation-adjusted gains not including dividends. You may point out the dividend gains aren't too shabby and you're right, that's a lot of compounding. However, we are looking ahead. Do you want to suffer that loss while only collecting about 1.6 percent yield on the S&P 500 Index? Also, bonds can compound too. If inflation rises, 10-year treasuries will be paying substantial interest, possibly as much as the 8-percent investment return target many investors and institutions default to.

French Torch Pro-Immigration Politician's Home

Remix: French mayor in support of new asylum center in seaside town has his house burned down

The house of a left-wing mayor in France, who supports a controversial plan to establish an asylum center in the small seaside town of Saint-Brevin-les-Pins, has been burned down in a suspected arson attack.

Immigrants to the USA are probably the safest because the USA considers itself "a nation of immigrants," but there will probably be some rough goings for those who are openly unassimilated and also observably anti-American. In Europe, I'm expecting things won't turn out very badly for the migrants and it'll spark a backlash that will hit long-term citizens such as Turks in Germany.

Incyte

Game Over

Repo is inverse with XLF, not on XLE.

Get into the Zone

Today's loser list: my faves that I recognize (haven't looked at all of these yet) are DHI and SHW. NKE DHR BSX CSX SHW SQ ROST MBLY DHI HZNP ALNY CBRE AEE CHWY PKI AGL OSH G BZ NOV RRC CCCS SOFI IONS BROS AIMC PLTK DQ FL MRVI YOU AMN AFRM MCW GH VRRM LAZR CSIQ VSCO WOOF FTDR MQ

The Horror!

I have a post at the Substack looking at socionomics and the market. The culture, politics and economics have been suggesting a depression for years, but the markets only broke lower when the Federal Reserve stopped doing quantitative easing. Might the wheels finally be falling off and no more rescues possible? Will stocks finally fall to meet the broader social mood?

China Cuts RRR Again

Yikes.

A New WAG

This is the first iteration. I have not considered the time, only the form and potential price areas.

Financial Stress Like in 2020 and 2008

I covered BXMT a few times last year. It was one of my "crash" targets. It is rolling into crash territory now. Some resistance around, conservatively, $16.50 per share. Below that it can free fall. If that happens, we'll be in a full-blown financial crisis of some degree.

The other side of the market is the Nasdaq. The NQ continues holding up. It needs to break 12000 and not look back for a full-blown bear move to get underway.

The Nasdaq's reslience, really the whole market's, speaks to the still extremely bullish sentiment within the market and the trillions of inflated liquidity sloshing around. The behavior of banks, commodities and so on are now hinting that this money will be deflated and sent to money heaven. Investors can hedge risk of bailouts and supercharged inflation with assets such as gold. Until there is some major pain however, I do not expect the Federal Reserve will go into full bailout mode because it will risk, with signficant probabiity, even higher readings the inflation indexes. If inflation goes up and rates with it, more banks fail. If inflation goes up and the Fed does what they did for SVB Financial, inflation goes higher still and takes down the whole economy. They're trapped and so are all the bulls that aren't hedged.

Go Time for Bears if 12000 on NQ Falls

NQ still battiling in that area. I'm encouraged by the collapse in the peso though. It gave way intraday and is below where I first said to short it.

Nice Wicks on the Peso

I am focused like a laser on USDMXN because it is very correlated with the VIX Index over the longer term and it looks a hell of a lot like February 2020 with a break below pattern (the green line in 2020) before an explosion higher. There are also possible double-wicks off support if today's move holds.

Silicon Valley Spanked Shares

I posted a bunch of times on the formerly named Silicon Valley Bancshares. It collapsed this morning. I wasn't in the trade at the time, haven't messed with SIVB in awhile, but I expected it would evenutally makes its way lower because it is at the crossroads of technology and banking. Fitting that today's plunge comes hours after Silvergate (SI) announced it would liquidate, a stock I said could fall 80 percent a year ago. SBNY was another target that has recently come in for a pummeling.

SVB Financial stock plummets toward biggest one-day selloff in 23 years after stock offering, large losses on securities sales I'm going to keep digging in a post more over at the Substack later.

USDKRW

Back above resistance. A move above 1345 will open up a renewed bullish outlook for the cross, and would be bearish for global financial markets.

Healthcare: The Next Bear Victim

Chinese Real Estate Digs for Hope

Qiushi 求是 is the Chinese communist party's internal and external magazine.

Its goal is to "to publicize the governing philosophy of the CPC" with content that reports on political, economic, cultural and social issues, while providing analysis of world politics and China’s foreign relations". About 60% of its articles are written by political leaders.

In late February, Qiushi published part of a speech written by Xi Jinping in which he discussed the need for stable real estate growth along with repeating the line that "houses are for living in, not speculation on." As a result, hopes for a floodgate of easy money and regulatory policy evaporated. Since then however, the industry found a new hope: China's 5 percent GDP target for 2023. In a nutshell,

On the other hand, the main expected goal of this year's development is to increase the GDP by about 5%. Li Yujia said that this means that real estate at least cannot form a drag. To boost economic growth, real estate needs to perform well in investment, construction, and consumption this year.

iFeng: 房地产重磅！中央最新定调，关键信号来了