14 Comments

ROFLMAO!!! Winnebago man! This video clip alone with worth 10x my paid subscription to QTR. We need these little gems to remind us that, in spite of the 'shitstorm' around us, we are all human and need to treat others a hell-of-a-lot better. Oh...and could you include this link of The Trailer Park Boy's Jim Layhey's ShitStorm montage: https://youtu.be/tjMkqFmRGL4

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My recent favorite is ratio of SPX to M2 money supply, which shows about 120 points of upside and 1130 of downside.

Printing is the trend, but SPX can only get so far away from M2 in my mind.

Caveat: The 2000 peak was up 46% from here. My 120 points call is based on Mar 2007 and Nov 2021 peaks.

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I'd like to hear from an MMT type or a bond expert, but I am starting to think that evaluations can be like this because 2 things: 1 a precedent has been set that the government will rescue certain big players in the public markets, therefore everyone believes their shiny prized stock is one of the chosen and they'll overpay, and 2, maybe stocks are way more sensitive to the long bond than the short term bond rates. If we are talking about the idea that the 30yr Treasury still implies a low growth future (which on a historical basis it still does) then maybe the discount rate is still crazy low and therefore the market can maintain the illusion of paying future earnings since bonds yield nothing on the long term.

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This month the CPI drop-off from June 22 reported in July 22 was 1.3%. If we get a flat 0.0 number that will drive YOY down hard. The market will likely go nuts on this. I wouldn't rule out a crazy melt up towards 4900. While agreeing with your views things are likely going to get even more insane.

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Don’t you realize that in a few months we might be fighting deflation and depression instead of inflation?

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This was an excellent read!

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Slowly then suddenly.

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Asset bubbles are often kind of a reverse psychology the stock market does when it's prescient underpinnings are saying otherwise. At least that's how I remember the 2000 era dot.com bust. The current scenario is very confusing but it wouldn't surprise me if some kind of event(s) precipitated a much harder landing.

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There is something different from all previous episodes - the Fed now pays interest on excess reserves, which are the other side of the balance sheet to QE. This is why the Fed is running massive deficits, and that money has to go somewhere. It must be boosting liquidity somehow.

I personally think the Ukraine War going nuclear will ultimately crash the economy. It won't be any internal market dynamics.

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Possible reasons to add to Derek. Reason 3, there is a FedPut in the stock market (psychology and/or direct or indirect stock market influence). Reaaon 4, the stock market is disconnected from mainstreet so the two are no longer connected. Reason 5, could the stock market eventually be heading to a crack-up boom?

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Back to work guys..... could the chip friction between the US and China become the Black Swan event spoken of in ancient tails?

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PRC is banning export of gallium and germanium, two components of chips. That's what happens when you outsource your supply chains for everything to make a few hundred billion, de-industrialize the US and run the biggest trade deficits in history. Nothing to see here, folks. I buy a pound of lead and an ounce of gold every month for years...

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Life goes in cycles. The economy also goes in cycles. And the market is a reflection of that. This cycle lasted way more than a normal one due to extraordinary government intervention, but that was reversed a year ago. The damage is already done and the economy is fatally condemned to slow down, we can see that in many indicators, basically all alarms are blinking red. Why the market hasn’t collapsed? Probably because after 14 years of gains people refuse to believe that it is finished. I met a guy on Friday, former CEO of a very well known brand that belongs to Unilever, that is retired since I first met him 20 years ago. He is probably 79 or 80, and he has all his portfolio in equities! When I started talking he look at me with scared eyes and confess that he was 100% equities because he did so well in the past.

After where are we coming from, there is going to be a landing of course, and it cannot be soft, it will necessary be hard. Very hard. May be in 2 or 3 months, maybe in 6 months, no more than that.

The only justifications for this valuations, is very high inflation (equities are a hedge to inflation in the long term), but we are seeing the opposite. Inflation is collapsing. We are seeing deflation in some sectors like food or rentals. And we better avoid the “credit” issue with the regional and local banks. Credit is closed. How the economy is going to work without credit to the small business?

I see it very clear. The question is when the crash will start?

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Who’s lying? The bond market or BlackRock’s Aladdin?

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