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food for bears

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GoSeigen
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Re: food for bears

#455250

Postby GoSeigen » November 3rd, 2021, 7:24 am

TUK020 wrote:
GoSeigen wrote:Withdrawal of money from the market as Comps describes it is profoundly bullish for stocks because it implies the economy is strong enough to generate inflation and warrant tightening of monetary policy. A strong economy is good for stocks, not bad.

Taper tantrum is what happened to bonds in 2013, not all the other nonsense spewed forth above. From the horse's mouth:

https://fredblog.stlouisfed.org/2021/08/no-taper-tantrum-this-time/

GS


I thought the whole concept of stagflation was where inflation happened without the economic growth.
Is that not the danger we are facing now?


It's nice when someone can get to the crux of the matter in two short sentences.

As a quick aside I'm really just making a narrow point on this thread which is that stocks performed well in spite of the taper tantrum, which was a bond market event, not a stock event.

I have two observations about the no-growth-with-inflation (=stagflation) point. First, are we talking about no real growth, only nominal, or are we suggesting there will be no nominal growth either? Second, there is a cycle, I agree, over the cycle growth can be minimal, but I think early and mid cycle it could be reasonably robust -- certainly in nominal terms -- and then give up the gains late-cycle and into the downturn. What all this means for shares I don't know, but I don't think it's clear-cut bearish at this stage.

Last year in Feb (2020) I called an epic bull market ahead. So far the S&P is up 40% and personally, I don't think it's over yet, especially because of the Covid crash which I think gave the bull market fresh legs. It feels very strange for me to take a bullish view: for years my user name on TMF was actually bareish (yes, spelled that way), so I am not unfamiliar with bearish ideas. I just think it's the bond market's turn to struggle, not stocks.

Lastly I should disclose that my money is where my mouth is (or I am talking my own book if you prefer). I have precious little cash and govt bond exposure, though I am short S&P index as a partial hedge (it seems the most richly valued market and dominated by tech) of my UK and EM stocks & property exposure.

GS

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Re: food for bears

#455279

Postby odysseus2000 » November 3rd, 2021, 10:22 am

compscidude
Hoping to see precise facts and data in your reply, specific examples or counterexamples, not your intuition, if you don't mind.


The basic tenant of your arguments is that all the articles you cite are based on good arguments and unbiased assessments of history.

I am sorry to disappoint you, but this is all media stuff, pot boiler articles written by folk who need to write to get paid.

Once you go down the line of reading this stuff and believing it you are never going to see the big picture and the macro trends.

This is a trap that especially catches folk who have been trained in anything analytic. In such fields the folk who write are dealing with facts, in business and economics the folk who write know almost nothing and are guided by some frame work that is mostly a reflection of the political stance of whoever they are writing for.

As a topical example, lets look at Tesla. Until the last couple of years, all the mainstream media were telling everyone that Tesla was a scam, massively over priced on ridiculous p/e. Don't buy this buy something with a low p/e and a dividend. Article after article, talking head after talking head. All wrong!

I ignored all of that, just looking at the secular trend of reducing co2 and knowing that electric motors are 90% efficient and petrol are 30%. With that information it was obvious that Tesla would do well. There was so much support from investors in silicon valley that Tesla could borrow if needed destroying all the arguments about them running out of money. Yet every media person was negative Tesla, costing anyone who followed them a fortune and ruining anyone who shorted Tesla.

If these folk were all hopeless on Tesla why will they be any better on anything else?

We are now in a situation where there are the two paradigm shifts of electric traction and AI along with a war on co2 and a government created inflation. Yesterday I went to my metal supplier for steel to make sculptures from. I was expecting around £45 based on past buys, it was instead £135. So I am putting my prices up. Every other business will do that. Sure consumers may not buy, but we have a government committed to co2 reduction so they will spend.

What happened in the past in different circumstances is not what will happen now. As an investor one has to look at the secular trends and how they will influence economic behaviour.

Regards,

compscidude
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Re: food for bears

#457100

Postby compscidude » November 10th, 2021, 4:07 pm

>> I thought the whole concept of stagflation was where inflation happened without the economic growth.
>> Is that not the danger we are facing now?
> It's nice when someone can get to the crux of the matter in two short sentences.

Hi guys/gals,

There are lots of threads about inflation/stagflation already even here in this one forum - I can see 5 different inflation threads on the front page of Roundtable alone.

If a few people decide to turn every thread they see into being about inflation / stagflation / whatever arbitrary thing they personally announce is 'the crux of the matter' then we don't really have threads or discussions any more.

It's especially bad when someone comes onto someone else's thread, calls everything written before 'a stream of vomit' or whatever, and then announces the thread is now really about whatever topic they want to talk about instead. That's anti-social behaviour as far as boards go.

This is a thread called 'food for bears', the topics I posted are a wide range of 'food for bears'. That's the purpose of this thread.

No one would argue inflation isn't important, but, it cannot be forced into being the primary topic of every single thread on the board, or the board dies. Just like 'brexit' killed every thread and every board on the original TMF. 5 threads is already more than enough.

There are a wide range of factors besides inflation which are also interesting to talk about. Perhaps not for you, but certainly for other people. So let's keep the other 5 threads for inflation and allow this one thread to not be about inflation, ok?

Let's keep it 'food for bears' like the topic and initial post contents suggest. Diverse, exciting, bearish, yummy datapoints.

I respect everyone's right to talk about whatever they want on lemon fool. I respect everyone's opinion/choice to consider whatever they want 'the crux of the matter'. But I'd be grateful if people can respect threads. Else what's the point of having threads?

So please everyone can you take inflation/stagflation talk to one of the many threads on that topic, and leave this thread for people to flag up imminent, diverse, exciting data points leading to the Grand Bearpocalypse.

Happy to see people briefly report any sudden jumps/falls in inflation as a single bear food item.

I'll be happy to copy paste people's posts over to one of the inflation/stagflation threads if that would save anyone some time.

Thanks for listening and I hope you have enjoyed my TED talk.

comp

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Re: food for bears

#464602

Postby compscidude » December 9th, 2021, 6:56 pm

Some more bear food:

1) Omicron, of course.

2) Inflation in the US > 6% , in the UK >4% and expecting >5% next year, Eurozone inflation at 5%, Germany nearing 6%, which is a 29 year high. Meanwhile central banks terrified to raise rates given omicron, terrified to not raise rates given inflation. Please note, this is not an invitation to make the thread about inflation/stagflation! Just an update on broad stats...

3) Inflow into equities is insane. OK, slow down a moment and read this carefully and think about what it means.

The inflow of new cash into global equities in 2021 was at the highest level of any of the last 20 years.

Not only that. Imagine you take every single year of positive inflows over the last 20 years and then add all those years together.

2021's equity inflows were higher than the sum of the last 20 years of positive equity inflows, too.

But wait. It gets even more strange.

New cash into equities in the *first half* of 2021 alone is also far higher than the sum of the previous 20 years of new money going into equities.

Now that is crazy. So here's the bear food: what happens if it reverses?

https://www.ft.com/content/85b06040-199 ... 64fed3fe26

https://www.ft.com/__origami/service/im ... &width=700

4) And of course, profit margins are under a lot of pressure.

a) wages rising

b) taxes rising

c) debt costs likely to rise

d) input costs up

e) logistics a mess both for inputs & outputs

f) logistics costs up by up to 20x

g) energy costs up

h) covid impact on worker productivity

i) job hopping impact on worker productivity

j) ability to operate at all with lockdowns, regulations (certain sectors like cruises, airlines etc)


5) Margin debt continues to stay near record levels and is largely fueling the bubble

https://www.yardeni.com/pub/stmkteqmardebt.pdf



It may be winter but this bearish poster isn't hibernating.

comp

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Re: food for bears

#464673

Postby GoSeigen » December 10th, 2021, 7:12 am

compscidude wrote:Some more bear food:

1) Omicron, of course.

2) Inflation in the US > 6% , in the UK >4% and expecting >5% next year, Eurozone inflation at 5%, Germany nearing 6%, which is a 29 year high. Meanwhile central banks terrified to raise rates given omicron, terrified to not raise rates given inflation. Please note, this is not an invitation to make the thread about inflation/stagflation! Just an update on broad stats...

3) Inflow into equities is insane. [
4) And of course, profit margins are under a lot of pressure.

5) Margin debt continues to stay near record levels and is largely fueling the bubble


1. Bullish
2. Bearish but market looking through this for now. Likely to be a temporary phenomenon with strong deflationary pressure upon monetary and fiscal tightening.
3. Bullish
4. Only one side of the story. Margins are very healthy in fact at all time highs. Bullish. https://www.yardeni.com/pub/sp500marginnipa.pdf
5. Bullish. Margin debt still low by standards of the past 20 years. In UK/EU maximum leverage is 20x compared to 100x or more before 2018ish.


GS

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Re: food for bears

#464760

Postby TUK020 » December 10th, 2021, 2:39 pm

compscidude wrote:Some more bear food:

1) Omicron, of course.

comp


Too early to tell. This could swing either way, and in a big way.
We don't yet have any meaningful data on Omicron virulence.
If it turns out:
- to be much more transmissible
- to be much less virulent (serious disease/hospitalisations/deaths)
- to generate immunity to earlier more virulent strains
then it becomes the solution to the world's COVID problems.

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Re: food for bears

#464765

Postby odysseus2000 » December 10th, 2021, 2:45 pm

TUK020 wrote:
compscidude wrote:Some more bear food:

1) Omicron, of course.

comp


Too early to tell. This could swing either way, and in a big way.
We don't yet have any meaningful data on Omicron virulence.
If it turns out:
- to be much more transmissible
- to be much less virulent (serious disease/hospitalisations/deaths)
- to generate immunity to earlier more virulent strains
then it becomes the solution to the world's COVID problems.


It would be ironic if this turns out to be the case, but life loves irony!

Regards,

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Re: food for bears

#464768

Postby PeterGray » December 10th, 2021, 2:51 pm

- to be much more transmissible
- to be much less virulent (serious disease/hospitalisations/deaths)
..
then it becomes the solution to the world's COVID problems.


The trouble there is that if it is much more transmissible, as seems likely, then even if the average severity of disease is lower we may still see an increase in severe symptoms, hospitalisation and death. As a smaller proportion (getting severe symptoms) of a larger number (more infected with Omicron) could still end up being a bigger number. We need much lower virulence for overall serious symptoms to be reduced, and at present that's not really what's being suggested.

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Re: food for bears

#464854

Postby odysseus2000 » December 10th, 2021, 7:49 pm

PeterGray wrote:- to be much more transmissible
- to be much less virulent (serious disease/hospitalisations/deaths)
..
then it becomes the solution to the world's COVID problems.


The trouble there is that if it is much more transmissible, as seems likely, then even if the average severity of disease is lower we may still see an increase in severe symptoms, hospitalisation and death. As a smaller proportion (getting severe symptoms) of a larger number (more infected with Omicron) could still end up being a bigger number. We need much lower virulence for overall serious symptoms to be reduced, and at present that's not really what's being suggested.


Yes, but so far there does not seem to be serious troubles in any who have been infected. If this was murderous to some small numbers of individuals we should start seeing outliers early on with omnicrom that are showing bad prognosis. As of now, as I understand it, we are not seeing that. Of course it may still develop but the longer we get no serious troubles the more unlikely they are.

Regards,

PeterGray
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Re: food for bears

#464874

Postby PeterGray » December 10th, 2021, 8:56 pm

odysseus2000 wrote:
PeterGray wrote:- to be much more transmissible
- to be much less virulent (serious disease/hospitalisations/deaths)
..
then it becomes the solution to the world's COVID problems.


The trouble there is that if it is much more transmissible, as seems likely, then even if the average severity of disease is lower we may still see an increase in severe symptoms, hospitalisation and death. As a smaller proportion (getting severe symptoms) of a larger number (more infected with Omicron) could still end up being a bigger number. We need much lower virulence for overall serious symptoms to be reduced, and at present that's not really what's being suggested.


Yes, but so far there does not seem to be serious troubles in any who have been infected. If this was murderous to some small numbers of individuals we should start seeing outliers early on with omnicrom that are showing bad prognosis. As of now, as I understand it, we are not seeing that. Of course it may still develop but the longer we get no serious troubles the more unlikely they are.

Regards,


Almost certainly too early to tell. Omicron was only clearly recorded less than 3 weeks ago. Development of severe disease and death has always lagged infection rates by several weeks.

The first, not very encouraging, signs are perhaps coming out of SA now. Bloomberg reported 3 days ago that the number of people being admitted to hospital in SA doubled between Mon and Tuesday. Mail Online reported yesterday that covid admissions in SA were up 65% over the week. The good news is that so far there are fewer moves to ITU and deaths. But we'll have to see how that progresses over time. Even if it proves true that Omicron tends to cause fewer deaths and ITU admissions, it's still possible given the much greater infectivity, that hospitals will face much higher admission rates, and could become overloaded.

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Re: food for bears

#465066

Postby tjh290633 » December 11th, 2021, 6:27 pm

compscidude wrote:3) Inflow into equities is insane. OK, slow down a moment and read this carefully and think about what it means.

The inflow of new cash into global equities in 2021 was at the highest level of any of the last 20 years.

Not only that. Imagine you take every single year of positive inflows over the last 20 years and then add all those years together.

2021's equity inflows were higher than the sum of the last 20 years of positive equity inflows, too.

But wait. It gets even more strange.

New cash into equities in the *first half* of 2021 alone is also far higher than the sum of the previous 20 years of new money going into equities.

Now that is crazy. So here's the bear food: what happens if it reverses?

It might be connected with the very low rates of interest available at the moment.

TJH

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Re: food for bears

#470200

Postby compscidude » January 4th, 2022, 3:01 pm

https://am.jpmorgan.com/content/dam/jpm ... ets-us.pdf

JPM Guide to the markets 1Q 2022

Scary stuff

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Re: food for bears

#470256

Postby Howard » January 4th, 2022, 6:02 pm

TUK020 wrote:
compscidude wrote:Some more bear food:

1) Omicron, of course.

comp


Too early to tell. This could swing either way, and in a big way.
We don't yet have any meaningful data on Omicron virulence.
If it turns out:
- to be much more transmissible
- to be much less virulent (serious disease/hospitalisations/deaths)
- to generate immunity to earlier more virulent strains
then it becomes the solution to the world's COVID problems.


Your comments might prove rather prescient. John Campbell on YouTube is presenting information that the milder Omicron is supplanting Delta in the UK and providing immunity to Delta. Too soon for a definite conclusion? And of course another mutation will be along in a minute.

Anyway the FTSE went up today! :)

regards

Howard

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Re: food for bears

#470494

Postby compscidude » January 5th, 2022, 2:28 pm

> Your comments might prove rather prescient. John Campbell on YouTube is presenting information that the milder Omicron is supplanting Delta in the UK and providing immunity to Delta. Too soon for a definite conclusion? And of course another mutation will be along in a minute.

It is certainly possible that omicron may be the last major wave (or may end the delta wave), in the sense it will be hard for any remaining anti-vaxxers to avoid developing antibodies this time around. Omicron is ridiculously easily spread.

On the other hand:

- The first 2 years generated, say, 1-2 billion human infections + an unknown number of animal infections. These 1-2 billion infections in 2 years resulted in the development of about 10 major strains of interest - 5 'variants of concern', 3 'variants under investigation' and 2 'signals under monitoring'. e.g. Alpha, Beta, Gamma, Delta, Omicron did not pop into existence by magic.

- The 'attack rate' of omicron is far higher due to the high R, so we should expect around 4 billion+ global infections (basically, the higher the R, the more it tends to 'reach' people who would have escaped infection in previous rounds, because the effective R of a disease diminishes as more people are infected and recover - there are fewer people left to infect. Once the effective R drops below '1', the disease spread rapidly declines). Starting from such a high natural R it will take a VERY long time for omicron to reach community immunity such that the effective R is <1. Even moreso given public & political reluctance to isolate, distance, wear masks, get boosters, etc. all of which would lower effective R. Schools returning for example is going to raise the effective R by rather a lot.

- Again because of the high R, most omicron infections will occur in just 3 months (December, January, February). It is also likely to infect a vast number of animals on the planet whose ACE receptors will fit the virus, just as the other strains did (omicron appears to have possibly mutated inside a mouse, from the shape it has taken). Mathematically, we should expect 4 billion infections to generate 10 new variants of concern. And these to be noticeable by say, March-June. We saw this last year in India, where Delta arose in India among the 0.5 billion or so infections there.

- One can argue that there may be fewer new variants, because such a fast rate of spread will result in 'broader' rather than 'deeper' family trees of mutations. One might also argue that the longer we have covid around, the more it will exhaust the possibilities of its evolutionary space (i.e. it will approach a global minimum), there will be fewer ways to work past antibodies etc. Nonetheless the story of the last 2 years has been 'if you hope that this is the last strain, you are wrong'.

- On the one hand, whichever of these 10 new 'theoretically ought to exist' VoCs is most effective at bypassing antibodies and spreading, may dominate and suppress the others... so we may only see 1 or 2 in practice.

- On the other hand, if we have multiple new VoCs spreading at the same time (perhaps sharing the high R of omicron but with immune evasion vs omicron antibodies), there's a chance of recombination between new VoCs...

- Talking of recombination ... since delta and omicron are in circulation at the same time there's also a possibility of hybridisation where someone is infected with both at the same and their cells produce a mixed up version of both, perhaps with the rate of spread & immune-evasion of omicron plus the lethality of delta. We already see this in omicron where it has acquired new RNA snippets from other viruses (either the common cold or HIV). Recall that the beta strain in South Africa was poor at spreading but had high immune evasion against vaccination.

- Part of our productivity as a nation is dependent on a functioning healthcare service and we are more or less destroying that resource (by destroying the health/happiness/empathy of the staff) to service Boris's political objectives. Regardless of the immediate impact of coronavirus on patients, this shock to the economy (and our way of life) is there and continuing to worsen.

- Some people have been misled by propaganda to believe that viruses automatically mutate to become milder over time. They do not. It's easy to see examples where viruses remain deadly even over periods of thousands of years (smallpox for example) and coronaviruses would be more likely to fall in that category as they have a kind of RNA copying error-detection mechanism making them e.g. 10000x more stable between generations than e.g. the flu. The flu itself is also an example where the virus is moderately dangerous and has been around for centuries, it never became 'benign', it is a shock to the world's healthcare systems every winter even today. Many viruses do develop a milder version that supplants the original, but when you have a virus that A) can be spread asymptomatically B) does most of its spread before the patient becomes very sick (or dead), there's practically no 'selection pressure' to favour a milder strain (well, maybe politics?... a mild strain might be allowed to 'let it rip' as we see in the UK and Australia whereas a tougher strain might result in lockdowns to limit infections).

- There is also the issue of long covid - fatigue, blood clots, memory impairment, cognitive impairment, etc. I don't see how it can be good for an economy if 10% of the population suddenly get plagued by serious, chronic ailments.

Anyway, to cut a long story short, it would be nice if this is the beginning of the end for covid, but it's also possible that it's the end of the beginning. At some point, the economy may begin to stagger under the number of punches it is taking from covid, or some other black swan/crisis will emerge alongside covid and it will exceed the economy's capacity for shocks. A major war - perhaps Russia invades Ukraine, and China seizes the opportunity to try for Taiwan while the world is distracted. Some other new disease arising. Perhaps a major earthquake in Japan or America destroying production capacity or messing up logistics. Political revolution in China or America (we almost saw that last year on January 6th!).

This market is priced for perfection; it seems unlikely that we'll see perfection this year. I find it very annoying because although there are a few stocks still priced somewhat reasonably, with so much potential for a major correction or crash, I feel stupid to buy them. I appreciate there is an argument to just buy them anyway and ignore the market; if the margarine is cheap, why worry that the butter is expensive? Still, I prefer to buy with a high degree of confidence that I'll win.

then again, what can I say? I'm a bear. I can always find a reason not to invest :-)

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Re: food for bears

#470499

Postby GoSeigen » January 5th, 2022, 2:44 pm

compscidude wrote:I find it very annoying because although there are a few stocks still priced somewhat reasonably, with so much potential for a major correction or crash, I feel stupid to buy them. I appreciate there is an argument to just buy them anyway and ignore the market; if the margarine is cheap, why worry that the butter is expensive? Still, I prefer to buy with a high degree of confidence that I'll win.

then again, what can I say? I'm a bear. I can always find a reason not to invest :-)


Feel your pain: I daily battle the urge to sell but just to hold and see what happens. I do think though that I am rather happier doing this from a position leveraged long than one which is largely cash or defensive.

Many of your "food for bears" points are actually bullish -- you do present a nice summary of reasons to be invested... and sure enough subsequent market rises have confirmed your secretly-bullish hunches ;-)

.
GS

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Re: food for bears

#470502

Postby TUK020 » January 5th, 2022, 2:46 pm

coherent explanation.

My earlier comment should have read:
"then it becomes the solution to the world's current COVID problems."

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Re: food for bears

#476602

Postby compscidude » January 27th, 2022, 3:40 pm


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Re: food for bears

#483816

Postby compscidude » March 2nd, 2022, 2:10 pm

https://money.cnn.com/data/fear-and-greed/

CNN has an interesting multi-factor index of various measures of market panic or euphoria.

e.g. Ratio of put-buying to calls-buying in the options markets

e.g. Ratio of stocks that are hitting 52-week lows or highs

The current overall level has slid so far into 'fear' that the only comparable times in the last 3 years are:

- 1 day in June 2021

- February & March 2020

- 1 or 2 days around August 2019?

- November & December 2018

Quite interesting as the SP500 is currently only down <10% from it's peak in January.

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Re: food for bears

#484367

Postby vand » March 4th, 2022, 5:29 pm

It wouldn't surprise me if the likes of Jeremy Grantham are actually calling it correctly, and we are in the early stages of what is likely to be a brutal bear market.

It feels more and more like 2008 imo - the market tries to rally a bit but then gets sold off again. This week European stocks have been absolutely crushed. You can say that the Ukraine situtation is contributing to that, but I think that's just one of several factors. Energy prices going through the roof will eventually feed through to falling corporate profits, and a combination of lower earnings and higher inflation does not make for a very encouraging environment for a stock market that is still very expensively priced.

The yield curve is flattening at an alarming rate and could move into full inversion within a few weeks if it keeps going.

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Re: food for bears

#484384

Postby odysseus2000 » March 4th, 2022, 7:04 pm

vand wrote:It wouldn't surprise me if the likes of Jeremy Grantham are actually calling it correctly, and we are in the early stages of what is likely to be a brutal bear market.

It feels more and more like 2008 imo - the market tries to rally a bit but then gets sold off again. This week European stocks have been absolutely crushed. You can say that the Ukraine situtation is contributing to that, but I think that's just one of several factors. Energy prices going through the roof will eventually feed through to falling corporate profits, and a combination of lower earnings and higher inflation does not make for a very encouraging environment for a stock market that is still very expensively priced.

The yield curve is flattening at an alarming rate and could move into full inversion within a few weeks if it keeps going.


If this continues it is more like 2001 imho.

Then, as now, we had had a big run in the markets especially new tech and then the markets sold off hard and many highly valued companies corrected.

There was no over arching crisis as we saw in 2008 with US banks, but a more general ambiance that the good times must keep rolling, not unlike 1929 and then when some selling started the whole market rotated from high value growth to low value staples and such.

A counter argument is that products have become more essential and thence more sellable at higher prices in globally connected markets. Additionally we now have strong inflation, but with such an indebted population that higher interest rates would crush the economy and send us into depression.

Difficult for me to quantify but as of now I am estimating about a 50:50 probability that things go higher or crash and a crash imho won't go off the table quickly.

The politicians seem divided over those that want a reset to effectively take a away a lot of sovereign debt by strong inflation and those who believe the world can grow itself out of this mess.

If markets really start to slide everything is set for a serious crash that it is unlikely central banks can stop. To avert this we will need a return to
excessive government spending as being pushed in Germany to arm and the Fed to take Internet raises off the table.

Most politicians will imho soon realise there is a depression danger and lobby for monetary easing, but inflation policies they pushed through such as limiting HGV working hours may have already done too much damage to repair.

Interesting times!

Regards,


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