My Writeup on the Market Concerns

Posted by $ Abaco 2 years ago to Economics
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For some of my sidework I wrote this little report up a little over a month ago. Now, I'm starting to hear some of this mentioned in the news (I don't watch the news very much). Just thought I'd toss it in here for your reading pleasure. Also, I recently heard an interview of a very knowledgeable ETF manager that when the Fed clearly saw the need to raise rates it waited a year before doing so while acquiring $1.5T in more assets. I hope I heard that wrong...I was walking my dog at the time...haha! Gotta love retirement: See below:

March 14 marked the second test of support around 4170 for the S&P500, climbing on higher volume, marking a potential “follow-through” day for the index. Considering this we would normally expect to see more stocks climbing out of a base if this is a sustained recovery. Of course, the 300-pound gorilla in the room is the war between Russian and Ukraine.

Since it appears that the conflict in Ukraine is starting to look like it is going to be an extended campaign, also worsening relations between the US and Russia, there is a growing interest in cyber security stocks. BUG showed a price gain of about 7.5% on unusually high volume on February 24, but it has failed to break out yet.

The recent rate hike by the Fed of 0.25% may have created a feeling of predictability in the market. The last tightening cycle was back in 2015 when a rate hike acted as a bullish signal. However, with the increase in interest rate a yield curve inversion occurred with the 5-year Treasury yield going higher than the 10-year. The spread between two-year and 10-year yield flattened. Historically, this is a strong leading indicator of recession. See: https://fred.stlouisfed.org/series/T1...
In my casual observations of securities I have noticed a high degree of correlation between stocks and bonds, which is a similar indicator. Christine Benz of Morningstar (I’m a fan of hers) states that the environment of both rising interest rates with inflation is driving correlation toward unity. It is not just my opinion that the Fed really will have to raise rates in an effort to chase down this inflation. In my engineering work involving a life cycle cost analysis for a new building I noticed that the official inflation rate on energy was listed as 27% by the Federal Bureau of Labor. That’s certainly notable.

China has just entered a new lockdown on its citizens in response to Omicron. This comes at a time when the supply chain, starting from there, still hasn’t recovered. This concerns me because it’s hard for me to get my favorite golf balls…but, clearly has implications for our economy as a whole since we are mass consumers of Chinese products.


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  • Posted by freedomforall 2 years ago
    Everything the fed does is anti-competitive, artificial, and anti-free market.
    They control everything arbitrarily to increase wealth of banksters, elites who own the majority of shares
    and real estate, and wall street looters, while stealing from ordinary hard-working people.
    The fed insists that only higher interest rates must be used to restrict credit creation and to slow inflation.
    This is completely false.
    The fed can easily restrict credit creation without increasing interest rates, but they won't do so because
    that would also lower profits of banksters and wall street looters.
    The federal reserve act must be repealed and bankster assets (which are solely a product of looting) seized
    and used as rewards for productivity and merit.
    Let the banksters starve to death as they have been slowly starving productive people for 109 years.
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    • Posted by Ben_C 2 years ago
      Inflation is by design It provides cheaper dollars for the federal government off pay off debt. The fed has no concern for the average citizen - just lip service. Where in Hamilton when we need him?.
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  • Posted by fivedollargold 2 years ago
    $5Au is pleased by the Red Chinese lockdowns of millions of its citizens. Less commie goods that reach the USA means more savings in the pockets of Americans and less dollars for Xi to spend building more weapons. Win-Win!
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  • Posted by term2 2 years ago
    I dont understand that China is trying to put a clamp on COVID19 all of a sudden, especially since they are being draconian about it, in spite of the fact that what people are catching is the weakest mutation of all, and having by and large ZERO symptoms of it.

    I can help but think that china is trying to demonstrate to us through a shutdown how dependent the USA is on chinese products (translation- when china invades taiwan, the USA should not try sanctions on china). I dont think the ccp cares much about the health of their citizens- this is just a warning about how the usa should tread lightly with china.
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    • Posted by TheRealBill 2 years ago
      It used to be that if you had no symptoms of a disease, but some "test" said you had it that it was a false positive.

      In general the false negative is far, far more common - and a problem of its own. You can, for example, have the symptoms of say rheumatoid arthritis, but test negative for the markers. In that case, you still have those problems that we call symptoms to deal with.
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      • Posted by term2 2 years ago
        I have lost a lot of trust in the CDC, fauci, and biden. Sounds like the chinese government is off basse on locking so many asymptomatic people up in their homes
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  • Posted by Dobrien 2 years ago
    “The 300lb gorilla in the room” is the war between Russian and Ukraine. I agree with you most of the time , but not this time. The gorilla is DEBT.
    The Fed keepers here and almost everywhere has destroyed any sound financial principals. This is by design and has been in the works for 100 years or more. Don’t get caught in the blame Russia game. Russia actually has wounded the Fed with moving to a Gold or Ruble payment for energy.
    Since then the Ruble (which all the geniuses with glee spoke of the Rubles collapse) 2 months ago has made a historic move against the dollar. Right back to where it was ,sanctions be damned.
    What is not going according to the Great Reset plan is Trump ! We were supposed to be in war with Russia. The military under devolution ( continuity of govt during a war) will not take those kind of orders from the fraud in chief.
    Ask yourself, why Trumps Sec. of Defense Chris Miller was meeting with the top Generals in Ukraine and Poland last week?
    Where are the cry’s of the Logan Act like Gen Flynn endured? Why won’t several world leaders take Biden’s Call? Things aren’t as they seem.
    We are at war, an information war. Elon Musk just won a battle in this war. Cognitive warfare is real and it has and is being waged against US.

    See Norman Dodd interview with the man who wrote about Jekyl island G Edward Griffith.
    http://www.supremelaw.org/authors/dod...
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  • Posted by Kalle 2 years ago
    I totally agree that there are some very dark clouds on the economic(life in general) horizon. I've been in the financial markets since the crash in 1987 - trading just my own account. I do believe that we are now in the early stages of a bear market and things will start to accelerate on the downside. There will be some very sharp counter-trend rallies that will make things seem as though everything is now okay but they will offer excellent shorting opportunities. Speaking of opportunities has anyone seen this latest bombshell video made by a very highly credentialed, honest and intelligent doctor? https://odysee.com/@go1dleaf:f/DR.-RI...
    I think information like this will lead to the prosecution and bankruptcy of injection manufacturers like Moderna. EUA and liability shields become null and void in cases of fraud.
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    • Posted by term2 2 years ago
      There are so many serious problems that have been kicked down the road, I would expect that some slight issue will pop up and run the whole economy into the ground unexpectedly
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    • Posted by TheRealBill 2 years ago
      For me it is more of a gray result and that bothers me pretty hard. I've got along history of being the guy who would come back against "the world is about to end/crash/etc." claims by pointing out a bunch of historical aspects and metrics that don't support the claim or - most often - show it to be exceedingly unlikely. Decades, pre-Internet level.

      But today it is different. I can't do that. I'm not saying these often ignored or overlook factors and indicators show that something big is coming. What I am saying is that they don't counter the ones that do indicate that anymore. Many are heading in the wrong direction.

      So it is gray, and it pisses me off. Which is kind of one of my indicators: how often do I a have to angrily say "stop making the conspiracy theorists right!" is a reasonable metric for me. Minor, but still there. ;)

      When the optimist researcher is buying acres and acres homesteading land and planning on going full off-grid and able to self-sustain, I'd say it is time to be concerned. When his wife finally agrees because even her friends are talking about it, it may be a little on the late side. ;)

      Either way, within the next year or so I hope to be posting from my own family level Gulch via Starlink. :P

      If things only partially go to hell, we'll still be set up nicely to not care too much about the crap.
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