When I started writing these stock exchange columns, it was 17 (or nearly) years ago. We were in a wonderful world where the markets were only going up and where we started to believe that work was no longer just an option and that making money in the stock market became a way of life. Two years later we discovered the SUBPRIME concept. For many of us, it was an absolute mystery, but the market crashed and I remember a very special moment when we saw Lehman traders leave their desks with their boxes, a moment when a customer told me, “I will never buy stock! Never come back!!!”.
Vote June 14, 2022
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We were more or less at 666 on the S&P500. There is still a long way to go from where we arrived at the US benchmark. And that, despite last night’s shocking shutdown. Yes, the S&P500 is in the Bear Market. It’s been hanging in our faces for some time and the doubts about inflation, concerns about higher interest rates, and vicious “hawks” on the part of the Fed that got all the doves out of the social circle of the FOMC meeting would be true. Motivation from investors who are beginning to show the first signs of surrender.
It must be said that we will not exclude anything. First of all, there were the CPI numbers that continued their long work of undermining. We have to believe that the entire weekend, plus Friday afternoon, will not be enough to accommodate the fact that the peak of inflation is not yet for this month. So we spent most of the day thinking that the Fed would really have no choice but to pull heavy artillery to rein in inflation once and for all — but then, all of a sudden, what about growth???? Is slack upon us? We can ask the question.
Besides, we asked ourselves the question…
And we won’t be the only ones to ask, since all the money stars, investment visionaries, and Wall Street wizard Merlin have just about everything, as I quote: “Reviewing their predictions in connection with the Fed meeting.” Yes, because it would still be stupid to look like idiots tomorrow night because we weren’t aggressive enough about what Jerome Powell would announce. We were already immersed in the concept of “peak inflation” last Friday; Twice in less than 5 days, it won’t do it for her in the year-end ratings and accompanying rewards.
Yesterday, whether it was J.P. Morgan or Goldman Sachs or Jefferies–and I forgot some of them–they all came to proclaim with one voice and with one mind; That the Fed might raise interest rates by 0.75%, not 0.5%. So the real surprise would be a 1% increase. Interesting to note that everyone has prepared themselves to “expect a big rate hike from the Fed” when we were told six months ago that Powell’s job was to raise rates moderately and accurately. Suddenly the steam machine is welcome, because we are only aghast at the idea that inflation can advance so quickly that we will never catch up. What used to be known as laser scalpel microsurgery has apparently become a veritable butchery with a jackhammer and a mechanical shovel.
So we are witnessing a mass panic. Whether it’s investors who seem to be finally in the liquidation phase – even if volatility remains (very) very low – or whether it is on the Fed’s side giving the impression that spending their day is breathing in a paper bag to prevent anxiety attacks. Anyway, the FOMC meeting starts today, so discussions will go well, keeping an eye on the PPI numbers due this afternoon. We’re going to miss the latter being as strong as the one it was on Friday and JP Morgan, Goldman Sachs and Jefferies are going down this evening telling us they expect at least a 3% rate hike, because we’re sure inflation won’t inflate anything anymore, and economic growth will just be A concept from another time when you didn’t drive across Australia in the Ford Interceptor for fuel.
Whatever it was, yesterday we were in “bloodbath” mode and nothing delivered. The S&P500 finished its session in the Bear Market – and since then we can no longer open a newspaper without encountering charts, tables, explanations of the sequence of events and a possible recognition of the “bottom”. We forget that after the panic stage, there is still the stage of giving up and frustration. Only then can we begin to tell ourselves that we are finding a bottom. We will remain in a slump, we will not believe it, but we will already start to rise – but the customer will still be in the position of “I will not buy shares again!!!”. And that will only remain until his dentist friend tells him he’s made 35% in three days by buying a biotech company that is developing a drug to get paralyzed people to walk again and double the loaves.
A glimmer of hope
So the markets exploded again and all the support for May jumped out. Whether it’s NASDAQ or whatever. European indicators are not left out and we can pretty much understand that. Yes, because even from the USA, we wonder what the European Central Bank is doing in terms of raising homeopathy rates, while the Fed is panicking because they are losing the little control they left on inflation.
Madame Lagarde gives the impression that she is “improving her strategy by working with the delicacy of a bee pollinating a flower,” while the Fed is cleaning up the economy with an anti-faucet. Riots. Suddenly, CAC and DAX wiped out the struts and destroyed what looks like an uptrend that took three months to build. This morning, we can only see the damage when we’re really wondering when it’s going to rise. Another good reason not to drift. As far as I’m concerned, I think until Thursday morning I’ll be sitting on my hands and doing some meditation, so I don’t try to get into this market too early, which keeps showing it could be worse. noticeably worse.
Asia and the rest
This morning in Asia, we can’t help but see the damage and admit that Americans will have no choice but to watch prices rise much faster than anticipated, and this time too, Powell will do whatever it takes, but he will be. to stop inflation. He will allow all blows, even above the knee, see above the thigh, in the genitals. At the moment, Japan is down 2%, Hong Kong is down 1.2% and China is down 1.6%. However, US futures are up 0.7%, but looking at what hit us, it’s closer to a “dead cat bounce” than anything else. Especially before PPI and FED, all in less than 28 hours.
If you want to talk about surrender and liquidation, there is a sector you should look at; It is encryption. We wouldn’t go there four ways. If yesterday’s decline in US indexes was violent, it has nothing to do with the imprisonment that Bitcoin or Ether, as well as all of their cousins and friends, have taken. Bitcoin is currently trading at $22,000 and earlier this morning we were below $21,000. Ether is priced at $1,160 with a low of $1075. I’m not painting you a picture, but we’ll say there’s a big panic and everyone is going out and suddenly finding it very exciting to buy 10 years at a 3.35% return – no more dreams of grandeur and a Bugatti Chiron painted in camouflage. Anyway now. It must be said that the fact that some institutions in the ecosystem blocked the possibilities of withdrawals or remittances, did not entirely stimulate investors. It should also be noted that Microstrategy – which has a “business plan” to buy Bitcoin and that’s it – was beheaded and lost 25% yesterday. Not to mention that men borrowed money to buy bitcoin. Yebby.
For the rest, the only thing that goes up is oil. After taking a hit of weakness yesterday morning, WTI is back above $120 and gold which, as I remind you, is an inflation hedge, has just risen from $40. Go figure, Charles.
In today’s news, we will clearly remember that all the newspapers and other media have agreed to give us a course on Bear Market, on how long it will take and what it will take out. It’s about the one thing you find in today’s news.
Well, well, this is not entirely accurate, we are also talking about the fact that Bitcoin is being slaughtered, Binance is suspending Bitcoin withdrawals, and the Terra/Luna case deserves legal action on the platform (however, it seems to be working again) . We also discuss the topic of Oracle’s excellent quarterly numbers that have recovered 15% after the close. There are also the banks that fund Elon Musk to take him on Twitter that wonder if they wouldn’t be better off funding him until he kills the deal and gets off Twitter, rather than wanting to pay $54 for something when she can. You can find it on Ali-Express for $36. When Musk announced his intentions, the Nasdaq was 25% higher and without that, I think Twitter would trade at $25. Another number, in the fun stuff for the day, since we came first in the market we’ve lost $9.3 trillion in market capitalization. During the COVID crash, we lost $9.8 trillion and regained 18 between confinement and the peak of the year. Like what, if it continues to decline, one wonders what the cash injections would use, if not to cause out-of-control inflation. Another funny number to remember; In a recent survey (a survey conducted during the night of a full moon), we learned that 91% of investors are planning to buy cryptocurrency in the next six months – so we haven’t given up completely yet. There is even a hedge fund manager who estimates that Bitcoin could easily reach $100,000 in the next 24 months. Hey, it’s Christmas now…or two years from now.
Today, on the economic side, we’ll have Germany’s CPI – just to see what Lagarde will do with homeopathic pills to fight the beast. There will also be ZEW in Germany and Europe, not forgetting, of course, the PPI in the United States. The FOMC meeting starts today, and tomorrow Powell is going to talk to us, and instead of speculating that the Fed might do this or that, we’ll have some tangibles, but let’s remember two things this morning, which are:
1) The Fed will raise interest rates by at least 0.75% starting tomorrow
2) The price of oil has risen to $180, so the Fed will raise interest rates by 1% in July.
Right now, futures are gaining momentum, showing 1% openness – but with 4% on the horizon yesterday, most commercial banks saying we’re all going to die, and BlackRock declaring it’s too early to buy back shares, we’re not out yet From the lodge that lies at the bottom of the pit, in the depths of the woods.
Despite the vibe befitting a first Mad Max, remember that in 2009, at 666 on the S&P500, a guy said to me, “I’ll never buy stock again!” Will never come back!!! “.
Have a nice day and see you tomorrow for evaluation!
“What we need to understand is, first, that there are market failures; and second, that there are things like asset bubbles and irrational exuberance. There are booms and bubbles and mania. These things, left to themselves, can lead to crashes, bankruptcies, and panics. “.
– Nouriel Roubini