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The End is Near - Long post

From May 13:

I haven't posted here in awhile mostly because I havent had much to say. But I think the next couple of weeks will be interesting. I hate people who waffle so here's what I am saying in case you don't want to read the long post: the VIX is going higher and the market is going lower and there is already evidence the house of cards is teetering.

I am not going to discuss the terrible breadth in the market, or what the VIX is actually signaling the market will do in the next couple of months (move in a 1% range), or the fact that we are being invaded at our southern border, or that the market returns are largely due to five stocks, or that CMG has a PE of 55, Salesforce 961 PE, Zoom 187, NVDA 162, or that earnings were terrible if you remove cost cutting measures etc. None of that matters either apparently.


When will this tight range end?

Way back in February, I posted somewhat jokingly that what would drive everyone nuts is if the SP500 pinned itself to the 4000 level. Here we are in June and thats effectively what its done. I've posted about my frustration, my bewilderment and then my conviction that when it does break, it will be to the downside.

Whats important is not to take one or two data points and then deduct a result that is full of confirmation bias. However, I believe we are close - like next two weeks close - to this market being able to break out of this range.

A couple of points (thanks again to my expat genius on Twitter @/frankoz95967943 who learned me the very complex details of this) - all of these I have discussed at length in posts on my sub):

  1. VIX is being suppressed artificially. I have covered how in previous posts. Simplest way to know is to look at HYG. It normally correlates. Not anymore.

  2. Oil is also being suppressed. Again, if oil rises, everything else rises in price. The Fed does not want inflation. Best way to fight inflation is to keep oil down. I've shared how they are doing this in previous posts. (links at the end)

  3. The Japanese, or the Nazis of Asia as I call them, are the major fbuddy helping the Fed do all of this.

I have to tell you that in +30 years in the market managing assets, I have not seen a market like this before. It is unnatural and controlled. That's why the VIX keeps dropping when risk keeps rising. I have posted at great length about the outlier risks that currently exist (Ukraine, banks, etc.) so no need to get into that again.



WHY IS IT DIFFERENT NOW?

So a couple of things have happened and a couple are scheduled to happen that have caused me to go out on a limb and say this: what the Fed can control, and their AsianNazi friends, are limited. Yes, the Fed can print money ad infinitum, like they have been doing, and the Japanese can play their role, but at some point, outside events will occur that they cannot control. Even with the help of the devil, I mean Jamie Dimon and JPM.

Here is what has happened recently:

TRIGGER #1: OIL being manipulated is close to being out of US hands:

  1. As I postulated earlier, because the US keeps hammering down the price of oil, eventually those countries whose GDP is based on oil might decide they've had enough. Well, OPEC+ is communicating they've had enough.

    1. Saudi Minister Says OPEC+ Could Cut Production At Any Time | OilPrice.com


  1. Then there is this: Iraq And Iran Ignore U.S. Sanctions In Talks To Expand Energy Ties | OilPrice.com

  2. There this: Syria’s normalization signals a new Middle Eastern order (brookings.edu) <----- Let's not forget that Assad is a war criminal. So bad that the Arab league suspended Syria's membership in 2011.

    1. Of course, the NeoCons in the US govt respond by doing this: US lawmakers introduce bill to combat normalization with Syria's Assad (yahoo.com)


The Middle East seems to be getting MORE peaceful, not less, Israel excluded of course. Why? I think its because they see that they have a shot at gaining more control over their regional politics AND perhaps a chance to wean themselves off of the US dollar dependance.

RESULT: If the price of oil is allowed to trade freely, its going up. Period. If the price of oil goes up, inflation goes up.


TRIGGER #2: DEBT CEILING TALKS

Lots of news lately about the debt ceiling. Of course the debt ceiling would not be a problem if the US just spent LESS but thats a moot point since thats not going to happen. I don't know if the US will default, probably not a full default anyway. BUT, the mere appearance of the possibility of the US defaulting will cause risk assets to plummet.

Look, they will raise the debt ceiling at some point. The question is how long it will take and who will blink first. However, the longer it takes, the more nervous the markets become.

Don't forget this too: The Treasury General Account fell to $154 billion, down from $184 billion on May 9th. In fact, at this rate, the account will be EMPTY on May 19th. OPEX.

Don't be fooled by the chatter of deals and more deals. Yes, a deal will get done but the point is the SP500 is not trading like there is any concern.


RESULT: The empty TGA will force the US government to RAISE rates it offers to investors to fund operations. Raising rates is bad for the market.


TRIGGER #3: SHORT SELLING BAN on bank stocks.

Beyond the hypocrisy of this, compounded by the fact that other than Yellen, the main spokesperson trumpeting this retarded idea is the devil, I mean Jamie Dimon, is the fact that the last time they did this in 2008 after Lehman, 3 months later the XLF was down 44%.

  1. JPMorgan CEO Jamie Dimon wants US regulators to consider a ban on the short selling of bank stocks | Business Insider India

  2. Calls to Investigate Short Sellers Intensify as Bank Crisis Deepens - The New York Times (nytimes.com) <--- retarded that short sellers as being blamed for bank failures.

  3. Oddly the SEC says nope.

  4. TREASURY SECRETARY YELLEN TO MEET TOP BANK CEOS NEXT WEEK IN WASHINGTON: POLITICO <---- prob to discuss the $18b they are going to force on the banks to recapitalize the bank insurance fund.

  5. Discussions of raising the FDIC limit to infinity <--- this is bank nationalization or rather, JPM et al.

RESULT: A BAN WILL ONLY OCCUR IF ANOTHER BANK IS ABOUT TO FAIL - this is the only reason. IF IT OCCURS, BYE BYE MARKET.


TRIGGER #4: MONEY IS LEAVING AAPL

AAPL is close to an all time high. As AAPL goes so goes the market. AAPL's earnings S U C K E D unless you are a fan of gains due to outsourcing of labor overseas. Also, Foxconn, AAPL's largest supplier, reported a 56% drop in net income ( Apple supplier Foxconn's Q1 profit plunges, outlook "conservative" | Reuters ). Oh and Samsung Electronics profit fell 95% in first quarter. But yeah, AAPL is fine.

But while the stock is going up, money is leaving:

  1. 2 billion left the stock May 5

    1. Money flowed in May 10th

  2. Then this past Friday, 7 billion - and no its not repositioning or some other reason..

Since Jan 1, AAPL has added $760,000,000,000 in market cap. Sure, that makes sense.


RESULT: AAPL rolling over will pull the techs and the rest of the market down.


All it will take is FOR ONE OF THE ABOVE THINGS TO HAPPEN and the market goes down.


But wait, thats not all. Here are some possible "canaries in the coal mine":

  1. The VVIX, which is the volatility of the VIX, is going UP when the VIX is being manipulated going down. HUH?

  2. The UAE announced a $10 billion short position on US stocks last week. What's odd is how public this announcement was.

    1. I believe this was another warning to Washington to knock off their manipulation of the oil markets.

    2. Our idiots in the government responded 2 days later that they would start buying to refill the markets in June. What?? WTF would you communicate when you will buy in the open markets? The US has publicly stated they will only buy when oil is $67-$72 per barrel. Either the US thinks thats where oil will be or they are communicating to OPEC+ (the + is for Russia) that they will be done screwing around in June.

OTHER RISK BEING IGNORED:

  1. US Banks - not any better regardless of what Yellen and JP and the devil say. There is a structural problem with regional banks: they cannot compete unless they take on more risk and that has led to them taking on more risk which is why the banking system is set to collapse - collapse into a national banking system, run by the devil of course. I am not a conspiracy theorist - if you understand how much money the TBTF banks are getting for less than 1% from the Fed, you understand that regionals dont have a chance.

  2. Ukraine - there is still a war going on. People are dying. The US public is done VIRTUE SIGNALING about Ukraine having moved on to better things like trans rights.

  3. China / Taiwan - probably not this summer since Taiwan is going to be having an election in 2024 and if the KMT party wins, unification, i mean war is called off: China wins, without a single shot being fired. By the way, this is the great idea our retards in Washington have if China invades: US Threatens To 'Blow Up' Taiwan's Semiconductor Manufacturing Firm If China Invades The Island; Taipei Unhappy (eurasiantimes.com) WHEN YOU HAVE FRIENDS LIKE US...

  4. Commercial real estate market is already crashing but of course, nothing to be concerned about.

    1. Here's a jewel in San Fran that was valued at $300m two years ago, now on sale for the low price of $60m ( Commercial real estate in SF grapples with 350 California's expected (hoodline.com)

    2. And this in NYC that was valued at $125 m two years ago just sold for $13 million ( Turtle Bay Residential Building Sells at 90% Discount (therealdeal.com)

    3. CRE debt is a mess. I've already discussed it at length in previous posts. Defaults on Commercial Real Estate Loans Surge to 14-Year High (investopedia.com) <--- this was a January article.

    4. Trucking rates are WORSE than the 2019 "Trucking Bloodbath" when 10 large trucking companies went bk. Truck rates are down to $1.19/mile with operating costs up $.30 mile since then. This doesnt even include rising finance costs. (thanks to Craig Fuller@freightalley on Twitter).

Other items of interest are credit card chargeoffs higher than 2008 levels, rising auto loan delinquencies, poor tax collections, layoffs, BBBY bankruptcy (this would've normally crashed the market for a day or so due to their large real estate holdings). But yeah, there's no inflation.


And really, the big data point to me that proves without a doubt the VIX is being manipulated is the following chart which shows that normally, like the last 15 years, when yields move higher, the VIX moves higher (historical R [correlation] of 71.21%). But not this time I guess. VIX is purple, Yields are green.




CONCLUSION:

All it will take is for one card to fall in this humongous house of cards. And I only listed a couple of them.

The US stock market is apparently not concerned. Since the VIX is sub 17 and headed to 0.

The FED is controlling what it can. They are running out of time and money.

The next two weeks are crucial and I have little confidence in the idiots in Washington <--- they will screw up enough where they can't hide it.


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