"Once inflation is above 5% in advanced economies, it takes on average 10 years to drop to 2%" - BofA
In 1931, the S&P 500 dropped for a total of 33 weeks throughout the year.
In 2022, we are currently at 24, ranking it second in terms of the percentage of the year stocks have lost money.
We are close to having the worst year in the path of stocks in history.
Wells Fargo says "the market bottom has not been established, and stocks will make lower lows in 2023."
The US Dollar Index is at its highest level in over 20 years (since May 2002), up 58% from its low in 2008. $DXY
Events in the average bear market that have not happened yet:
1. 10 months pass before the bottom
2. $VIX hit 45+ before every bear market bottomed
3. Stocks fall 36%, the current low is just a 24% decline
4. Short trade gets crowded
This is not your average bear market.
JPMORGAN: “The market has now settled into a view that the Fed will continue with outsized hikes. But .. Next 6-9 months are likely to look quite different. .. it should be increasingly probable that the next months could see some dovish tilt by the Fed.” [Kolanovic]
US stocks are still up 17% since the pre-pandemic days
"Once inflation is above 5% in advanced economies, it takes on average 10 years to drop to 2%" - BofA
Lumber futures have plunged back to June 2020 levels
The container collapse continues with China to US West Coast about to break the $3k mark. It was over $20k a year ago
Inflation is driving most consumers to borrow at a record pace:
"Consumer debt, including credit cards, rose to an all-time high for the 118 million US households among the bottom 90%,
Default insurance (CDS) on Credit Suisse is approaching same level as during the collapse of Lehman Brothers…
Wharton's Jeremy Siegel accuses Fed of making one of the biggest policy mistakes in its 110-year history
PAULSON: “Today, the average bank is probably 9% equity .. So we’re not at risk of a collapse today in the financial system like we were before. Yeah, it’s true, housing may be a little frothy .. prices may come down .. but not to the extent it happened.”
Interest rates at highest since 2008
Median mortgage payment up 45% in 1 year
Fed says recession needed to control inflation
Credit card debt up 13% in Q2, most since 2002
Gasoline = drives disinflation
Food and shelter = lag in the disinflation process
Current Open Trades
SELL SHORT EUR/USD (+340 Pips)
Sell Short At Current Price @ .9970
Stop @ 1.01
Profit Target : .8500
SELL SHORT BITCOIN (-100 Points)
Sell Short At Current Price @ 18,885
Stop @ 20,500
Profit Target : 14,000
BOUGHT $USD/JPY ( +400 Pips)
Buy Level @ 140.57 (Current Price)
Stop @ 135.00 Take Profit
Profit Target : 147
Comments: There is no stopping USD/JPY and it seems that 148 is a price magnet, as it was an important high in 1998.
Disclaimer: The material in this newsletter is for educational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy, or investment product. This newsletter is not a substitute for professional investment services. Past performance is no guarantee of future results, and there is no assurance that investment objectives will be achieved. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. All investments contain risk.