Tuesday, November 23, 2021


Panic buying in autos, homes, durable goods, commodities, cryptos, and Tech stonks is the overwhelming cause of today's "inflation". It's called the trickle down fake wealth effect and that premium is going to come out of markets via margin call. 

Lower prices are coming, and when they do liabilities will exceed assets and the sheeple will quickly realize they are bankrupt. At that point EVERYONE will understand the difference between inflation and deflation, however that lesson will have arrived 40 years too late...

This week the money printing cargo cult is going late stage euphoric on news that their Kool-Aid serving cult leader Jerome Powell has been re-nominated to lead money printing operations. On the one hand they embrace everything he does for them in casino markets, on the other hand they excoriate him constantly for economic inflation. You can't turn on the TV or radio these days without hearing about the "inflation" crisis. These people are plowing their life savings into the most overbought and overvalued asset markets in human history and yet all you hear about is the price of eggs going up 50 cents. 

No question, at the bottom of the wage scale, a combination of factors have made even relatively small price increases seem insurmountable. However, maybe it's time to consider the fact that working wages have been suppressed by mass outsourcing and mass immigration for forty years straight. As I showed in my last post, wages are going up the LEAST of all other types of prices. Which in aggregate is deflationary.

Now we learn that Biden is following Trump's (mistaken) lead in releasing oil from the Strategic Petroleum Reserve. Which is ironic, because it's highly likely that oil prices have already peaked. Any blind man can see below that oil is far lower today than it was in 2014, 2011, and 2008, none of which times oil was released from the SPR. Meanwhile, Trump released oil from the SPR in September 2019 which was only a few months before oil crashed the most in history - going negative in April 2020. I predict that will very likely happen again.

More importantly, note that oil demand is STILL only at 2013 levels (lower pane).

EIA data is here: 


Brent crude was down five week straight as of last week, which is the longest losing streak since March 2020 and before that Q4 2018. So far this week, it's bid as of Tuesday close.

So far, the Q4 2018 analog continues to loom large. Back then fiscal AND monetary stimulus were waning and global markets were rolling over.

This chart shows BOTH India and China getting in synch to the downside.

This chart shows that through Monday, there were five Nasdaq  Hindenburg Omens in a row, which is the most since Q4 2018.

Yesterday, new lows at an all time high (lower pane) set a new record going back to 1978:

Here is Nasdaq breadth relative to Q4 2018:

How's that for bullish?

Of course this implosion will make Q4 2018 seem like a good time by comparison.

Why? Because three years ago, positioning was cautious compared to today's absolute faith in printed money.

In summary, the cure for higher prices is coming. However, I suggest that most people won't be in a position to take advantage of them when they arrive.

Here we see that the U.S. aggregate bond index is highly correlated to Chinese risk assets:

Which makes THIS is a far more relevant Q4 analog: