ALL ABOARD COLLAPSE

"What a fool believes he sees, no wise man has the power to reason away. What seems to be, is always better than nothing at all" 

It's not my goal to "rain on the parade". I am merely pointing out that this parade is taking place in a torrential downpour on the way to biblical flood...

Unfortunately, facts and logic can't compete with a society in love with denial. Nevertheless, the slow arc of reality is coming in for the kill. We are witnessing the PEAK of everything in this cycle from profits, to speculation, to consumption. 

Two cycles in a row (2000/2008) I changed jobs right at the end of the cycle. Why? Because my job satisfaction tank was empty and wages were rising. Also, because no one told me it was the end of the cycle. Like now.

We are currently seeing a level of turnover unprecedented in U.S. history. For a variety of factors - most significantly, the pandemic put the supply/demand equation in favor of employees for the first time in decades. Ironically, due to 20 million knee jerk mass layoffs at the beginning of the pandemic. Yes, you read that right. A DECADE worth of jobs got wiped out, even though the government promised to PAY employee wages during the shutdown. Now, employers are scrambling to fill empty positions, because THREE MILLION baby boomers chose early retirement, which just so happens to be the gap between pre-pandemic and post-pandemic payrolls. All of which means that higher wages are cutting into profit margins leading to PEAK profits for the cycle. The irony is quite ironic. 

Number of Americans quitting their job, monthly (thousands):

Still, no one need be convinced this will continue indefinitely, since that's what they must believe anyways.

Yesterday the monthly ADP private jobs report was a total fiasco. -300k job LOSSES versus 200k expected job gains. This was a massive miss even by EconoDunce standards. It was off by more than a minus sign. It's hard to be that incompetent and still keep your job, but economists excel at it. If it's one thing their continuing employment proves is that none of their theories are credible. 

I personally have long stopped guessing the monthly BLS jobs report which comes out tomorrow. There have been many pundits making excuses for why the January jobs number could be a disaster similar to ADP. However, we must bear in mind that this post-pandemic macro environment is a con man's paradise. All of these "unique" factors make it very easy to bury the end of the cycle in broad daylight.

Make no mistake, none of these "experts" want anyone to believe this is the end of the cycle. Does anyone on Wall Street want to tell people that recession is looming? No. So they don't. 

This week, we are very likely witnessing peak earnings, although most analysts won't admit it. The key is not what happened in Q4 of last year, but what will happen THIS YEAR:

"The first quarter estimates declining reflects the reality of supply chain and inflationary problems, the second and third quarter numbers rising are wishful thinking”

 there is increasing doubt that corporations will be able to keep raising prices to offset higher costs, particularly labor costs"

Got that? Up until now, profits have been rising faster than wages, but we've reached a point at which "consumers" will no longer accept higher prices, hence profit margins must come DOWN. 

And along with all of this peak wishful thinking, we are also witnessing peak corruption.

"Movement on the issue comes after an Insider investigation found dozens of lawmakers violated laws around stock trading while in office"

We live in an era wherein the Fed is trading stocks AND Congress is trading stocks, far more freely than at any time in modern history. And we wonder why there is no financial regulation. 

That will change. When it's way too late. 

Social mood is turning down. We see it in consumer sentiment. We see it in Biden's tanking poll ratings. We see it in the market itself. People who don't understand the role of greed and fear in markets are the ones who are constantly surprised when they explode. Currently we are seeing less fear in these end of cycle markets than we've seen in any other cycle in history. Why? Because the Fed has convinced everyone they are expert stock pickers. Therefore even as the Fed removes stimulus, these morons remain over-confident as to their prospects for future gains due to their unique "skill". Little do they know that their only skill in life is getting serial conned by Wall Street. 

Which gets us to the casino.

Today Facebook is imploding on 10x average volume due to "inflation" impacting advertising spend for their customers. That sounds a lot like a decline in overall economic activity to me. After the close today, we will hear from Amazon which is already expected to see a year over year -60% decline in profit. The stock is not waiting around to see what happens, as it's trading down in tandem with Facebook. What we notice below is that Amazon rocketed through the pandemic, but has been carving out a top for over a year and a half now. In other words, the pandemic brought about peak Amazon. The virtualization of the economy, which is inherently structurally deflationary. 

Now, they are seeing slowing growth AND higher costs at the same time. Their business model, consisting of predatory competition the likes of which would have been broken up in any other era, is coming to an end. 

In summary, algo-driven Tech moonshots by Apple, Microsoft, and Google drove the Nasdaq to backtest the 200 day moving average. However, now Facebook and Amazon threaten the next leg lower.

Finally, Trump's election rally exploded in the February after his first year in office. Right after the January jobs report. 

I'm sure everyone believes this time will be different.

The Eye Of The Hurricane

The front wall of the hurricane weakens the structure, the back wall blows it away...

We are in the midst of a Lehman style collapse in real-time, but there's no way of knowing because today's pundits are broadcasting sugar coated bullshit across every media channel. The sheeple wouldn't have it any other way. No one would pay for what I have to say, nevertheless it will turn out to be exorbitantly unaffordable.

We live in a society of useful idiots, who are convinced there's strength in numbers.

Last Friday I posted this chart on Twitter showing that to-date the volatility at the 200 day moving average was the highest since March 2020. The third highest was March 2000.

In other words we are in the midst of a bear market rally. The path of this bear decline is so far following the Y2k sequence: First junk Tech stocks got obliterated, which began a year ago. After that mega cap Tech took the lead, which continued until  November. Then, cyclicals led in December. Finally everything imploded in January. Except Energy stocks which I will discuss further below. 

Now investors are getting worried as January was the S&P's worst month since March 2020. For the Nasdaq, it was the worst month since December 2018, tied for the worst month since 2008. Had January ended last Friday it would have been the worst month for the Nasdaq since 2008.

Therefore, to placate their investors, every advisor and pundit is working overtime to keep the sheeple from bolting out of the casino. At the prime broker level, Marko Kolanovic is "pounding the table" for everyone to buy stocks. 

Many market metrics such as recent performance of high vs. low beta stocks and valuations of small-caps are already fully pricing in a recession — something we do not see materializing,”

The flip side of this argument comes from Alfonso Peccatiello, author of The Macro Compass blog, who notes the spread on overnight index swaps is dangerously close to inverting"

As I've said many times, buying cyclicals going into a recession, is a very bad idea. They get demolished. Unfortunately, the imploding Tech bubble gives investors fewer and fewer places to hide. So what to do, push investors into cyclicals and tell them recession is off the table. 

Unfortunately, every spike in inflation for the past 70 years has preceded recession.

Another asinine assumption Kolanovic makes is regarding the bullish aspect of collapsed small caps. Below we see that January had the worst Nasdaq breadth in HISTORY. And comparing to 2008, the maximum breadth collapse occurred in October 2008 which was four months before the market bottomed. In other words, margin clerks won't be selling the small caps anymore, now they will dump the big caps that have been holding up the market.

This chart is also testament to the RECORD amount of junk stocks that got dumped into the market in 2021.

Another dumbfuck assumption getting bought with both hands is that we are "early" in the rate hiking cycle. You have to have amnesia or dementia to believe this argument. First off, as we see below, interest rates have been in a downtrend for four decades. Secondly, as we see also see, this relative move in rates is unprecedented. Somehow we are to believe that post-pandemic price increases in the order of 8% justify increasing interest rates 400%. Because we all know that the price of money is not a "cost" to the consumer in the most leveraged society in history.

Sure. 

Which gets us to the massive Energy sector outperformance in January. Here we see that Energy outperformance has attended EVERY end of cycle/bear market in the past thirty years. And January's monthly outperformance is the largest in the life of the data.

Similarly, the monthly VIX is warning that we are heading into recession AND bear market.

But among the most dangerous assumptions being made right now, including by Kolanovic, is that cyclicals are NOT overvalued. This is how all of today's pundits are able to ignore the meltdown in Tech stocks, because they tell themselves that Cyclicals are "value" stocks. 

Unfortunately, nothing could be further from the inconvenient truth. 

But what better sector to prove it than the Wall Street brokers now pushing out all of this end of cycle bullshit in 2022 after having dumped RECORD amounts of junk stocks into the market in 2021. 

Rule #1 of survival: Never trust proven liars just trying to make the quarter.

"Many investors are grappling with their portfolios turning negative and the rotation into value is depressing appetite for the growth stocks"

In New York, the market turmoil has made at least nine firms call off IPOs"

The Point Of No Return

"The Sea On The Tide Has No Way Of Turning"

I am not predicting a market crash, I am predicting a market explosion. The likes of which will be impossible to bailout...

This week the Fed and Wall Street were in consensus, we need to accelerate this meltdown:

Step back for perspective...

At the lingering end of a two year pandemic the global economy is struggling to regain normalcy. History's largest asset bubble is imploding and the Federal Reserve has decided to embark on accelerated tightening. The growth stock crash is approaching the one year mark with certain key sectors having already given back all of their pandemic gains and or -40% deep bear market: Chinese internets, Biotechs, Fintechs, Ark Innovation, IPOs, EVs/green energy, Cryptos, ecommerce, momentum Tech etc.

The losses are STAGGERING. Multiples of 2008 subprime.

Wiped out Millennials are abandoning the market, as the era's most popular online broker, Robinhood is down -90% from its  2021 IPO high. 

The Nasdaq was down -19% at the week's low and then bounced ahead of the seminal FOMC meeting. The S&P 500 is holding up better as hedge funds rotate en masse to cyclical stocks.  Therefore, it remains record over-valued by every known metric. 

The Fed now believes that inflation is the ONLY risk to markets and the economy and that they are behind the curve. They are happily ignoring the reverse wealth effect as the air comes out of their asset bubble.  The inflation the Fed is concerned about is a lingering remnant of the pandemic which exacerbated supply side shortages. The Fed's inflation gauges are at a 40 year high on a relative basis, whereas most commodity prices are substantially below their 2008 highs. The Baltic Dry index which is a leading indicator for U.S.. inflation shows the problem with focusing on percentages versus absolute price levels, ESPECIALLY following a depressionary pandemic.

Bad data leads to bad decisions. 

On the labor side, the jobs market is very tight due to mass layoffs during the pandemic. Many former employees have either retired early (3 million Boomers) or moved to gig jobs. The Fed's models ignore ALL of these pandemic-related factors , which make their economic models OBSOLETE and totally useless.

They are flying blind straight into the ground.

"The Fed has admitted that it is seriously behind the curve"

Aggressive Fed tightening should affect the economy with a lag"

The biggest policy error since September 2008 just took place this week. And to celebrate the occasion, consumer sentiment collapsed to that same level:

Consumer discretionary stocks are flirting with bear market on decade high volume.

The Wilshire/S&P ratio worst since October 2008:

Emerging Markets got monkey hammered this week by the rising dollar.

Global market dislocations ended Fed tightening in 2015 AND in 2018.

This time Powell and Fed are totally ignoring global markets.

Unfortunately, there is no bullish case anymore. Up until now the entire bull case which ignored valuations, was based upon  the ubiquitous belief that printed money is the secret to effortless wealth. Now that argument no longer exists. However, there remains an industry of financial salesmen who need sheeple to continue buying financial junk through all types of market risks and at the end of the cycle.

THAT is why we find ourselves at this perilous juncture where fear of missing out is the only risk today's investors understand.

"Despite the deep losses in tech stocks, there’s still an appetite for risk among the retail crowd"

"Stock funds have absorbed $84 billion this year and just two out of the 18 trading days have seen outflows"

In summary, the Fed is wrong. AGAIN. 

The economists who believe the Fed, are wrong. AGAIN. 

And the consequences are already exorbitant, on their way to unaffordable. 

This era's fantasy that central banks can bail out investors from unlimited amounts of risk is filed under the long forgotten lesson of moral hazard. The muscle memory of which lingers long after the safety net has already been removed.

mor·al haz·ard

"The lack of incentive to guard against risk where one is protected from its consequences"

  

Here Comes "Common Prosperity"

Globalization failed to create common prosperity, so now we're going to do this the hard way. Super bubble meltdown at the zero bound. It's amazing how few people want to see it coming...

"It's time to pull the plug on inflation!"

It's shocking how clueless people are at this juncture. No one would believe this extended "cycle" began with a global financial meltdown caused by the laundering of cheap global capital through the U.S. housing ATM machine. Weaponized 10x, Wall Street subprime time bombs were sold to global banks desperately attempting to avoid 0% interest rates at the end of the cycle.

KABOOM!

Now here we are in sudden death overtime of the longest cycle of all time watching the Fed "pivot" from expanding the world's largest asset bubble on record, to exploding it in record time. Standing around like we're watching a tornado in a trailer park.

Today's bulls are functioning solely on their standard model of mass ignorance. The less they know, the better. Today's pundits have as their job to sugar coat every bad piece of information and ensure that the only resulting conclusion is to buy more stock. If Bernie Madoff were alive today he would have to be released from prison and installed as head of the SEC so he could oversee the smooth functioning of this epic mass deception.

So it is hugely ironic that China is the FIRST country in the entire world to begin turning their back on this epic human and environmental disaster via the policy they call "Common prosperity". Meaning, no more bailouts for the rich.

Already this no bailout policy has drawn the derision of GOP and Democrats alike. It's UnAmerican to turn your back on fellow billionaires. So say wealthy politicians trading stocks in their spare time. The only way anyone could believe any of this is "normal" is if Walt Disney is your national historian. 

Of course, the term "Common prosperity" is loaded with irony. For me it's a euphism for super crash sans bailout. One so big and so bad that the rich head straight to their yachts and flee to the Cayman Islands. 

There are random times when I actually agree with Jim Cramer. By that I mean down days, because that's when he's bearish. Between his bullish days of exhorting his flock to buy stocks, he  like me somewhat acknowledges that the amount of junk paper dumped in 2021 is deja vu of 2008. My words, not his.

SPACs/IPOs and Cryptos are this era's suprime, only ~5x larger in magnitude. 

“I want to believe that many of last year’s 600 IPOs are better than the 300 that we got in the dot-com era. But the recent action tells me they aren’t,”

I can’t even find 15 good companies out of the whole 600 odd enterprises that came public last year"

“These broken IPOs have emptied the pockets of investors, and yet they’re selling their winners to fund the over-hyped losers"

Got that? According to Cramer, this era has twice as many junk IPOs as there were in Y2K. 

As it was in Y2K, the meltdown began with the junk companies, but eventually those imploding stocks dragged down the good companies with them.

The vast majority of growth stocks are deep in a bear market, and now the Fed is about to implode cyclicals. Yesterday's gap reversal rally was the largest since October 10th, 2008 which was the acceleration point for the Lehman meltdown. At that point stocks were already in a bear market, but they fell 40% further. Although, the article below doesn't mention any of that. It just makes it sound like a great (one day) comeback.

Not only did both the S&P and Nasdaq stage massive one day reversals yesterday, but as I showed on Twitter today Nasdaq highs-lows were the worst since the pandemic and before that...

October 10th, 2008.

However, unlike that era when the Fed was working overtime to keep markets from final imploding (Hint: It didn't work). This time we are told that the Fed MUST raise interest rates in the middle of a meltdown. 

To restore credibility:

This should do it.

One year ago, the Gamestop pump and dump scheme almost imploded the stock market. Too many newbies who didn't know what they were doing were buying and selling stocks for the first time. That debacle took place amid record Fed liquidity. Now one year later we are witnessing the Millennial margin call amid maximum Fed liquidity withdrawal. 

Nasdaq down volume has been trending up for the past five years:

Of course this reckoning is long overdue. The real question is how is it that so few people see this coming. And I realized recently the reason why bearish commentary doesn't reach the masses, and it isn't for lack of trying. It's because we're not responsible for teaching people right from wrong. That biblical responsibility has been clearly neglected. Today, we have religion without values.

Some think I'm a preacher, I'm not. I see things more from an historical perspective. This cycle of ignoring record inequality has taken place over and over again throughout history. And it always ends the same way. 

"Common prosperity"

GLOBAL MELTDOWN. IN PROGRESS

THIS is what happens when investors are bailed out too many times. They see a Fed aggressively raising rates at the end of the longest cycle in U.S. history in the largest asset bubble in world history, as a reason to buy stocks. All under the assumption that if they get into trouble they will once again get bailed out. The fact that the Fed is heading in the exact opposite direction doesn't seem to make any difference. Which is why we are seeing EPIC mass complacency during a global meltdown. Already in progress...

Be clear, it's no one's job to see this coming. From every salesman's standpoint, it's their job NOT to see this coming. After all, what are Wall Street analysts with their unanimous buy ratings and perma-bullish market predictions other than glorified salesmen? Instead of selling used cars, their job is to sell financial "assets", meaning pieces of paper that may or may not have value depending on the stage of the cycle. Were this to be the end of the cycle, that would imply they are selling worthless junk again. Same as last time global markets imploded. Enter plausible deniability, the opiate of the deeply stoned masses. Never before has the overdose of denihilism been as strong as the one they are imbibing right now. 

This lethal juncture checks every box for an end of cycle. I would argue that the cycle was likely ending in 2019, however the pandemic and its attendant super bailout extended the longest cycle in U.S. history by two more years. Now, at the crest of the breaking deflationary tsunami we are to believe that the Fed which has ended EVERY cycle in post-WWII history, will not end the longest cycle in history. All because Wall Street has decided that bear markets can no longer exist.

It just so happens that among the many current indicators screaming end of cycle, one of the key indicators is a Wall Street crime syndicate lying constantly. 

So it is that we find ourselves on the cusp of a Federal Reserve meeting to decide the future course of liquidity tightening, that investors are buying the dip on the assumption of another Fed bailout when in fact nothing could be further from the truth.

Over on Twitter I have shown many charts that indicate this current crash and bear market rally is essentially identical to the March 3rd FOMC bounce that occurred just before the wheels came off the bus. To be sure, back then there was a pandemic spreading worldwide. However, this time around we are dealing instead with the pandemic HANGOVER, which will be far worse from an economic and markets standpoint.

Wouldn't it be nice if we could all just "pivot" from the unquestioned inflationary hypothesis to the recession hypothesis overnight? Unfortunately, only Zerohedge and Jim Cramer are intellectually "flexible" enough to have their transitory opinions marked to market every single day. 

Therein lies the problem. While pundits eager to maximize their subscriber base can leapfrog from hyperinflation to depression overnight. Most investors can't. Which is why they get demolished at the end of the cycle by believing they can ride out a recession in massively over-leveraged "inflationary" assets.

Of course this market didn't just roll over and implode from all time highs. The Nasdaq and small caps have been forming a top for one year now. 

Today's collapse in breadth (highs-lows) was the third worst since 1978, BEFORE the market bounced ahead of tomorrow's FOMC meeting. I included the list of worst breadth dates, which includes March 12th and 16th 2020 then today, March 18th, 2020, then October 10th, 2008 during the worst part of the Lehman meltdown.

As we see, positioning (lower pane) is fully delusional: 

 

The bulls at this lethal juncture all believe this is under control. But it's not under control. It's merely a massive delusion working it's way to a point at which markets get totally out of control.

Ultimately, the Fed will be forced to realize that the markets now pose a risk to the economy. At what point that happens is anyone's guess, but at the current rate it may only be days away. 

When they do however, they will only make things far worse. Why? Because by reversing policy now, they will be slamming on the reflationary brakes, and all of the useful idiots who bought and believed the reflation hypothesis will go through the windshield. Cyclicals will be bidless.

And you know that means. 

It means it's the end of the cycle. And Powell can't bail out everyone. 

Fool Me All The Time, Shame On Me

Three decades worth of criminality got crammed into one pandemic asset super bubble, but today's casino gamblers only fear a long overdue wage increase. Today's con men are now boxed in by their own bullshit...

This coming week is setting up deja vu of September 2008. A Fed dicking around worrying about inflation while markets are imploding all around them in real-time. Either the market final implodes ahead of the FOMC causing them to pivot, or the Fed will final implode markets during their meeting. Either way, all signs point to collapse. 

Breadth has been imploding for a full year now. While Nasdaq lows to end the week, were the worst since 2008. 

The dawn of 2022 is revealing a lethal hangover from history's largest monetary heroin bubble:

This week, Tech earnings from Netflix and Peloton reminded us that the pandemic caused a one-time massive over-investment in stay-at-home technology reminiscent of the Y2K date change. Tech stocks were already weak due to Fed actions, but now gamblers must navigate an earnings season that will reveal declining growth. 

In addition, peak IPO/SPAC issuance on an order of magnitude 400% what it was pre-pandemic is now causing Wall Street banks and brokers to implode. Retail trading activity peaked a full year ago. Meanwhile, record IPO issuance has left a 2022 insider lockup expiration of lethal magnitude. And of course with peak valuation, we have now seen peak M&A activity. All of which is now imploding financials which is where investors have been rotating for months. 

Can't you tell?

Whereas the median return for IPOs since 1990 is +14%, in 2021 it was -14%. A mere 28% difference. 

Rivian Automotive cited in the above article is just one of many  unprofitable billion dollar IPOs that are now going bidless. Even Jim Cramer is warning investors to AVOID profitless stocks. The same ones he was endorsing during the rally.

Bulls will have to explain to me how everyone can own something on the way up and NOT own it on the way down. 

Next there's the now one year running Millennial margin call which is the locus of widely ignored collapse. It was one year ago that the Gamestop pump and dump scheme lured a generation into gamified markets where they could get bilked by known con men. What jackass pundits far and wide called the "democratization of markets" has now been revealed as the democratization of fraud. 

One growth sector after another is now imploding back to the pre-pandemic level on their way to the pandemic lows. The Global Nasdaq ended the week right at the pre-pandemic collapse level.

Also under the radar is this era's record global housing bubble. Which is already imploding in China. Recently we learned that U.S. housing construction is at the highest level in 50 years. And yet, home buyer sentiment remains mired at 40 year lows. This set-up is even WORSE than in 2007 which was the last time the Fed imploded a housing bubble they helped create. They don't get full credit however, because it's the housing industry that is once again telling us that high home prices are a "supply" problem. 

Fool me all the time, shame on me. 

Fittingly, heading into an FOMC meeting that is all about "inflation", the vaunted Crypto "inflation safe haven" trade is imploding in real-time.

Another MASSIVE lie bought and believed by today's ubiquitous army of useful idiots at the behest of today's quasi-criminal financial pundits. 

In other words, markets are already doing the Fed's job for them. They are collapsing the fake wealth effect that was behind this "inflation" blip this entire time. 

Of course CPI is a lagged indicator, so bulls need to now wonder how long it will take for the Fed to realize they are making a MASSIVE mistake. 

How "long" measured in percentage terms.

I'm guessing TOO long, because Nasdaq lows are ALREADY worse than they were in December 2018 when the Fed last reversed.

Doh!

In summary, the pandemic and the mega asset bubble it spawned was a con man's paradise. The past three decade's equivalent corruption was unleashed on Millennials at the end of the cycle. 

Nevertheless, there comes a point at which the con man fools himself. We have now reached that juncture. If these people now want to tighten liquidity in the midst of a collapsing global asset bubble all because they fear a long overdue working class wage increase, I say go for it.

FOMC: Fear Of Missing Crash

The two year Treasury bond just hit 1% and global stocks shit a brick. Who alive in 1980 would think that a 1% interest rate would be anything to worry about? The only thing consistent in this society is that the bar keeps going lower and lower, especially the IQ...

"Inflation is out of control"

Measuring percentages using a zero denominator and calling that "inflation" is at best dumbfuck math. At worst it's deceptively motivated to ensure that wages never re-capture their lost decades to corporate profit. What so many pundits are ignoring about "inflation" is that profits have grown 25% since pre-pandemic, whereas wages are up 8%. And yet I don't hear any pundits complaining that profits are too high. We are now a society ordered by and for the maximization of profit at the expense of everything else - the economy, the environment, and the workforce.

There are several reasons why persistent structural deflation is a problem for the economy. First off, it means that the economy is now stuck at the zero bound and any time there is an attempt to lift off from 0% interest rates, markets implode. So it is that the Fed now finds itself fully charged to tighten monetary policy while ignoring the $200 trillion global asset bubble in the room. It's a fool's errand of biblical magnitude, and hence no one questions it. Why the Fed allowed the asset bubble to grow to such a lethal magnitude will be THE question of all time. What were they thinking? It's as if they were too busy trading stocks to notice their bubble was out of control. This entire society is fully captured by asset bubbles now, having full faith and confidence in the virtual simulation of prosperity and its acolyte QE. Former hedge fund manager Hugh Hendry predicted it would end this way. A society fully addicted to Disney markets and questioning nothing to the bitter end. 

However, the REAL risk arising from the zero bound is the lack of economic stimulus buffer during recession. To inflate a record credit bubble AND keep interest rates at 0% for too long, is the worst case scenario in the event of economic dislocation. It means the Fed won't have the tools they need to revive the economy.

Consider this risk in the context of the record credit bubble. The pandemic allowed many companies that were already imploding in late 2019 to cheaply rollover their debt. This time around, they won't have the Fed "emergency powers" to tap during the downturn. 

Which means we now face record de-leveraging at the ZERO bound. 

Next week, the FOMC will update us on their interest rate plans for 2022. Over the past weeks since their last meeting, markets have been pricing in more and more rate hikes. Over the weekend, Bill Ackman suggested they should do an immediate half a point "shock and awe" to restore their credibility. 

What Ackman doesn't seem to understand is that if the Fed raised rates half a point next week, every risk market on the planet would be a smoking crater. Maybe he does understand, since he made "The greatest trade of all time" during the pandemic betting against credit markets. No conflict of interest there. 

Which gets us to the casino. 

First off, bulls should be worried that despite ever-rising bond yields, banks and financials are now imploding deja vu of Q3 earnings. In my last post I predicted that both Goldman and Schwab had reached peak profit and one day later both imploded. They are joined by JP Morgan, Citigroup, and Interactive Brokers.

The Momentum Factor strategy has been reconfigured to include a much larger weighting in Financials. Here we see it's very much deja vu of the last Fed "policy error" in 2018:

The IBD 50 consists of the fastest growing companies in the U.S. Companies with REAL earnings. Now these too are getting monkey hammered. Next support is the 2020 pre-pandemic high:

The NDX internals are indicative of Third wave down.

Oil realized volatility is almost as high as it was during the pandemic, and that is in a rally. Which portends badly for what happens when this rising broadening top implodes. 

We see via the volume momentum oscillator, the S&P is nowhere near a "buyable" dip. Which means far more dislocation is in order.

The Japanese have learned the hard way that EVERY central bank pump and dump ends badly for those who buy them with both hands. 

They too are heading back down to reality.