Stock Market is ROCKING

[jsx1043]

I've lost quite a bit, I'm thinking of hedging against further loss by buying up a small warehouse of single malt scotch in barrels with what's left. After the crash, I can get rip-roaring drunk, and barter for everything else.

Yup. If you can’t hold it in your hand, it doesn’t really have value. Even then, paper fiat is just about done and is basically worth about a nickel of buying power from what it once was.

1s and 0s on a computer screen don’t do it for me. I prefer precious metals like lead and brass, and commodities like beans, booze and bandaids.

 

[smokingman]

Here is a chart of PE for you. Why is it important? Because during the inflation of the 1970s PE fell to 6.63.
We are currently at 20.83 for average PE(down from 36.86 in January of 2021). A smoothed average of the last 90 years puts average PE at 14.06.

Now with inflation eating into the earnings part for pretty much everything,where do you think current PE stands to wind up?

My opinion around 10-12. In other words I think we are just over half way down.

Side note our GDP to Earnings is 160.3 today(5/20/2022). Still well over the average from 1980-2022 by around 100(ie average GDP to earnings is in the 60s range).

S&P 500 PE Ratio - 90 Year Historical Chart

This interactive chart shows the trailing twelve month S&P 500 PE ratio or price-to-earnings ratio back to 1926.

www.macrotrends.net

Zerohedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero

www.zerohedge.com

If the US dollar was not stronger because of the Euro,Yen,and Yuan degradation I think we would have not even hit the halfway point in the downturn(we entered bear market territory 5/20/2022). Yes,this is my realistic take,not my pessimistic or optimistic one.

Not advising anything,just pointing out some numbers for context.

Dow is down 8 straight weeks, its longest losing-streak since May 1923.

Dow Suffers Longest Losing Streak In 99 Years, Bonds & Bullion Bid | ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero

www.zerohedge.com

How large was the derivatives market back then...? Oh.

 

[smokingman]

We may rally a tiny bit this week(markets). Do not fall for it.
The FED has not even started reducing their 9+ trillion balance sheet but has made it public they will start on June 1,2022.

I say this based on the Dollar getting weaker in early Asian trading,if it goes up the "rally" will likely never happen.

When the fed starts reducing their balance sheet that is when the PPT and the FED will be reading from a different playbook and reality may start to appear(of how screwed we are).

The Fed’s plan to shrink its balance sheet, quickly | Vanguard

Vanguard experts discuss the Fed’s balance sheet reduction plan compared with previous quantitative tightening.

investor.vanguard.com

They are planning 95 billion per month in balance sheet reductions,or double what they did when they reduced it last time in 2017 (that built from 2008-2017)after QE 1-3.

 

[mechmc17]

We may rally a tiny bit this week(markets). Do not fall for it.
The FED has not even started reducing their 9+ trillion balance sheet but has made it public they will start on June 1,2022.

I say this based on the Dollar getting weaker in early Asian trading,if it goes up the "rally" will likely never happen.

When the fed starts reducing their balance sheet that is when the PPT and the FED will be reading from a different playbook and reality may start to appear(of how screwed we are).

The Fed’s plan to shrink its balance sheet, quickly | Vanguard

Vanguard experts discuss the Fed’s balance sheet reduction plan compared with previous quantitative tightening.

investor.vanguard.com

They are planning 95 billion per month in balance sheet reductions,or double what they did when they reduced it last time in 2017 (that built from 2008-2017)after QE 1-3.

Most people don’t even know about the PPT (plunge protection team). If Fed tightening policy stops PPT from going into action, I expect major losses in market value because the backstop will be gone.

Q1 GPD dropped by 1.4%. If the Q2 number is negative, then by definition we will have been in recession since Q1. In that scenario, the “R” word officially being used, while at the same time we have had a few months of the Fed tightening by $95 billion a month while hiking rates 50 basis points in June and July, I think we could easily see S&P 500 at 2800 or below. If PPT is sidelined also, maybe more.

 

[smokingman]

Wonder why I called the rally correctly last week?
US dollar index 5/20/2022-5/28/2022
The US dollar index has gone from 104.88 down to 101.65.

Price something in dollars(stocks,oil,bread ect) and when it loses value the price appears to go up.
It is not really worth more though.

Next week. Well, the fed cutting their balance sheet starts,but we will see. I suspect a downturn even possibly a gigantic one. Earnings are terrible for the most part. Our last two quarters in imports were new records,exports held a bit but only in commodities(oil and food).
I saw articles claiming "retail" investors caused the daily ramps into the last half hour all week,no that was the PPT and is the same thing they have done over and over since 2009. No one is sure what they will be able to do when the FED reduces their balance sheet.

I think the other shoe drops soon.

I said it in 2012 on INGO. No economy can survive when it is based on "services". You have to grow,mine,create,and build. Our big pharma/tech boom has led the rally on the Nasdaq(for 2+years),but oil(energy) and food has led the Dow and S&P(this year).

Watching emerging markets and their currencies,the Fed,yields,and US dollar index.

Dropping my TIPS US treasuries next week(at a tidy profit),because I no longer see the value of paper(I have suggested them as a way to protect wealth for a long time). At this point if I can not hold it I do not value it.

 

[smokingman]

The Euro tanked yesterday because nearly every country in it posted record inflation. Germany has inflation running higher than it has since the end of WW2.
We look like the best horse in the glue factory so the dollar is rising,and stocks are down.

I am just waiting for when the market realizes what the FED shedding 95billion a month and no longer buying MBS is going to do to margins and liquidity(liquidity is all but nonexistent already).

Of course today you had the only dove at the fed walk back the idea of a September pause in rate hikes and now it is looking more like .5 increases not the announced .25.
We will see.

 

[patience0830]

Since Jan. I am down 120k. I long hauled strategy 10 years ago. All those gains are gone. And I'm older...

People who get off the coaster at the bottom lose the most.

 

[amboy49]

People who get off the coaster at the bottom lose the most.

I’m probably older than you - and your “loss” is half of mine. I’m still whistling past the graveyard as I tell myself I haven’t “lost it until I sell it.”

 

[Scuba591]

People who get off the coaster at the bottom lose the most.

Oh I get it. I have not moved off of anything as of yet. I have to think now that I have not lost it until I realize and sell. My period of just coasting has gotten shorter now.

 

[smokingman]

I think today was the answer to how much the PPT can do against the FED.
How did that saying go,"Never fight the FED"
Sorry for those who are seeing huge losses. Hopefully many of you saw the warning about the free to trade brokers getting destroyed by the SEC before the end of the year. I am glad to have gotten all my funds into my own accounts,no way I would trust it in theirs(I am sure individual traders will be very low in the bankruptcy payment line).

SEC’s Revamp of Stock-Trading Rules Faces Criticism From Wall Street

SEC Chairman Gary Gensler said the agency is considering requiring brokerages to route individual investors’ stock orders into auctions, part of a broader revamp of the market’s plumbing aimed at reducing investor costs.

www.wsj.com

SEC floats rules to bring 'full and fair competition' to U.S. stock market

SEC Chair Gary Gensler told reporters Wednesday he believes U.S. investors are not getting the benefit of full competition in the market right now.

finance.yahoo.com

Just remember where you are on the totem pole.

 

[smokingman]

The stock markets just snapped. By that I mean they are not functioning.
The list of trading stops is higher than it was in 2008(rules put in place for how much a stock could go down are the reason).

Trade Halts - Current

www.nasdaqtrader.com

Trading Halts Explained

In rare circumstances, it has been necessary to suspend trading in a particular stock, or in even rarer occasions, the entire market.

www.marketbeat.com

They likely will keep hitting breakers on the way down most of the day,if they do not stop trading all together again,so far it has only been individual stocks not the entire market like 2020. It does seem contained to less than 3% down at the moment(you can likely thank the PPT).

The USD index is incredible. By that I mean it is much higher(2002 levels). Look at the chart.
That is very bad for exports,which at this point may be a good thing for the US(less can afford our oil and food being exported at record amounts). It is terrible for stocks and anyone wanting to buy those.

US Dollar Index (USDX) - Investing.com

Our interactive US Dollar Index (USDX) chart shows you the live price of the US Dollar index as well as the top analysis, news, historical data and more.

www.investing.com

Treasuries are moving as well,but in odd ways. The 2 year is almost the same as the 10 for yield. I do not think that has happened since the 1970s 2 year is currently 2.96% with the 10 year at 3.12,and things are breaking.

Check out US TREASURY-CURRENT 10 YEAR's stock price (US10Y) in real time

Get U.S. 10 Year Treasury (US10Y:Tradeweb) real-time stock quotes, news, price and financial information from CNBC.

www.cnbc.com

Check out 2 year US treasury last price's stock price (US2Y) in real time

Get U.S. 2 Year Treasury (US2Y:Tradeweb) real-time stock quotes, news, price and financial information from CNBC.

www.cnbc.com

 

[BugI02]

Whether or not the endpoint is a crash or a bottom, capitulation is a necessary step along the way

 

[DoggyDaddy]

DOW down another 880 points today.

 

[DragonGunner]

Wonder if any democrat stockholders are wishing now they kept a businessman in office?

 

[jsx1043]

Wonder if any democrat stockholders are wishing now they kept a businessman in office?

As an oversimplification, I’d say no. Remember, these are the folks who voted out mean tweets and don’t mind paying extra for gas “just because.”

 

[Leadeye]

Need more of those Joe, I did that, stickers for Wall Street. They look good on the gas pumps, now they can go on your 401K statement.

 

[Ark]

So much for peak inflation.

 

[smokingman]

So much for peak inflation.

"total US debt is at $90 trillion(including states) which together with $169 trillion in US unfunded liabilities totals $259 trillion, which is $778,000 per US citizen or $2,067,000 per US Taxpayer.
*This was in 2021,things have improved for many states,mostly do to higher tax revenue(Gas/diesel).

Now, the value of all US assets combined: every piece of land, real estate, all savings, all companies, everything that all citizens, businesses, entities and the state own is worth $193 trillion.

Our total debt, $259 trillion minus our total net worth, $193 trillion equals negative $66 trillion of debt and liabilities after every asset in the US has been sold off."

In other words we are not even close.P/E is still almost double the average,and more than 4 times what it was during the inflation of the 1970s. Yet,our government still spends and gives away huge amounts of cash all over the world.

 

[Pepi]

I will say, "I'm happy with my move before the attack from Russia". Being older and set WITH no more worrying is great.

 

[CHCRandy]

Yeah, gonna get bumpy. One more pump.......to 415-420 on SPY, maybe.......then the generational waterfall begins. SPY will see 320-340 area before Christmas, I am afraid.