Days Of Reckoning

After a decade plus of blue balling the bears to the max it appears that the days of reckoning may have finally arrived. Of course we here at Red Pill Quants always knew that it would happen eventually. Even as far back as 2009 when the Federal Reserve panicked and first embarked on its quest to single handedly change the laws of finance and in the process managed to enrich a small group of connected insiders as an unexpected bonus. What we of course didn’t realize back then was how long it would actually take for the bubble to burst.

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The Wheels Are Coming Off

If you seek to plot a way out of a particular conundrum you may have found yourself in it’s always advisable to take a step back and figure out what got you into that pickle in the first place. However if one would attempt to take stock of the sheer number of misguided and short sighted policy decisions taken over the course of the past decade across the board I fear it would probably end up filling a volume as thick as Tolstoy’s War And Peace. So the real question we may need to ask ourselves is why the heck things haven’t blown up in our faces already many years ago.

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Breaking Point

Throughout my trading career I’ve never been much of a perma-bear, mainly because I have a basic understanding of math and statistical probability in particular. In case you are unaware of a few simple realities of life allow me to share a few salient data points for your general edification: In essence throughout your average trading career only about 11% of your time is spent in downside corrections, the rest is either sideways or advancing tape.

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Dollar Rocket

Reports about run-away inflation in the MSM have been rampant over the past few months, so it may be a wee bit surprising to some to realize that the U.S. Dollar has been on a massive tear lately. Although cognitive dissonance has long become a mainstay in the financial media such a glaring disconnect between some obvious facts of life and the current advance observed in the DXY is bound to raise a few eyebrows. So allow me to be the one to burst your collective bubble regarding the strengthening of our U.S. reserve currency.

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Inversion Pains

All is not well in paradise as the world awaits today’s FOMC announcement with bated breath. Already leaked comments from U.S. Federal Reserve officials managed to spook the U.S. futures market on reports of a three-year plan to trim several trillion dollars from the stash of assets purchased to stabilize financial markets and move to tighten credit and lower inflation.

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The Next Frontier

After three months of having to endure another frustrating prison term in crypto purgatory two important inflection points – both in BTC and ETH – were suddenly breached on Sunday night. As a result over $100 Million worth of over leveraged short positions where effectively taken to the woodshed in one single session. With the momentum effect once again active across the entire crypto market the overarching sentiment among crypto investors and traders has now flipped from FUD back to FOMO.

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Signs Of Recession

After half a century of economic expansion the prospect of recession is once again rearing its ugly head, except this time around it promises to be unlike anything any contemporary has ever experienced before. Back in the 1970s we at least had the benefit of great music, fun movies, and top notch comedy with which to console ourselves whilst waiting in line at the gas station. This time around we’re also being treated to food shortages and the growing possibility of WW3 involving Russia and China. Interesting times indeed!

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The Fed Sees Its Shadow

Well that was easy! All it took was a full scale Russian invasion of Ukraine in combination with run away double digit inflation across the entire Western hemisphere for our friends at the Federal Reserve to jump into action and raise the FFR by a whopping 25 basis points. Undoubtedly that should do the trick and I am very much looking forward to paying $3.00 at the pump again as early as next week. For one liter that is – not one gallon.

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The Art Of Hedging

I have long given up trying to make sense out of the giant mess the world as a whole now seems to have maneuvered itself into. While the respective political camps are engaged in an information war eager to point fingers at each other keep in mind that none of that will change the realities on the ground. Which are now becoming ever more sinister by the day. It is my sincere belief that a large part of what is currently unfolding is self-inflicted and the direct result of a long and apparently never ending sequence of bad decisions, all of which are now in the process of converging into an economic disaster of biblical proportions.

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SHTF

If there’s one salient lesson I have learned in my life it’s that most people are completely wrong most of the time, especially when it comes to assessing the importance and future outcome of current affairs. I know this may sound somewhat elitist but it’s an all encompassing observation I have made on numerous occasion in my life, and as such it has become a core tenet that in year’s past has saved me from financial ruin many times over.

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