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.
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.
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.
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.
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!
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.
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.
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.
If you are new to trading then you may be wondering what all those red candles mean you suddenly keep seeing all over the place. Well, let me tell you a tale of a long forgotten place and time when market corrections were a regular occurrence and served to prevent excessive greed and hubris to prolong for more than mere fleeting moments. The rare times it happened were feared by all but then quickly ignored and soon forgotten nonetheless. This cyclical ebb and flow of the financial markets worked well for a few centuries until one day back on September 15 of 2008 when the Federal Reserve decided that market corrections were a thing of the past and thus henceforth were considered ‘verboten’.
It’s finally official: Inflation is out of control with last week’s consumer price index (CPI) reporting a jump to a whopping 7.5%. This is the fastest surge in the past 40 years but let’s not kid ourselves, that is AFTER the numbers have been thoroughly massaged and finagled to look as rosy as possible. The truth is most likely much more dire. I personally would pin running inflation at 10% or perhaps as high as 14% simply judging by fuel prices as well as basic cost of living expenses which continue to explode higher.