(For What It’s Worth)
In light of the current machinations transpiring within the “markets,” I thought I’d update a few observations for those that may want to know. (aka: “What I’m watching”)
Let me first start out by noting these “markets,” from a technical analysis viewpoint, have been diabolically frustrating since the advent of central bank interventionism and assimilation. Although I can “chart” with the best of them, and have. Some of those I consider “the best” have themselves been totally perplexed. i.e., Just when you think you’ve got the dealer beat as you’re sitting on “20” in Blackjack. The dealer, siting on “19” made from seven cards, then draws a “deuce” – for the 296th time in a row. What are the odds, right?
Welcome to today’s “markets.”
Another way expressing it comes from the old adage of Wall Street, that goes like this…
When a monkey can throw darts at a board of ticker symbols and come up “winning” every-time. People don’t ask themselves if there’s something wrong with the markets. No, what they will ask is: “What’s the name of the monkey, and is he taking new clients?”Paraphrase of a Wall Street idiom
That’s where we are. And we’ve been here for over a decade. But, I believe there are real warning signs that have shown themselves, yet the entirety of the business/financial mainstream media seems to have no interest in covering. i.e., They’re too busy booking “The Monkey” for interviews and insight.
Here’s just one example…
Are you aware that we’ve had one of the most spectacular hedge fund collapse (Archegos™) since the one that previously took down the markets back in the 1990’s known as “Long Term Capital Management?”
Hmmmmm, you would think that would be a big deal, correct? Hint: _______________ (insert crickets here)
Over the past few weeks a hedge fund by the name of Archegos has been at the center of the “hot potato universe,” when it suddenly collapsed due to its taking extreme risk with highly leveraged positions, legally, yet were invisible (aka “no need to report”) to the regulatory agencies such as the SEC (Security Exchange Committee) and others.
Then, suddenly, surprise! Banks, just as suddenly, found they were on the hook for $Billions and $Billions and $Billions of losses in transactions they didn’t fully understand themselves and a “dumping of dumpings” began in what some estimate was near a $100 Billion margin call. (some believe it may be even more)
This entire scenario is so reminiscent of one of my favorite movies “Margin Call” (2011, Lions Gate) it’s scary. If you’ve never watched it, you should, for that’s basically what just happened.
The scary point here is: it may not be over. i.e., Others are now openly positing another old adage that involves “cockroaches.” i.e., There’s never just one.
Here’s what I mean…
It appears that the person running this hedge fund (Bill Hwang) happens to be both an inspiration, as well as a backer, of another media darling. Care to know who? Hint: starts with Cathie, ends with Wood of Ark Invest™, aka Tesla™ biggest fan and evangelist.
Can you say “Wait…What?” Hint: many just did, and are.
Another issue here, as spectacular as this latest is, – it’s far from the only one that’s already taken place. i.e., These are suddenly happening everywhere – and they are not “small potatoes.”
In the U.K. you just had another spectacular blowup with Greensill Capital™ that has ensnared former PM David Cameron in a public probe. What it also ensnared are Banks with sudden losses worth $Billions. Again, past media darling with it’s founder receiving high honors and award from the British Crown. Now? What’s a “Greensill?” Funny how that happens, no?
There are more, many more, and yes, recent. But the entire media seems to be far more “hard at work” still trying to book an interview with “The Monkey” then trying to report anything more than a conciliatory headline, and get back to work getting the monkey’s agent on the line.
Here’s what I believe (and been warning) is the root cause of all this sudden turmoil: Interest rates on short term bonds, a necessary mechanism for carry-trades of leverage – regardless of what the Fed wanted, over last few months, has already done its damage. We’re now only seeing what can not be held up behind the scenes any longer. i.e., Significant structural parts of the “market” have not only blown up, they’re continuing.
All my conjecture, of course.
Now, the opposite effect may be transpiring, where we’re seeing a sudden reduction in Yields may be more of a sign for “getting outta Dodge” and markets begin piling into Bonds.
That’s a double whammy for this “priced for perfection” market running into an earnings season that may only hold pockets of good news when it needs everyday extravaganzas.
As always, we shall see. But, as I sit here currently I’ll just put up the latest rendition of the chart I’ve been watching and you can decide if I placed my lines where I felt the “market” was paying attention, all the while remembering, I originally drew them months ago.To wit:
Remember: I don’t “draw the lines” – the market does. I just try and connect the dots.
© 2021 Mark St.Cyr
Note: This is not trading or investing advice of any sort. This commentary is for “big picture” discussion purposes only. Please read, or re-read the “About This Site” page for any questions or clarifications.