Critical Market Moments

Don’t let a dead cat bounce fool you…

What we’re seeing now is the prelude to carnage.

Never have the markets had such a shock where economies and critical supply chains have all stretched to critical mass.

Every new day seems to bring increased panic and downside.

Maximum loads are tested daily – at airports, hospitals, and grocery stores. “Back to normal” post-pandemic is proving a challenge.

Add inflation that a whole generation has never experienced to that – and you have major failure points.

Market Meltdown

On a comparative basis to this market melt, only the 2008 crash compares.

The charts look eerily similar, and a meltdown seems imminent…

Internal Charts Show Treasury Agency Assigned to Measure Risk in U.S. Markets Slept through the Repo Crisis of 2019 and the Fed’s $19.87 Trillion Bailout

By Pam Martens and Russ Martens: July 7, 2022 ~

The Office of Financial Research (OFR), a unit of the U.S. Treasury Department, was created under the Dodd-Frank financial reform legislation of 2010. Its job is to prevent, through early warnings, the kind of catastrophic financial crisis that occurred in 2008 when irresponsible and corrupt practices on Wall Street toppled the U.S. economy; brought on the deepest financial crisis since the Great Depression; and left the taxpayer and Fed bailing out the Wall Street megabanks that would have otherwise collapsed from their own hubris.

Unfortunately, the OFR was savagely gutted under the Trump administration. Today, OFR is like the cop on the beat that has been stripped of his whistle, his walkie-talkie and is wearing dark sun glasses on a cloudy day.

One of the tools that the OFR is supposed to use to warn federal regulators that Wall Street is heading toward another trainwreck is the Financial Stress Index (FSI). This is how the OFR describes that Index:

Combat Interest Rate Hikes With This Simple Tool

By Andrey Dashkov, analyst, Casey Research

Interest rates are about to go up higher and faster than many investors think.

The Fed has released its June meeting notes, and they suggest that hikes are far from over. In fact, future hikes could be on the higher side: 0.75 percentage points and more.

That’s because the Fed is behind the curve. Its original prediction that inflation is transitory has clearly been wrong.

In May, annual inflation reached 8.6%. Some components of the Consumer Price Index soared much more, however. Food became 10.1% more expensive compared to May 2021, while the energy index rose 34.6% year-over-year.

What’s more, the Fed has changed the narrative around inflation and how it plans to deal with it. The Fed now wants to pacify the market and do whatever is necessary to bring down inflation.

Even if it means higher and faster interest rate hikes.

Housing Bubble Getting Ready to Pop: Pending Sales Plunge in June, Inventory Jumps, Price Reductions Spike amid Holy-Moly Mortgage Rates

Pent-up supply suddenly shows up – those vacant homes that no one was counting as vacant.

By Wolf Richter for WOLF STREET.

For the last two years, the story was that there’s no inventory for sale, that there was a housing shortage, and that’s why prices were skyrocketing. Then there were other folks like me that pointed out over and over again that people weren’t putting their old homes on the market after they’d bought a new home, and that these people now owned two or three homes and that they were going to ride up the hottest real estate market ever where prices soared 20% or 30% or more per year, and then they’d sell those vacant homes which no one had ever counted as vacant.

And because they already lived in a home, they could sell their vacant homes without having to buy another home. This is the “shadow inventory” that is now coming on the market, just when mortgage rates have spiked, and sales are plunging. And to get things moving, price reductions are spiking.

Bitcoin price spikes to $20K as whale bought BTC confirms support

Bitcoin bounces to five-day highs while Ethereum rises above the $1,100 mark.

Bitcoin price spikes to $20K as whale bought BTC confirms supportMARKET UPDATE

Bitcoin (BTC) rose to clip $20,000 for the first time in five days on July 4 as the Independence Day holiday brought some unexpected gains.

BTC/USD 1-hour candle chart. Source: Tradingview.com

$20,000 briefly reappears

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD spiking to $20,085 on the day, its best performance since June 30.

The pair had spent most of the holiday weekend at around $19,000, but the absence of Wall Street trading ultimately proved no obstacle for bulls.

Thinner weekend order books likely exacerbated volatility compared to underlying volumes, but nonetheless, Bitcoin was up 3% on the day at the time of writing.

Prepare for War, Higher Energy Prices & Significant Civil Unrest -Martin Armstrong

Legendary financial and geopolitical cycle analyst Martin Armstrong says, “If my computer had legs, it would hide under my bed.”  That’s how bad things are looking for the rest of 2022 and 2023, according to Armstrong’s “Socrates” program that foresees future geopolitical and economic trends and events.  Let’s start with war that is already underway with Russia.  Armstrong says, “They wanted war.  It’s all been provoked, and it’s intentional. . .”

Armstrong points out, “Ukraine President Zelensky already has hundreds of millions of dollars stashed off-shore.  He’s been offered a golden parachute, and he’s willing to fight until the last Ukrainian dies on the battlefield.  This is nothing more than a proxy war between the United States and Russia, and they know that.  Russia knows Ukraine is not the enemy.  It is the United States.”

Despite Its Pullback, Bitcoin Is Still a Hedge Against Inflation

By Teeka Tiwari

Since the pandemic began in March 2020, the federal government has injected nearly $9 trillion into the economy.

The money helped prop up the economy. But it came at a cost: Sky-high inflation.

Today, inflation is at a record-high 8.6%. Everything from gas… to food… to furniture costs much more than it did two years ago.

To combat the economic fallout from the pandemic, the Federal Reserve pumped more new currency into the U.S. economy than it had issued in the previous 14 years combined.

And as the Fed printed more money, the rest of the dollars we held became worth far less.

It’s simple supply and demand… the more you have of something, the less it’s worth.

Imagine if Apple doubled its share count tomorrow without a corresponding rise in revenue and profits. What would happen to the price of the stock?

Its value would get cut in half.

It’s Not a Turndown, It’s a Takedown – Catherine Austin Fitts

By Greg Hunter’s USAWatchdog.com (Saturday Night Post)

Catherine Austin Fitts (CAF), Publisher of The Solari Report and former Assistant Secretary of Housing (Bush 41 Admin.), contends this is what the so-called “reset” looks like. High food and fuel prices along with crushing interest rates are no accident. CAF explains, “To me, this is part of the ‘going direct reset.’ There is an official narrative, and the official narrative is they’ve got to stop inflation. . . . Let’s look very simply at what happened. They voted on the direct reset. Then they injected $5 trillion into the economy that went to the insiders. Then they used Covid to shut down the economy run by the outsiders. Now, the outsiders want to open another business, and they are going to radically raise the cost of capital to the outsiders. What’s going to happen is that $5 trillion is going to buy more assets more cheaply. To me, this is part of centralizing the control of the economy. They are asserting very significant central control. This is not a turndown–this is a takedown.”

These People Never Learn

By James Rickards

Here’s the good news: The stock market didn’t lose nearly as much today as it did yesterday. The Nasdaq even posted a 19-point gain.

Of course the Dow still lost another 151 points and the S&P lost another 14. The S&P slipped into bear market territory yesterday, which doesn’t bode well for the economy.

Since 1970, whenever the stock market fell 18% or more over a four-month time frame, the economy fell into recession every time. Well, that’s exactly what we’ve seen.

But after yesterday’s bloodbath, I heard a well-regarded business TV anchor ask her guest about “green shoots.”

I nearly fell out of my chair, laughing. These people never learn.

Crypto-Carnage Hits Every Asset Class Tied to Crypto

By Pam Martens and Russ Martens: June 14, 2022 ~

It wasn’t just cryptocurrencies that crashed yesterday, it was crypto exchanges, crypto mining stocks, publicly-traded companies holding large investments in crypto, and crypto ETFs.

By the time the closing bell rang yesterday, ProShares Bitcoin Strategy ETF had tanked by 20.22 percent on the day, bringing its year-to-date loss to 50.4 percent. Other crypto-related ETFs were similarly hammered. VanEck Bitcoin Strategy ETF gave up 19.86 percent, bringing its year-to-date loss to 53 percent.

Shares of crypto mining stocks, which were already battered and bruised, were further bloodied. Among the worst of the lot was BIT Mining Ltd. (ticker BTCM) which plunged 36.60 percent yesterday, bringing its year-to-date loss to 79.9 percent.