27 May 2021
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US Mortgage Applications back at full covid crisis levels.
It is amazing just how much trouble the US economy is in, with hardly anyone in 'ivory tower Wall St world’ noticing at all. It is a pack of cards about to collapse. No apology, better to warn you, than let markets get away from you to the downside.
Just want to tell you that stocks maintain a 'just keep selling' look.
AUS200 hourly above, and US markets in general, are simply not inspiring price action formations. Combined with the market's complete mis-think on the reality of the US and global economy, it is not hard to work out in which direction the predominant risk is pointing.
Sometimes you just have to sit and think for a bit.
The market in the US did an excellent job of recovering from a quite damaging sell-off. While Australia continued to head in the direction of my at risk warnings.
What I think is happening, is certainly some degree of buyer exhaustion, but also a reduced enthusiasm to desperately buy absolutely any dip, as had previously existed in this quite incredible bull market from covid lows.
This is likely to see some broad range trading at current levels, followed by a slipping away process to the downside, rather than overly dramatic vertical drops. Though these cannot be entirely ruled out either.
18 May 2021
BITCOIN FALL IS NOT JUST MUSK
Just a quick comment here, as I have been warning of crypto vulnerabilities across the board and particularly Bitcoin. Bitcoin's demise will not be a result of Elon Musk tweets. His tweets merely draw the panic stricken day traders who hang on any latest headline. The long term fundamental outlook for Bitcoin is not good. The tweets of Musk may well act as a catalyst for holders to take pause and reconsider.
ITALY THE WORLD OPENING UP
Everyone was forecasting a firm economic recovery way too early. However, we may now be steadily getting back toward whatever that new normal will be.
Still though, after all the initial euphoria of economic prosperity coming out of the pandemic, too much 'expectation' is currently priced into stock markets. My cautionary approach to equities overall remains in place.
Starting to run on the spot, not too sure which way to go. Stepping back, this still looks like a bounce only, as it struggles to kick on here only around half way back to the previous high. Short term traders will be watching the range of the past two days for a clearer indication of direction. I do favour the downside.
Of course, it could be a consolidation phase to kick higher, but given the unbridled relentless positive sentiment, it should already be higher Fundamentally, the economy is highly over-rated, with immigration and travel restrictions likely to continue longer than we all would like.
It was a choppy period recently, as all consolidation periods are, after a major price shift. We started favouring Gold again more recently. It looks to have steadied enough to perhaps launch into another long term shift to the upside. The volatility could still be high, but having a small core long position should deliver quite strongly in the long term.
14 MAY 2021
we did get that expected bounce.
What was happening yesterday, and very likely today, is that everyone in the world who needs to buy, and believes as is the current religion that you buy on any dip, well, they will be doing exactly that. That entire section of the market, will believe the low has now been seen.
This is why this bounce is so important to watch. Any failure, and falling back in on itself price action at this point, will indicate broad buyer exhaustion. Clearing a path for further sharp declines.
With the tech sector so clearly still under pressure however, the bounce in the broader market is not yet convincing enough to unwind the overall downside risk for equities at this stage.
The Australian market remains over-flowing with bullish sentiment. I still see this as a massive top formation. Yesterday's low, now becomes very important. Every fund manager and trader will be setting their stop loss orders on their fresh long positions just below there. Well worth keeping an eye on from a strategic perspective.
US NEW JOBLESS CLAIMS
US data, as always painted with a positive spin, but new jobless claims are still around twice what they were. Good progress in lower jobless claims to be sure, but just because the number of people losing their jobs is less, does not mean there is a lot of hiring going on.
US PRODUCER PRICES
Producer prices continued to climb alarmingly. Suggesting there is even more inflation down the track.
13 MAY 2021
as suggested, it was best to just sit back and watch. What a view. The US market still has that 'world caught long' look about it. A reasonable bounce is becoming due, in the next 24-48 hours. If that fails to eventuate, then this really is a serious crash market.
The Australian market held up a little on the back of the Federal Budget. No surprise there, but all those traders who positioned for instant reward as if the budget would be a surprise, may now still be caught long.
The Australian market really does look like it can have a serious collapse, of a greater quantum, at any time.
Precariously hanging over the edge of a cliff.
Continues a big fall, and as suggested two days ago, this is probably a huge change for some time to come.
Continuing an already well established downtrend.
US INFLATION TRENDING
US inflation accelerates, which I wrote about a year ago. Supply chain disruption means higher costs across the board, and when combined with government stimulus, is a no brainer.
11 MAY 2021
3 YEAR STOCK CRASH
This is the Dow Jones, day one, the tech sector has been falling for weeks,
and now the broad market is turning to follow.
10 March 2009 went on the record, news media etc, forecasting a 5-15 year new grand bull market in stocks had started, then to 30,000 by 2020, unbelievably accurate. Last year, got it wrong. Today, I am raising the flag on the possibility that we just saw day one of a 3 year crash. Cannot get everything right, but everyone should begin to factor this kind of scenario into their portfolio management.
10 MAY 2021
A SPECIAL NOTE ON THE
PRIME MINISTER OF AUSTRALIA.
PM SCOTT MORRISON INCREASINGLY LOOKS LIKE
THROWING THE NEXT ELECTION AWAY.
Talk about surprises, but the more he puffs himself up on social media, the more fair dinkum Australians will turn against him.
Being on holidays in Hawaii and not immediately rushing back, (why would a PM holiday overseas in the first place), I know, poor judgement. Then, slow to come back. Didn't handle it well at first. While largely a state issue, very poor optics as they say. More recently, swept under the carpet by the mainstream media, but more soundly registered by working families than the government would like, was Mr Scrooge with the Jobseeker rate. Completely ignoring the OECD and all charity organisations opinions. That was diabolical. Tax payers have to support cafe owners, but scrooge the real un-employed who are really suffering.
Without the stimulus response to covid, there would be no feather in the cap to speak of, just scattered feathers on the ground perhaps. Is anyone in the Liberal Party noticing they are throwing government away. Perhaps they know they cannot do anything about it anyway. As the PM will continue on his Church sing-song while going hard on the poor?
And let's not mention destroying decades of hard work by both sides of politics for Australia to have a very fortunate 'friend' relationship with China.
Current and future Australians are in for an unpleasant wake up call. That is, the economy over the next 5-10 years. It was this government. I voted for the guy, and just another in the long list of Australian PM disappointments. Un-interrupted, even by changes of Government, for a very long time now. I guess politics really doesn't pay enough to attract the best people anymore.
Having correctly forecast Trump, Morrison and Biden to win, all months in advance, I am not quite there in forecasting Anthony Albanese, who I attended Sydney University with, to win just yet. My point at that moment, is that this possibility of a change of government is looming fast. Like a speeding freight train coming down the track, if left to late to stop, it will not be stopped.
If the Liberals are taking refuge in the polls? Think again. I forecast Trump and Morrison to win previously, well against the polls.
Elon Musk has said what I made special mention of a week or two ago. Dogecoin fell 28% yesterday. We are not trading Dogecoin, though we did warn about it's false rally.
We are short Coinbase. The big float that every one was raving about, but has only gone down since it was listed.
US JOBS GROWTH
We seem to be the only ones getting the US economy run of data right at the moment. Again, and again, the financial media is reporting that various data releases were a surprise, and the market acts as if it will not last. Yet, the weakness of the US economy is only going to become more profound and difficult to rectify over the coming twelve months.
The Stimulus Mask is wearing out.
US HOUSING BUBBLE PEAKING
This is a grab from the Wall Street Jounal.
It is significant, because it is the first crack in the financial media positive painting of the property market. The first sign of media coverage emerging of what I have been saying for six months or more. The US is approaching, or at the top, of its second great property market bubble in our life times.
Startling last 45 minute rally from near the low of the day to a strong high. From a price action perspective, definitely looks bullish, but even so, this could be the right shoulder of a major head and shoulders formation pattern that is now developing.
Making an effort to at least consolidate the recent losses. By no means signaling great confidence as yet.
The China directive, outlined by the flash report yesterday, continued to weigh on the Australian market while the US market enjoyed that late rally. Some morning strength on back of the US market could be seen today. The thing is, there are going to be some big global funds that simply do not like how the China Australian relationship is shaping up. Remaining of the view that rallies are to be sold.
US NEW JOBLESS CLAIMS
It is a snappy heading is it not? Yet, this is exactly what we have been expecting, a run of mis-leading look how good the data is spins, that do not reflect reality as much as one might hope. Of course it is a new one year low. The US was in covid crisis mode one year ago. So the base from which the statement is made, is one that was diabolical. The true comparison should be for absolute numbers relative to the pre-covid period to get a more accurate handle on things. New jobless claims from that perspective, are still at extremely concerning levels. Suggesting significant problems in the economy are continuing to force a high rate of laying workers off.
Productivity, good to see, is being pushed higher. However, this emphasises the need to make businesses profitable with minimal staffing, that continues to sweep the country.
BREAKING NEWS 6 MAY 2021
The market may not be able to fully comprehend this, but this directive will see another very sharp slow down in orders for Australian exports, from China. This is about AS BAD AS IT GETS for Australia.
It will be years before this relationship will even look like being mended. And we just fell off a cliff into an abyss where the bottom of this falling apart relationship is a distinct unknown. At some point, people may ‘get' what has just happened.
Having been in the same small meeting room as China’s Finance Minister, and head of the PBOC, I can tell you such decisions/directives have tectonic plate significance with all Chinese institutions, businesses and consumers.
The Australian economic and market community just doesn’t get it.
However, when the penny drops, the market could begin to gap lower.
The rest of the world may even begin selling us,
before the local market has figured out what is going on.
6 MAY 2021
UBER LONG TERM RISKS
My warning of a few days ago, that the Uber business model faces long term decay risks, as does the stock price, remains in place.
Will struggle to maintain this marginal new high.
A very different and troubling story.
Looks a bit like a snowflake, and its Australia?
US ISM NON-MANUFACTURING SERVICES INDEX
Representing the bulk of the US economy, there are signs that the best is already behind the USA. While still at very high levels, this strong period has not been an offset to the covid period contraction losses.
US NEW MORTGAGE APPLICATIONS
Continue to decline, pointing to a not too happy future property market.
5 MAY 2021
WARREN BUFFETT AND MR. MUNGER,
When asked about crypto currencies a couple of days ago.
Buffett: “We’ve probably got hundreds of thousands watching this that own bitcoin, and we’ve probably got two people that are short,”
“So we have a choice of making 400,000 people mad at us and unhappy, or making two people happy, and that’s just a dumb equation.”
Munger: “I don't welcome currency that is so useful to kidnappers and extortionists,”
Impressive rebound. Favour it tiring yet again around these levels.
And down it goes, just as we suspected. Favour continued selling.
Favour a fast collapse developing over coming weeks.
US TRADE DEFICIT LARGEST ON RECORD
Now this is a trending development, and is going in the exact opposite direction to the US dollar. For now though, both trends look to be intact. What this data shows is that the US is borrowing from the world to maintain a stimulus lifestyle out of step with its real underlying economic problems.
VOLCANO BRINGS ACID RAIN
Volcanic eruption in the Caribbean brings massive amounts, climate changing levels, of sulphur dioxide into the atmosphere. Generating acid rain in India.
We humans need to keep the fight against our own pollution, but we cannot change the course of the planet’s own natural cycles.
RESERVE BANK OF AUSTRALIA CASH RATE
The economy was already needing rescue levels of monetary policy, before the covid crisis hit. The mask of stimulus measures is a very dangerous thing indeed.
AUSTRALIAN TRADE BALANCE
Is all over the place at the moment, only nar=tyural, given the dislocated state of global trade. We cannot read too much into each data point, but we should not assume an on-going improvement.
4 MAY 2021
BREAKING NEWS: BITCOIN IS IN SERIOUS TROUBLE TOP OUT PRICE ACTION MODE. EVEN IF CENTRAL BANKS CREATE CRYPTOS, THAT IS ADDING TO THE END OF BITCOIN. WHY DO PEOPLE KEEP TELLING LIES ABOUT ITS REASONS FOR BEING. IT IS HACKABLE, EVERY GOVERNMENT MINES IT AND SO HAS FULL ACCESS TO ALL YOUR TRANSACTIONS, THE REAL ECONOMY IS NOT COMING TO AN END AND NEITHER ARE NATIONAL CURRENCIES.
ITS NOT A REBELLION. ITS A FOOLS GAME. DEPENDING ON MORE FOOLS TO JOIN THE HERD, BUT WHAT HAPPENS WHEN THERE ARE NO FOOLS LEFT? ITS A CASINO. PLAY IF YOU WANT. IT HAS BETTER ODDS OF MAKING MONEY THAN A CASINO, BUT REMEMBER THE GREAT MAJORITY MUST LOSE, FOR THE FEW TO MAKE THE BIG RETURNS.
OH NO !!! OVER THE WEEKEND, I HEARD OF A GENTLEMAN WHO WALKED INTO A REAL ESTATE AGENT, AND WANTS TO SELL HIS INVESTMENT PROPERTY AS QUICKLY AS POSSIBLE? TO BUY BITCOIN???
THIS IS MANIA REALLY STARTING TO HIT PEAKS OF PARTICIPATION. NO DOUBT GOING THE WAY OF THE TULIP BULB. DID THEY EVER MAKE A COME BACK AFTER BEING WORTH MORE THAN A HOUSE AT ONE STAGE?
Pulling back after reaching for the sky of a new high.
Give me a break, this looks terrrible.
US MANUFACTURING ROLLS OVER TOO
Drops in production, new orders, and employment.
US CONSTRUCTION BARELY BOUNCES
I keep warning, the US is in the grip of the last stages of a housing boom similar to the GFC, and absolutely no one else is seeing it.
3 MAY 2021
PUBLIC HOLIDAY IN QUEENSLAND >
MODEL X WILL BE PUBLISHED TOMORROW FOR MEMBERS.
MARKET LOOKS MORE AND MORE LIKE A TOP, IN A VOLATILE FASHION.
30 APRIL 2021
The US economy, it is hoped, will return to pre-covid levels this year.
It is still not there, despite near zero rates and the equivalent of 30% normal GDP having been injected through stimulus measures. How anyone cam be celebrating the state of the US economy is mind boggling.
You probably just did the math, would the US economy still be down 30% without stimulus measures. Is that where the real sustainable base level of the US economy is? Scary thought, but probably not. Suggest the real US economy at the moment is -10% on precovid. In other words, serious challenges and deficits exist.
This is why President Biden said the US has a "profoundly unbalanced economy" at the moment
The new economic agenda has plenty of positives, but also significant fault lines in the overall philosophy of tax more/spend more.
It all suggests that America is living on spin, and will continue to do so for some time.
The stock market has done all it can to support the spin story, but is increasingly tired as the muted on the day response to the latest data shows.
6.4% is a good headline number, but it is annualised and will most certainly fall back sharply as the economy continues to struggle to return to precovid. When the bulls were saying it would be all over in 3 months, I did keep forecasting that it would take 12-18 months. We have been correct on the economics, but not the market. Nonetheless, the loss of stock price momentum signals are becoming ever more apparent just now.
I think Uber's business model has long term decay problems, and the stock price is signaling warning signs as well.
Has paused for a couple of weeks now, and no new high yet on the GDP data?
Continued local market mega enthusiasm on the sentiment front, yet a real price action struggle over the past two weeks. Fvaour selling.
US PENDING MORTGAGE APPLICATIONS
Looks like a recovery, but isn't. Simply moved into the year ago at the start of the crisis comparison. When everyone froze at first. On a monthly basis, pending applications were only up 1.9%, after falling 11.5% the month before. Continues to look like the early stages of another major property crisis in the USA.
US SINGLE FAMILY HOMES
Fannie Mae Fannie Mac single family homes with mortgages prices. Article above.
28 APRIL 2021
US HOUSE PRICES ACCELERATED THEIR WELL ESTABLISHED TREND OF A POST GFC LOW INTEREST RATE ENVIRONMENT.
The impact of the covid crisis was not what we initially thought it would be, but is it sustainable.
While the headlines focussed on the further gain in the on year price increases, looking at the monthly data below, the Fannie Mae Fannie Mac average single family homes with mortgages prices, there are warning signs. If this roll-over continues, then we may move toward another GFC style housing crisis. This time, again created, though by a different mechanism, by a too easy borrowing environment.
This is a very early call, but it is worth keeping in mind. Especially, if stocks begin to top out, as I expect they will. For the moment the data is still weakening in positive territory, but clearly there is a shift taking place. Combined with momentary strong building starts, but a sharply declining overall new mortgages trend, prices could be falling back by year end.
US SINGLE FAMILY HOMES
Fannie Mae Fannie Mac single family homes with mortgages prices. Article above.
US EXISTING HOME SALES
Running out of steam. All the lockdown buying of goods really appears to be well and truly over. It is going to be a steadily suppressed economic environment for some time now. This view, despite all the euphoria about a booming economy on Wall Street.
REAL HORROR IN INDIA
And the official numbers greatly under-estimate the true daily death toll. Thoughts to the people of India. The peak of this wave is still many weeks away, and to be honest even if the oxygen crisis is resolved now, what if the numbers continue to skyrocket.