SPX | What goes up...

5 thg 2, 2023

...must come down.

Conservation of Energy

We all know QE... The god-given gift which made everyone rich! Well, not everyone...

Consumers sure took a hit. But who cares about them?


We want corporations rich! And they got rich.

And boy some of them did go rich... That's the beauty of the American Dream!

Sure we were cheating...


...but look at all this money we made!

Violets are green, dollars are green, stocks are green, everything is green!

And stocks are everything!

(This chart shows the stock market "dominance". How much of the wealth one can have is inside the stock market.)

And now everything is inside crypto.


We are all-in. In a Poker Game where The House always wins.


After all that fun party, it is time for the bill, not clinton bill, not treasury bill, not dollar bill.
It is time for debt to get paid. As always, nature will do it's trick... Nature seeks equilibrium.
Entropy.

When we cheat and inflate, it comes and deflates.


Nature is a closed circuit. When some deflate, others inflate.


And the cycle goes on...


Tread lightly, for this is hallowed ground.
-Father Grigori

6 thg 2, 2023

Ghi chú

If you are interested at the rules of the Poker Game:

We have an indication as to why the SPX/yields chart is a clearer indication for stock market bubbly-ness. This is the explanation, the thought process of the FED.

First SPX grows. When SPX keeps growing, FED raises rates because they smell money. If SPX shows signs of weakness or recession, FED reduces rates in an attempt to steer SPX back in the upwards trend. When SPX recovers, the trend continues.

The only thing that guides the FED into deciding rates is "divergence from trend".
When SPX is too strong, it increases rates to take a piece of the pie. When SPX is too weak, it decreases rates to stimulate SPX. FED is there to keep SPX glued to the trend.

SPX is stuck in the trend.


While in reality, SPX has clearly diverted from it's trend, creating a long-term bubble. The bubble is thanks to progressively lower yields.

6 thg 2, 2023

Ghi chú

Oops made a mistake, even consumers got rich during QE! All was well then! Now I fear it might not be that well for consumers...