What the fuck is going on in here? Let’s review.
The euro is up 0.8% v the dollar, suggesting either we will not tighten or they will too. Perhaps a slowdown in big tech is all the Fed needs to justify inaction?
But if that were the case, why the fuck are yields soaring today? The 10yr is up 7bps to 1.83%. The last time rates got off the floor was 2018, at which point the 10yr soared above 3% before coming back down.
Oil is undeterred. In spite of market weakness, the price is oil is barely down, pinned to highs.
Today’s market weakness is concentrated in big tech, with small caps doing better.
SAAS and all of the great high growth plays are quickly racing to become value stocks.
I made a few minor adjustments this morning but more or less kept everything intact, heavily hedged with TZA. I probably should sell TZA and man up and let my stocks run freely. All of these cross currents is somewhat insane and the fact we are seeing weakness is earnings now should create a new danger to holding stocks. However, the one silver lining is we are seeing economic weakness which can provide the Fed with a one and done approach to rates because tightening into a downturn is purely nonsensical.
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Yeah but earnings are collapsing because margins are coming under pressure and shortages are slowing sales rates (excluding the pandemic stonks which received 1x boosts that are unwinding).
Demand remains very high. Especially for goods. I don’t think this is the kind of economic weakness the Fed can assume leads to deflation.
The worst outcome remains: earnings and pe multiples get shattered and then the economy trudges along anyway.
Hah commodities fighting for green. Hilarious.
No deflation, but you’ll see some disinflation. With the Fed behind (obviously) how could we not expect Fed overreach at this point? For credibility alone! Do you fight inflation or are you truly just shilling for Wall Street?
For more inflation you’d have to expect current levels of inflation are headed for 8%? 9%? 10%? from here…no no. Could be a 2H’22 story, but we’re near or at peak inflation expectations almost assuredly. It may not be until we see several Pct points lower in SP500 and CPI until the Fed reaches back for Wall St.
Laughable! No downturns are to be permitted. Tightening long, long, overdue.