MARKETS IN TURMOIL AS GENERAL ECONOMY DESCENDS INTO CALAMITY

SIRS —

It’s over again. In the after hours CSCO missed and its shares are now off by 15%. This is standard stuff and we are soon to be ENTREATED to widespread earnings misses. This will CRASH the respective stocks, but perhaps get us into a twilight zone of normality, as we await the second half of 2022 sales projections to hit. I am not bullish, but maintain the position to trade bottoms when I see it. At this point, I am only using Stocklabs mean reversion for those oversold conditions, since the algorithms are geared to adjust to stress levels that a mere human mind cannot begin to fathom.

I gains 3bps today, mostly thanks to my oversized SQQQ position. I closed nearly 70% cash, a position in treasuries, dry bulk rates, and also 10% long in MOS.

According to text book, we should see a plunge at the open and then an attempt to bottom. Given the stark fundamentals we are facing, I would expect all rallies to fail, as pension funds and managers liquidate into rallies according to their mandates. We are in a period of deleveraging and malinvestment. In order to correct that, we might in fact overshoot to the downside.

I fully expect 20% lower from here as a base case and as much as 50% down under the conditions of a NATO loss in Ukraine. It’s relevant to consider the global impact of being humiliated in Ukraine and the recent gains by Russia against Ukr forces should give anyone rooting for the west pause.