Replies to post #24633 on Cycle Trading

[farooq]

It is very rare that inflation and recession co-exist. To stop inflation Fed may end up inducing recession. One Question, anyone have any example of recession with this high employment rate?
We are in these Circumstances because of leaders, Ukraine war and fight with China.
Supply is really bad from China and because of Russia NGas and Gasoline are cause of uncertainty and inflation hike.
I think bottom forming will start soon or may have started as of this writing.

[No-Quarter]

I tend to agree we are in for a recession, but first one more run up. Quantitive tightening begins June 1st.

The below quote from here - https://www.reuters.com/business/feds-qt-plan-then-now-2022-04-06/

I added the bold to the text for emphasis.

FASTER RAMP-UP
In the last cycle, it took a full year for the Fed to reach that maximum reduction rate of $50 billion a month. It started with $10 billion a month ($6 billion Treasuries/$4 billion MBS) and increased that by $10 billion a quarter until it reached its maximum rate in the fall of 2018.

This time, it will go from zero to $95 billion in the space of three months, with only one initial step before moving to the maximum reduction pace. On June 1, it will start the process at $47.5 billion a month for the first three months, divided as $30 billion of Treasuries and $17.5 billion of MBS. It will increase to the full $95 billion three months later.

I am looking for the continued rate hikes, and initial QT starting in June, to move the market higher. Then when Wile E Coyote clonks his head on the purple line, something else big breaks, and the market heads south.



https://stockcharts.com/h-sc/ui?s=%24UST10Y&p=W&yr=20&mn=0&dy=0&id=p75227327950

https://stockcharts.com/h-sc/ui?s=%21PRIME&p=D&yr=20&mn=0&dy=0&id=p25834343112

The below quote pulled from here - https://www.zerohedge.com/markets/who-will-be-recessions-lehman-wall-streets-most-accurate-analyst-says-3600-new-bull-case?utm_source=&utm_medium=email&utm_campaign=676

Or another way of putting all this is who will be this recession's deflation-triggering Lehman?

Credit events: Hartnett still thinks $18tn of negatively-yielding debt to $2tn in 9 months means high risk of liquidation & deleveraging & default; And indeed, the leveraged loan market is cracking, with systemic risk from bond/stock/real estate deleveraging in risk parity (RPAR), private equity (PSP) high, PE exposure to syndicated loans high, sovereign wealth funds, credit events in speculative tech, shadow banking, US consumer buy now, pay later models, European credit/banks/housing, Emerging Markets, zombie corporations, and so on... and yet the Fed has not even begun QT...

GLTY

[No-Quarter]

I like your idea about ARKK. It has come down a tremendous amount. Almost back to where it started ~9 years ago!

https://stockcharts.com/h-sc/ui?s=ARKK&p=D&yr=10&mn=0&dy=0&id=p06263635076

https://www.barrons.com/articles/cathie-wood-ark-invest-tuttle-capital-etf-51643236123

[No-Quarter]

I really like the way Komal Sri-Kumar thinks. Google his name and watch a few of his recent interviews. Fits the Wile E Coyote theory of the fed raising interest rates fast enough and high enough to temporarily reduce the inflation rate just in time for this falls elections, then something bigger in the financial system breaks leading to a recession in 2023.

I am thinking it will be good to be holding a mitt full of bitcoin and gold before the end of this year... GLTY