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#188: You have to See it to Believe it

#188: You have to See it to Believe it

micksonmatch
November 27, 2024

S2N Spotlight

I am not ashamed to say that I nearly cried at the beauty of this inflation analogue from 1966 to 1982 with 2014 to date. I am usually not the biggest fan of this type of research, as you often find the most bizarre comparative time series. Hat tip to the excellent Torsten Slok from Apollo for the inflation analogue idea. I have built this chart, which I will update monthly and keep y’all posted.

Most commentators have been talking about how inflation has been tamed. We are even seeing this being supported with rate cuts. The truth is, very little has been done to correct the true causes of inflation, which is still alive and well. The Trump tarrifs are not going to help the inflation story, and while Trump is probably the best guy to make a smaller government, he is still a big spender.

As you can see in the chart above, we could be close to an inflection point, that is, if we are not there already. Inflation is poised to show up in consumer numbers, and the rate-cutting cycle could have already ended.

S2N Observations

Following my comments about Trump tarrifs, it is pretty clear Trump vs. Xi round 2 is going to be more vicious than any matchup Dana White could dream up. I said to go long China via the Hang Seng and short the US via the S&P 500 were the green circle is on the ratio below.

Goldman issued a buy notice at the top of the recent spike in the Hang Seng. I don’t feel as bad now, as at least my trade is not under water. However, I am starting to feel nervous. I think if the ratio goes through the line I have put as a stop loss, I will exit this trade and wait for a better entry point.

Ouch MicroStrategy got severely punished yesterday. What didn’t get much coverage was the number of BTC liquidations that happened on the various futures/perpetual exchanges. Essentially, it is when there are margin calls.

Over $495,100,000 have been liquidated from the crypto markets within the last 24 hours. This is the single largest Bitcoin liquidation event in history. I was meant to put this in yesterday’s note, so the number is probably much higher after yesterday’s action. In short, the market is now in hyperbolic speculation mode, with many traders trading with money they don’t have.

S2N Screener Alerts

For the 100th time, the S&P 500 has been up 7 days in a row. Anyone willing to do the count manually and confirm my code doesn’t have a bug gets a free subscription to the newsletter.