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Last Week in Equities: Just like the Oscars, a Bad Remake

Last night the Academy Awards were held in the land of fruits and nuts and when all is said and done nobody will care because it’s just another poorly made woke remake. And just like CNBC’s ratings, nobody watched that fiasco either.

Unfortunately, the “bull” crowd has the same outlook and ability to make crappy reruns in the equity markets also.

Sven Henrich at Northman Trader had the most amusing chart to reflect this via his Twitter feed:

What exactly is old Sven referring to? This insanity from Bear Stearn’s favorite bull market tout, Jim Cramer:

I guess he’s getting old and forgot about all of his great “the bear market is over” calls from 2007 to 2009. Or he’s got a lot of crap stocks to unload on the suckers, er, unsuspecting public. The reality is the bear is just taking a quick nap, just like it has in the past. This past month’s market action reflects what I believe is happening quite succinctly.

The first question is “what is wave 1 down” and what does this mean. Based on historic patterns, of which some do and some do not perfectly repeat or overlay, the first impulse down and the counter trend rally on weak volume is indicative of the start of a major bear market, not the beginning of a bull move.

Using the 2007-2009 time period which was the most recent major bear market (30%+ down over a 12 month period or longer), it is easy to see the same pattern as it began then completed as the economic crisis worsened.

First the NASDAQ Composite:

3 waves, with 2 major bounces providing false hope to the bulls only to finish in a major capitulation.

The same pattern appears in the Dow:

And the S&P 500:

It’s the same disaster, same nightmare, chart after chart. What does this mean for this era and why the economic crisis this time will eventually lead to a financial crisis?

That is an easy explanation. A bond market crash is underway on a global scale, but inside the US it is far, far worse. The implications of a US government and soon municipal bond market crash which drags corporate speculative grades with it is beyond anyone’s comprehension because it has not happened in over 40 years. Hell, most of the blabbering BSers on the bubblevisions were not even out of elementary school when the last credit event of this magnitude happened.

What is far worse than the 1979-1982 bond market collapse is that the United States was not the world’s largest debtor nation at that time; today Uncle Sam is not only the largest debtor, but the worst regarding the lies being told about market manipulation. Thus trust in the Federal Reserve and US Treasury by overseas investors is at an all time low. And who could blame them with people like Senile Joe and Vodka Nancy running the political side of the clown show?

With inflation running far ahead of late 1970’s levels (ignore the CPI-U please, it’s above 19.9% now), the eventual collapse in demand should hit the markets by the 3rd quarter of this year. Following that implosion of demand, housing will correct by at least 30-50% in the most overpriced of markets then the corporate defaults and pension fund failures will be next. Also coming up is a global famine, international rationing, a potential world war, the everything shortage including food and energy, and that’s going to add up to some good times in the old USA.

This time it is different and when a major global war is ongoing along with high inflation, loss of confidence in the US as a trustworthy financial partner, and the eventual global reserve currency collapse that which follows are louder demands for a “Great Reset” will be heard far and wide.

It’s just not quite the reset many people think it is.

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