For over one year of excessive exuberance the financial media has proclaimed that retail has finally surpassed financial managers in guessing how and what to invest in equity markets. Remember this beauty of a story from the NY Times?
‘Dumb Money’ Is on GameStop, and It’s Beating Wall Street at Its Own Game
Or this classic from Fox Business:
Retail investors top Wall Street pros as stock market recovers from coronavirus selloff
As we head into the potential for a major cyclical bear market paralleling the stagflationary cycle our nation appears to be trapped in, odds are most of the new found retail traders were not adults, much less alive during the most recent episode of stagflation in the late 1970’s.
The reminders that retail has figured out the market however are nothing new. How can anyone for get the .com bust and the theory that day traders from their mom’s basement using dial up modems were becoming trading professionals after going to seminars? Newsweek reminded everyone of this in January of 1999:
Fast, Yes. Easy? No.
A quick excerpt from the article and that will be the end of tonight’s history lesson:
The Internet has come to Wall Street. Thanks to some market reforms and the spread of powerful data networks that were once confined to big financial institutions, a new breed of young financial guerrillas has sprung up to challenge such giants as Merrill Lynch and Goldman Sachs.
Yeah, that works until it doesn’t, trust this author’s personal experience and losses.
Today was a prime example of what happens when the small investor, WSB bulletin board types, or Davey Day Trader thinks they can beat central banks, large houses, and economic forces that are beyond the control of everyone at a global scale. Let’s meet tonight’s sumo wrestlers who arrived last week to crush many a Hoodies’ get rich quick dreams between their bosoms.
The Japanese ¥en
Sometimes a picture speaks volumes and presents the big picture to everyone as this has been one of the most volatile trades all winter, but especially the last five sessions.
There are exceptions, such as the NASDAQ rallying this morning, but so far the trend is your friend and the Japanese Yen hasn’t been that friendly to investors this year.
The Bank of Japan
Meanwhile, the Bank of Japan has been dealing with creeping consumer inflation and allowing, in fact pushing their bond yields higher. In fact higher to the point where the Yen is strengthening and threatening another repeat of the August carry trade unwind scare.
If we see this creep above 1.80% then 2% things get ugly in US markets unbelievably fast as capital flies to the safety of the Yen and Japanese investments.
The Trump Social Media Insanity
The markets today are hinging on every posting, every retaliatory action, and every word the President of the United States utters; even if some of it is absolutely insane.
Just like 2018.
Below is a brief review, not counting spoken statements, of the social media and media blitz endured by markets JUST TODAY.
09:04 a.m. ET:
10:15 a.m. ET (via TruthSocial):
I’ve circled the “likes” and date time to indicate that indeed, the reach of Trump’s social media account on his website is still lacking compared to X because it is one of the worst demonstrations of software programming on the web.
11:25 a.m.:
Now how is a rational trader supposed to construct a day trading portfolio, not to mention an investment portfolio for anyone desiring long term stable returns based on the almost hourly whiplash generated around the world?
Just like 2018.
The smart money is seeking safety and that means that the short term part of the US Treasury yield curve and precious metals are looking mighty fine right now.
To add fuel to the fires of concern, as Kurt S. Altrichter, CRPS posted on X today, credit spreads which have been dormant are starting to move up:
FYI, if you do not follow him, I highly recommend one does so at this link.
Thus with President Instability, global insanity, and an apparent American economic downturn, possibly more severe than anticipated by the markets, odds are the market is no where close to a bottom as highlighted last night.
In the short term, the market should experience another reflex rally which may well be the one that causes the bubblevisions to sing “Happy Days are Here Again” and tell everyone to buy an overvalued stock that’s trading at 33 times earnings. Right Apple?
Keep your head on a swivel and remember, thus far nothing that hasn’t already happened in the past has occurred so far. Prepare for impact if these pages are correct.
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