We just finished a crazy week. A week that will have been marked by the fact that the announced red wave of the Republicans has turned into a ripple and that no one cares. Also marked by the debacle of FTX – the third largest crypto exchange in the world – a debacle that occurred at the speed of light and which, at the same time, weakened the entire crypto system. And then, to finish we had the inflation figures which proved to us that the FED had everything just right and that Jerome Powell was our guide and that it was time to erect statues to him. Now, it remains to be seen who of the Bulls or the Bears will win the final fight.
The Audio of November 14, 2022
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Rarely seen so much opposition
After this crazy week, it’s time to put things on the table and wonder what’s going to happen next. When sifting through the weekend media, there seem to be two options:
– Option 1) We are in a new Bull Market and nothing more can happen to us because we are already looking far beyond a possible recession or a possible slowdown. The visionary investors that we are, investors who no longer do trading, but long-term investments, already see the economic reconstruction that we will experience once everything is settled – we just have to determine what still needs to be settled. , since Friday’s CPI seemed to have already cured just about every disease on the planet and put an end to all global geopolitical tensions.
– Option 1) is therefore the option where we live in a world of Care Bears and Thursday’s figures are a miracle almost as miraculous as the other which split the red sea in two to go to COP27.
– And then there’s Option 2) which kindly explains to us that the rebound on Thursday and Friday is just pure delirium and that the CPI numbers are just a data point in the Fed’s thinking and that those who think that Powell and his pals will turn the jacket in December, poke their finger in the eye up to the elbow and even further. The President of the FED of Saint Louis has also declared this weekend that the “relatively good CPI” published last week is just more information and that, in his view, rates must rise further and remain high. for quite a while before the FED changes its monetary policy. Or even a vision for the future of the economy.
– Option 2) therefore clearly implies that we are only bouncing in a Bear Market, that we cannot have a real beginning of a Bull Market without a massive capitulation of the system – something that the we STILL HAVE NOT SEEN – and that we will never find the strength to go and break the resistance of the downtrend we are in based on Thursday’s number alone. And that, to finish, it seems obvious that we are going to drop again to test the lows of June.
Bull or Bear, our heart swings
So of course the defenders of option 2) also don’t rule out that we have a Christmas Rally, but then the punishment will be severe. On this Monday morning, we therefore find ourselves in a very clear-cut situation: it is time to choose a side. The challenge will be complicated since on the one hand, you have to dare to go “long” after a rebound of nearly 10% in 48 hours and on the other, you will also have to dare to do nothing while waiting for it to go down again, while scary about the fact that it might never go down again and that in 2 years, when the S&P500 will pass the 10,000 point mark, we will be sitting by the side of the road thinking:
“Well, I buy or I don’t buy ??? »
Either way, the markets enter the week with a mountain of arguments on both sides and it will not be easy to make a choice in the current environment, especially with everything that can still “potentially” fall on us. above. The big economic figures that can move us are behind us and we will have to wait until the beginning of December to start to heat up on the rest, but as much to tell you that in the coming days, there will be so many opinions and of opinions that will break out in the media, that it will be necessary to consider taking two days off per week to have time to read everything and integrate everything correctly. Just this weekend, I’m not even telling you everything that has been said and told in the media.
Between bull market emperors like Tom Lee who think we’re going to take 25% off the S&P500 before Christmas, pundits on just about everything like Jeremy Siegel who are always there to give an opinion on anything – in As far as Siegel is concerned, this weekend he came to reassure the people to tell them that the collapse of FTX was rubbish compared to Lehman in its time and there is Bank of America which thinks that the conditions for the revival of the Bull Market have not yet been met. And UBS who thinks we’re going to get fucked up and that the 3,600 is coming soon. And I can swear to you that we will be entitled to an avalanche of speeches with punch during the next 2 weeks. But we must always remember that hardly anyone thought that we would be here today and that we would have lived through such a year 8 months ago, so we can reasonably ask ourselves why today we would know better than 8 months ago…
This morning in Asia we expect the meeting between Xi Jinping and the bedridden White House who has just confused Cambodia and Colombia. Well, in his defense, it is true that it begins with the same letter and that, better still, it ends with the same letter. After that it’s 30 hours by plane from each other, one is in Asia and the other in South America, but that’s only a detail. In short, the two leaders are going to meet today and it promises to be funny when Biden will confuse the Chinese leader with Kim Jong Un. For the moment, Asian clues are mixed. Japan is down 0.8%, China is up 0.8% and Hong Kong is still in the short covering phase and climbs almost 2.8%.
In China, we always talk about “detente” in terms of COVID and suddenly, oil goes up because we say to ourselves that – inevitably – if the Chinese open the floodgates, oil consumption will go up like Bitcoin when the we thought it would go to 100,000 by Christmas 2021. Oil is currently hovering around $90 on the WTI and that will surely help us have a good holiday season with a liter of gasoline at $2.50. About Bitcoin, the latter is digesting the collapse of FTX and dealing with all the rumors swirling in the market about whether Binance’s reserves, which are made up of more than 40% of their own tokens , will be sufficient in the event of a hard blow. Bitcoin is worth $16,000 and more and I remain convinced that it must first go down to $12,500 before anything else. Ether is at $1,187 and gold is worth $1,765.
News of the day
As far as today’s news is concerned, we are inundated with noises, rumors and explanations of what happened at FTX and how the “other” exchanges are doing everything to explain to their customers that everything is fine and that ‘they are rock solid and nothing can happen to them and THEY, they did not use client funds to lend money to boxes they own to trade. We are also unraveling the ball of yarn to try to understand what SBF has done and how big of a scam it is. Not to mention that the list of his victims grows every day and US sports stars are in it to the hilt. Brady and Curry will have paid their due in passing.
Otherwise one of Musk’s companies, SpaceX, has just ordered the largest advertising package available from Twitter to promote its satellite internet system: Starlink. So if ever, as I live in the bottom of the world and the networks are rotten where I am, I subscribed to Starlink 18 months ago. It worked great until early 2022 – then they cut prices in half, increased network distribution without increasing the number of satellites AND on top of that, they redirected the service to Ukraine – and since then, it’s a nameless crap that has roughly the speed of ADSL and sometimes to publish something on the net, it’s faster to go and post a letter to the post office than to use Starlink. So advertising on Twitter or not, it’s crap and as long as there aren’t enough satellites and there’s war in Ukraine, it’ll remain crap. And some very expensive crap too.
Numbers and elections
On the election side, it should be noted that the Democrats have therefore recovered the Senate and that they even have the hope of winning Congress too, since everything is not counted yet. Trump is mad with rage and the Republican party has been in doubt for a week. This week we will also have the releases from the retail sector, which promises to put inflation back on the table, then there will also be the quarterly releases from NVIDIA, which could confirm or invalidate the revival of the semiconductor sector.
But today, there will also be the PPI in Switzerland, industrial production in Europe, inflation expectations as seen by the consumer – so I can’t even imagine the two-ball survey of 500 Americans drawn randomly – and then there will also be the boss of the SNB who will speak. It will heat us up for the rest of the week. For now, futures are down 0.35%, but all is well, inflation is under control and transitory.
For the rest, and as far as I am concerned, I would like to wish you a very good Monday and an excellent week. I’ll meet you tomorrow, at the same place and at the same time, as usual.
“Always bear in mind that your own resolution to success is more important than any other one thing. -Abraham Lincoln