Patience Required While We’re in Market No-Man’s Land

Let’s use the time to think through what’s going on macro-wise. [The Rude Awakening] March 09, 2023 [WEBSITE]( | [UNSUBSCRIBE]( Patience Required While We’re in Market No-Man’s Land - The SPX is floating around 4,000, keeping its intentions quiet. - It’s tempting to short a quiet market, but I wouldn’t. - Waiting is smart. The market will eventually tell us which way it’s breaking out. [External Advertisement] [Reagan’s Revenge to Kick Off March 31st?]( [Click here to learn more]( 40 years ago Ronald Reagan implemented a radical new idea… Which led directly to the rise of one of the most profitable investments of the decade. And now, starting as soon as March 31st, 2023, Reagan’s idea could be rolled out in full force once again… Leading to what could be the most profitable investment of the century. [Just click here now for the full story.]( [Click Here To Learn More]( [Sean Ring] SEAN RING Happy Thursday! Man, it’s been boring marketwise. That’s why I haven’t been bombarding you with charts lately. When asked which way the market’s going, famous trader Jesse Livermore used to say, “It’ll fluctuate.” He was smart enough to know he didn’t really know… until the market told him. I suspect the breakout’s direction will depend on today’s jobless claims and tomorrow’s employment (non-farm payrolls) report. If those numbers are “too good,” then Chairman Pow will do his best to get more people out of work, slowing down the economy. If those numbers are “meh,” he’ll have less of an excuse to raise rates. So, while we’ve got this brief respite, let’s look at what’s going on macro-wise. The Boom Before the Bust Before we begin, let’s review two schools of economic thought, the Austrians and the Keynesians. The Keynesians - those who follow Lord Keynes’s version of economics - advocate activist stabilization policy to reduce the amplitude of the business cycle, which many of them rank among the most important of all economic problems. That is, a bust crashes the market, and then magically, the Keynesians reform policy to correct the bust and ensure a coming boom. So, for Keynesians, the bust comes first, then the boom. Austrians think differently. They think credit expansion creates the conditions for malinvestment. That creates a boom, which is inevitably followed by a bust. In short, the party comes before the hangover. From Ludwig von Mises in [Chapter 20, Section 9, of]( Action]( (bolds mine): The popularity of inflation and credit expansion, the ultimate source of the repeated attempts to render people prosperous by credit expansion, and thus the cause of the cyclical fluctuations of business, manifests itself clearly in the customary terminology. The boom is called good business, prosperity, and upswing. Its unavoidable aftermath, the readjustment of conditions to the real data of the market, is called crisis, slump, bad business, depression. People rebel against the insight that the disturbing element is to be seen in the malinvestment and the overconsumption of the boom period and that such an artificially induced boom is doomed. They are looking for the philosophers' stone to make it last. It has been pointed out already in what respect we are free to call an improvement in the quality and an increase in the quantity of products economic progress. If we apply this yardstick to the various phases of the cyclical fluctuations of business, we must call the boom retrogression and the depression progress. The boom squanders through malinvestment scarce factors of production and reduces the stock available through overconsumption; its alleged blessings are paid for by impoverishment. The depression, on the other hand, is the way back to a state of affairs in which all factors of production are employed for the best possible satisfaction of the most urgent needs of the consumers. As you can tell, I’m an Austrian at heart. And yes, I think Jay Powell and his overrated predecessors created this mess (the historically silly boom) and many of our economic conundrums (the inevitable crashes) before it. Mises also gives you the theoretical backing for why Powell is looking to increase unemployment, of which Senators Kennedy and Warren are accusing him. Now that we’ve established our thinking - first the boom, then the bust - we can proceed with our hypothesis. Employment Last month’s nonfarm payroll was a whoppingly positive 517,000. Tomorrow’s consensus number is a much smaller 225,000. If the number surprises to the upside, you can be sure Chairman Pow will be all over it. He may even look to hike 50 bps instead of 25 bps. In fact, if you head over to the CME Fed Watch tool, you can see the market assigns a higher probability to a 50-bp hike than a 25-bp hike. [SJN] Credit: [CME Fed Watch Tool]( The Fed funds futures are pricing in a 23.6% chance of a 25-bp hike (to an upper band rate of 5.00%) and a 76.4% chance of a 50-bp hike (to an upper band rate of 5.25%). Personally, I’d like them only to hike 25 bps this meeting and 25 bps later down the road. But the market may well be correct. Then the question is this: if the Fed hikes 50 basis points (0.5%) in March, what’s the Fed’s next move? Rates The US Treasury yield curve is inverted with the Fed massively increasing the fed funds rate. The yield curve is just a picture of treasury yields with respect to their maturities. [SJN] Credit: [StockCharts.com]( Remember, when the Fed “raises rates,” it raises the overnight rates. Those are as short-term as you can get. So, the “front end” of the curve is elevated. Right now, the front end is so elevated, it’s higher than the “back end” of the curve. This means the market - or, as the great economist Ed Yardeni called them, “the bond market vigilantes” - anticipates rate cuts in the future. But in the meantime, the elevated front end is putting upward pressure on the dollar. [Governors warn of “Biden Blackouts”]( [Click here to learn more]( A former advisor to the CIA and Pentagon just made this dark prediction: Calamity Joe’s sabotage of the Nord Stream pipeline [His Evidence Here]( was suicide. In the next 75 days, Americans will face fuel shortages… …widespread BLACKOUTS… …empty grocery shelves… …up to $1000 energy bills… …drained retirement accounts, and… …a massive crime wave. [>>Welcome to Biden’s American Energy Armageddon<<]( [Click Here To Learn More]( The Dollar Declared dead only in January, the dollar index is roaring back. And it’s easy to see why. [SJN] Credit: Stockcharts.com When you trade currencies, you’re really trading interest rate differentials. So as the Fed has tightened the screws on the US economy, investors have started repurchasing dollars. We got slightly below 101 in the dollar index in January. Now we’re back above 105. It’s not a small move. If the Fed continues to hike, the USD will continue to rally. It’s simple math. Neither the European Central Bank, the Bank of Japan, nor the Bank of England is keeping up with the Fed’s rate hikes. So, the differential between the respective currency rates keeps widening. And that means a stronger dollar. [SJN] To corroborate our story, since the start of February, the euro, pound sterling, and yen have all weakened against the dollar. (The yen chart on the right is moving up instead of down because the dollar is the base currency in the dollar-yen pair.) And this translates through to the dollar index. The SPX All this brings us to the broader market. Have a look at the daily SPX since November: [SJN] If you asked me, I’d say we’ve got higher highs and higher lows. We’ve got the 50-day moving average above the 200-day moving average. Ok, the price is slightly below the 50-day moving average. But right now, this is a bullish chart. However, we can also argue we’ve been rangebound between 3,700 and 4,200 since early November. And we’re practically smack in the middle of that range right now. So, prudence would dictate we wait for a decisive breakout. Why are we stuck? I think it’s because of the unexpected strength of the dollar. And that’s thanks to a Fed Chairman with an itchy trigger finger. And boy, does he love the sound of his voice or what? You’d think Greenspan took over Powell’s body… From [USA Today]( via Powell’s Senate testimony two days ago: As I mentioned, the latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated. If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes. The higher the dollar, the less you need to buy stocks. So, this is bearish. (As an aside, since commodities are priced in dollars, this has also put a lid on their prices.) Wrap Up The SPX is bobbing up and down, with no defined trend, because the Fed keeps us guessing. “50 bps? 25 bps? Only your chairman can tell!” And that won’t happen until the March Fed meeting on the 21st and 22nd. So, we wait. In this case, doing nothing is doing something. See you tomorrow! All the best, [Sean Ring] Sean Ring Editor, Rude Awakening In Case You Missed It… Insurrections Everywhere, The West Calls Out Its Politicians [Sean Ring] SEAN RING Happy Hump Day! Yesterday, I wrote about how the [Global South has had it with its former colonial masters]( especially France. And that’s all true, of course. But what’s becoming increasingly evident is that the West’s populace has also had enough of its bottom-of-the-barrel leadership. Let’s face it: Joke Biden wasn’t anyone’s first choice for the Oval Office. The Dems just needed someone, anyone, that could win the vote. Bernie was too old and too socialist. Kamala came third in the primaries in her home state. So, they put Joe, known to the younger generation only as Obama’s VP, up to see what happened. Lo and behold, Trump had made enough mistakes in his fourth and final year to lose. But make no mistake, Bottom-of-the-Barrel Biden demonstrates the absence of leadership in the US. In the UK, the Tories have been in for too long. (Some would say thirteen years too long.) From Cameron to May to Boris to Truss to Sunak, they’ve reached the end. Sunak is the UK version of John Kerry. He’s got one talent: marrying a rich woman to finance and further his political ambitions. I’m even cheering for Labour (with a “u”) to win next time. And in the EU… well, we all know the national election losers fail up to Brussels. That’s right, folks. The quickest way to get a full pension from the EU is to lose your national election, go to Brussels, and pretend like you’re working for Europe instead of the US for a few years. Ursula von der Leyen is only the most recent example of this. As German defense minister, she supplied the army with broomsticks to fight. This wrecked her - and Mutti’s - ambition for her to become the next Chancellor of Germany. So, what happened? She got “promoted” to President of the European Commission. It’s downright embarrassing. But The People seem to have had enough. Across the Western world, protests are breaking out. Even here in Italy, where the people are positively thrilled with Giorgia Meloni’s leadership, [protests broke out in Rome demanding Italy leave NATO](. Really. Let’s have a closer look. The J6 Joke It wasn’t an “insurrection.” It wasn’t armed. My maxim is, “If they stay between the velvet ropes, it isn’t a riot.” And if you’re let in by security guards, you didn’t break in, to begin with. Since I lived abroad when J6 happened, I saw the tapes of Capitol security guards letting in the “rebels” long before any Americans did. But now that House Speaker Kevin McCarthy released 40,000 hours of security footage to Tucker Carlson, it’s all coming out. And I’m laughing my ass off. No police officer died, though the original articles from major newspapers haven’t been corrected. (They issued later corrections. But not to the originals. So when future historians look up J6, those corrections will be easy to miss.) "The January 6th Committee knew perfectly well that Brian Sicknick was walking normally through the Capitol after he was supposedly murdered by Trump supporters. And they know that because they saw this tape. We can be sure because the footage contains an electronic bookmark that is still archived in the Capitol's computer system," [said Carlson](. Sicknick didn’t die from being struck in the head with a fire extinguisher. Congress knew it knew and lied about it. We got the tapes that prove it. Oh, and the QAnon Shaman, Jacob Chansley? Well, Capitol security escorted him throughout the Capitol complex, and even helped him find open doors. “The tapes show the Capitol police never stopped Jacob Chansley," said Carlson. "They helped him. They acted as his tour guides." Right now, the Twitterverse is lit up. I don’t know what the outcome will be. After all, Americans are so used to getting lied to they’re anesthetized to it. But I’d like to see some tangible results of all this. Americans didn’t care about Liz Cheney’s J6 hearings because they knew the hearings were bullshit. However, these tapes are authentic. So let’s see what they do about it. [Urgent Notice From Paradigm CIO Zach Scheidt!]( [Click here to learn more]( Hi, Zach Scheidt here… I’m the Chief Income Officer at Paradigm Press. With inflation raging (and showing no signs of coming to an end any time soon), almost everyone in America is feeling the pain in a big way. Which is why, several months ago, I set out on a big mission… my goal was to create a [complete, step-by-step plan to surviving and beating inflation]( one that anyone could take advantage of. Today, after hundreds of hours of research, I’m revealing all of my findings. [Simply click here now to see how to survive America’s deadly inflation crisis](. [Click Here To Learn More]( Hancock’s Writing on the Wall The last time I looked, The Daily Telegraph was the UK’s most conservative newspaper. (Yes, the political spectrum in the UK starts on the far left and ends on the center-left. They’re all for big government on the little sceptered isle.) Yet Allison Pearson, in an opinion piece for the Telegraph, [called for former Health Secretary Matt Hancock’s arrest]( Ok, I think he’s for the rope, myself, but this is a good start. You see, the Telegraph published “[The Lockdown Files]( which vindicates anyone with the temerity to ask, “What evidence do you have lockdowns will work?” Hilariously, Isabel Oakeshott, who Hancock commissioned to co-write his Pandemic Files book, released the WhatsApp messages he entrusted to her. And they are damning. Like most UK politicians since Tony Blair turned the UK government into a bean-counting machine, Hancock lied about everything to “hit his target.” Pearson quotes this message from a father: Lockdown sent him from a happy 14-year-old into a complete psychological breakdown. The fear of why everyone was wearing masks, the breaking of routine (so important for SEN children), and the closing of schools. He was utterly terrified. The knock-on effect for our family has been devastating. Thanks to anti-psych meds he’s slowly getting there, but from the second lockdown onwards it’s destroyed the fabric of our family, to say nothing of our life savings being lost (self-employed). To read the WhatsApps in The Telegraph makes me so angry. Having the heartbreak of a disabled child made worse by self-aggrandizing fools is almost too much to take. Administering psychiatric medicines to your child tends to focus the mind as to where the blame lies, and it isn’t with Isabel Oakeshott. There’s hell to pay, and I hope Hancock is held to the fire. Paris and Brussels Get Clogged Up This is great. I wrote yesterday about Le Petit Roi’s problems abroad. But French President Emmanuel Macron has his hands full at home as well. Wait, hold your outrage! Macron wants to raise the French retirement age from 62 to 64 and increase the years worked to qualify for a full pension. Yes, French people would have to work until the ancient age of 64 and for a certain amount of time to receive a full state pension. Of course, the French are going apeshit over it. It’s just one more thing on the French list of things to revolt over. Now before you snort and chortle, have a look at this: [SJN] Yes, the French have the ninth most productive workforce on the planet. And they only work 35 hours per week! (To be honest, the Irish have tax loopholes, the Norwegians have oil, and the Swiss and Luxembourgers have money laundering. So for me, the real list starts with Denmark.) With that kind of productivity, perhaps we should take a page from the French and relax a bit more. Number ten on the list is Belgium, home of the capital of the European Union, Brussels. In Belgium, their farmers have taken a page out of the Dutch farmer playbook by blocking up the city. The Belgian government wants to limit nitrogen emissions. Their farmers, like the Dutch, aren’t having it. From [Reuters]( "We are all convinced that something has to change nitrogen-wise, but the agricultural sector should not be treated differently to the industrial sector," protester Leen Engelen said, referring to one of the disputed points in the draft bill. "Our sector is already making a lot of effort and is willing to do so as well, but (the government) expects more and more from us while the industry sector is also expanding," said Liesje Van Loon, who owns a goat farm. Wrap Up It seems the Western people have had enough of their governments’ incompetence. Between the warmongering, lockdowns, and blatant lying, we’re seeing much more open disobedience than before. Long may it continue if we can’t elect good enough help. Until tomorrow. All the best, [Sean Ring] Sean Ring Editor, Rude Awakening [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2023 Paradigm Press, LLC. 808 Saint Paul Street, Baltimore MD 21202. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. To end your Rude Awakening e-mail subscription and associated external offers sent from Rude Awakening, feel free to [click here.]( Please note: the mailbox associated with this email address is not monitored, so do not reply to this message. We welcome comments or suggestions at feedback@rudeawakening.info. This address is for feedback only. For questions about your account or to speak with customer service, [contact us here]( or call (844)-731-0984. 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