Yellen confirmed thereâs no universal backstop for all US bank accounts. [The Rude Awakening] March 20, 2023 [WEBSITE]( | [UNSUBSCRIBE]( Flyover Lives Matter! - Useless Yellen’s testimony proves there’s no universal bailout.
- Only a voting supermajority at the Treasury, Fed, and FDIC confers a bailout.
- The bank in question must be systemically important, even if it’s not a SIB. [[CHART] Could Inflation Hit 20%+ In 2023?]( Take a close look at this scary chart pictured here… What you see is the money supply in America… And as you can see, the number of dollars in circulation has exploded in the last few years. In fact, more than 80% of all dollars to ever exist have been printed since just 2020 alone! Which is why some say inflation could soon explode even higher than it is now, to 20% or more. And if you’re at or near retirement age you must take action now to protect yourself… otherwise you risk losing everything. [Simply click here now to see how to survive America’s deadly inflation crisis](. [Click Here To Learn More]( [Sean Ring] SEAN
RING Happy Monday! Last night, we returned from France. It was a fantastic trip. We visited Nice, St. Paul de Vence, Monaco, and Menton (the last French city before the Italian border). All of those cities were amazing for different reasons. Nice, with its Old City and Promenade des Anglais, was everything I had hoped since watching To Catch a Thief. [SJN] The view of the Promenade des Anglais and the Cote d’Azur from our hotel room. St. Paul de Vence is a walled city on a hill about 20 minutes from Nice. Pam and I had overdosed on YouTube travel porn videos of it for years. We finally got there, and it didn’t disappoint. [SJN] A “street” in St. Paul de Vence Menton is a city on the France-Italy border with its own microclimate. It’s famous for its lemons, which grow practically year-round. We ate a lovely lunch in a restaurant owned by an Italian named Claudio. [SJN] Mrs. Ring frolicking in Menton. But Monaco, the principality itself, surrounded by France but not part of it, stunned us. And with Janet Yellen’s testimony on Thursday fresh in my mind, I couldn’t help but think of the flyover states. You may be thinking, “What on earth can Monaco have to do with Oklahoma?” Well, let me show you my thinking. [Response Requested]( 1/1000th of an ounce of gold available for Reader As a Rude Awakening reader, Jim Rickards is offering you 1/1000th of an ounce of gold when you upgrade your account.
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[Click here to learn how to claim your new Gold Back Currency<]( [Click Here To Learn More]( Yellenâs Admission Remember in 2017 when Janet Yellen said there would be [no more financial crises in our lifetimes]( In her defense, she probably didn’t think she’d live this long. I certainly didn’t think she would. Useless Yellen always looks like she’s got one foot in the grave and the other on a banana peel. Despite that, let’s face it, if she were an Egyptian goddess, her name would be “crISIS.” The latest screw-up comes via testimony with Oklahoma Senator James Lankford. He rightly asked if all the deposits at community banks in Oklahoma would be treated the same way that SIVB’s or Signature Bank’s deposits are treated. Yellen admitted that Oklahoma banks were not. It takes a supermajority at the FDIC, a supermajority at the Fed, and the Treasury Secretary herself, in consultation with the President, to bail out a bank. Watch the video below to see just how far out of the club you are. [Click here to learn more]( Credit and click to watch the idiocy: [@SeidlerCorp]( I’m going to say it right here: Flyover Lives Matter! Why on earth would you bail out SIVB and Signature, but not a farmers’ bank in the Midwest? Don’t these DC numbskulls know the Midwest feeds America? And this is where I started thinking about Monaco. A Bit of Monaco’s History No, Monaco doesn’t feed France. It’s the most densely populated sovereign state in the world. Because if you’ve got enough money, you want to be there. No income or inheritance tax. Lovely. But it wasn’t always like this. In fact, this part of the French (and formerly Italian) coast used to be dirt poor. A monaco is a “monk” in Italian. A member of the House of Grimaldi - Prince Albert II’s family - first ruled Monaco in 1297. That’s when Francesco Grimaldi, known as "Malizia" (translated from Italian either as "The Malicious One" or "The Cunning One"), and his men captured the fortress protecting the Rock of Monaco while dressed as Franciscan friars. This is a tremendous historical coincidence - or perhaps gave the Grimaldis the idea - as this area was known as Monaco since it was a Phocaean Greek colony. But there wasn’t much there… until Princess Caroline had the bright idea of building a casino. Finished in 1868, the Casino de Monte Carlo is probably the world’s most famous casino. [SJN] Credit: Sean Ring It saved the Grimaldi family from financial ruin and established Monaco as the place to be in the Mediterranean. Only recently did the Casino cease to be the Royal family’s primary source of income. And thanks to the casino’s revenues, Monaco’s citizens no longer had to pay income tax. Rainier and Grace After Grace Kelly filmed one of my favorite movies of all time, To Catch a Thief, Prince Rainier was in love. Not only was Kelly one of Hollywood’s great beauties, but she was the daughter of John C. Kelly, who owned a successful brickwork contracting company. I’m sure Rainier didn’t care, but having a rich wife must have been nice. Their match lent Monaco an elegance it never had before. People from all over the world started to flock there. France Threatens Monaco Of course, when high-tax losers get pissed off at low-tax winners, threats usually fly. Charles de Gaulle was angry so many Frenchmen were running to Monaco to avoid his onerous tax regime. So he blockaded Monaco. It was a joke of a blockade, and no one was harmed, to be sure. But de Gaulle only relented when Rainier promised to keep Frenchmen out of Monaco so they’d pay their tax to the French Treasury. As Murray Rothbard would reiterate, “The State is a gang of thieves writ large.” Will Midwest Community Banks Be Emptied? I don’t think so. But growing Midwestern companies with far more than $250,000 in the bank will surely migrate to a Big Four bank to know their money is safe. And that isn’t good for honest, entrepreneurial bank managers in the Midwest. That angers me to no end because who knows if there’s another Monaco story right around the corner? Who knows if that Midwest entrepreneurial story would have grown to be much, much bigger than tiny Monaco? Frederic Bastiat would call that the “unseen.” Wrap Up I know I was going to write about the rosé wine I was going to drink. They were ok but unremarkable. So nothing to report there, alas. But watch this week to see how the market reacts to the “my friends get a bailout, but you don’t” backstop. It’ll be informative insofar as the banking and credit sector goes. Equity markets have held up surprisingly well. Until tomorrow. All the best, [Sean Ring] Sean Ring
Editor, Rude Awakening In Case You Missed It⦠The Moral Consequences of Hyper-Inflation Have Come Home to Roost [Sean Ring] SEAN
RING Happy Friday! Micah, Pam, and I are driving to Nice, France, this weekend. (Believe it or not, the Rosé on the Riviera is supposed to be excellent. Allegedly, it doesn’t taste like grape drink!) I’ll sample it and report to you on Monday. But first things first. And that means energy and energy stocks. In our last Paradigm editorial meeting, our publisher Matt Insley asked a question that’s vexed me ever since. The question was, “We know and love energy stocks. But should we own them right now?” It’s one of those questions that gets to the heart of an investor’s biases. I say that because, heck, I’m as biased as the next man. I was sure we were going to freeze in our jammies this winter. Because it was going to be extremely cold, and the sanctions on Russian energy were shooting Europeans in the wallet. I was sure we wanted to own natural gas, oil, and their accompanying stocks because it was all so sensible. But last Friday night, it was 68F (20C) in Asti. Micah was running around with his jacket off. Micah’s friends’ parents, Pam, and I cracked open some Moretti beers in Piazza San Secondo (our town square) while watching our kids play hide-and-seek. When the sun finally set, it got cooler. But it wasn’t winter cold. It was midsummer cool. To be fair, it hasn’t been cold here since January. Sure, stocks were rallying hard. But energy and energy stocks were beginning to roll over. And that’s when I started thinking… maybe we won’t get that insane, sustained rally in energy. I didn’t want to believe it. Just like you, I was - and still am - massively long energy stocks in my retirement portfolio. So, this first quarter of 2023 has been a real kick in the goolies for me. And I imagine, for some Rude readers, as well. And not just us, but this entire business has been - and remains, funnily enough - massively pro-energy. So please understand if you lost money on energy stocks… you’re not alone! Be all that as it may, I thought I needed to hedge my opinion for the first time. Let me show you some examples of how I did that, not in my retirement portfolio, but as a trader. It’s important that you know you’re not the only one who may have been hit hard on energy stocks. Truthfully, the energy stocks in my retirement portfolio have, to quote Michael Lewis in Liar’s Poker, “gone down faster than an 18-year-old on prom night.” It’s painful, to be sure. Just know the below is what’s going on in my smaller trading account for your edification and learning, not my braggadocio. Three Stocks I Shorted In the Rude, I don't make single stock recommendations... As a daily writer, I concentrate on the big picture. But because the "big picture" story matters here - and the energy sector has been confusing to many readers - I need to share some recent trades I made... Just keep in mind these trades are “what I did in the recent past” examples, not recommendations. Devon Energy (DVN) Unbeknownst to me, good friend and smartest working analyst in the newsletter business, Dan Amoss, fundamentally loves this stock. Another oil and gas analyst friend fundamentally hates this stock. So, when that friend said, “It’s only a matter of time before DVN gets crushed, I looked at the charts. Here’s what I saw on January 11 of this year: [SJN] There’s no name for this chart pattern, but my eyes widen when I see it. We have a double top around $72.50, followed by a near-death cross (the 50-day MA crossing below the 200-day MA). The actual price was hovering right on the 200-day MA. I gambled on a long shot by buying the DVN Jul 50 puts on January 11 for $3.30. I thought that it surely could get below $50 if my friend were correct. I bet bigger than usual by buying six puts in total. Now understand this: I’ve got nothing against DVN as a company. I just hated the warm weather, the oil price falling, and this chart. Let’s fast forward to Wednesday (2 days ago). Here’s the chart: [SJN] After an initial rally from $61 to $65 which had my puts losing, DVN cratered. Those puts closed above $8 yesterday. This position is still open. I’m being a bit greedy, but I’d like to see them get to $11 or so. We’ll see. EOG Resources, Inc. Later, I was looking to add to my energy shorts. Again, I have nothing against EOG, but I didn’t like the stock movement for the same reasons I didn’t like DVN. What I liked even less were the two massive red (down) candles within a couple of months of each other. Somebody somewhere was trying to dump this stock. When that second huge red candle pierced the 200-day MA, I thought it might be game over. So, on February 17, I bought 2 Apr 114 puts for $6.00. It was a smaller bet than DVN because I was less sure my surmises would come to fruition in time for the shorter expiry. [SJN] Luckily for me, EOG followed the energy complex straight down. Yesterday, I closed out 1 of the puts for a 50% gain and 1 for a 100% gain. (My friend, colleague, and options expert Alan Knuckman taught me that trick. It’s good for a 75% gain overall.) [SJN] [Over 62 And Collect Social Security? Take Action Immediately!]( [Click here to learn more]( [If you’re over the age of 62 and currently collect Social Security, you need to prepare now](. Because Biden has given our country the worst inflation in decades – and many warn things will only get worse from here. Worse yet, the Social Security check you receive now may not keep pace with inflation… [Which is why, if you don’t act now, you could fall behind in the months ahead](. Is your retirement at immediate risk? [Click here now to get the simple, step-by-step actions to survive inflation](. [Click Here To Learn More]( ConocoPhilips Another company I’ve got nothing against, COP’s stock chart looked exactly like EOG’s. So, I thought I’d buy 2 Apr COP 100 puts @ 4.29. [SJN] This, too, paid off a nice 75% gain: [SJN] COP got crushed for the same reasons EOG and DVN did. Again, these aren’t bad companies. But as you look at the chart, you can see the “boom” clearly preceding the “bust.” Please understand these small trading wins in no way make up for the losses in my retirement portfolio. But I’ve got a few more years to make them up. (But certainly not as many as I’d like.) Will these stocks come back? I’m sure they will. And they may do so just in time for summer. But I’m pretty sure right now isn’t the time to buy energy stocks. They’re all getting slammed. Three More Charts Showing Energy Nosediving Right Now First, let’s visit the XLE. The XLE is the S&P energy sector index. If you look at the chart below, it makes a compelling case that this energy rally has concluded and that we’re on our way down. The MACD on the XLE is showing the greatest overbought reading ever. From [Investopedia]( Moving average convergence/divergence (MACD, or MAC-D) is a trend-following momentum indicator that shows the relationship between two exponential moving averages (EMAs) of a security’s price. The MACD line is calculated by subtracting the 26-period EMA from the 12-period EMA. The result of that calculation is the MACD line. A nine-day EMA of the MACD line is called the signal line, which is then plotted on top of the MACD line and can function as a trigger for buy or sell signals. Traders may buy the security when the MACD line crosses above the signal line and sell—or short—the security when the MACD line crosses below the signal line. MACD indicators can be interpreted in several ways, but the more common methods are crossovers, divergences, and rapid rises/falls. Finally, the XLE has been getting smashed compared to the overall SPX. None of those signals is bullish for the energy sector. [SJN] Source: @daChartLife via [The Chart Report]( Next, J.C. Parets of All-Star Charts fame shows how crude oil futures have resolved their triangle pattern to the downside. That’s not unusual at all, to be sure. But now crude futures are below a level with much overhead resistance. It’ll be challenging to get back above that line for a while. [SJN] Source: @allstarcharts via [The Chart Report]( Ian McMillan shows the same chart as J.C., but it’s his comment that caught my eye. I’d even ask, "Is this oil chart demonstrating the demand destruction the Fed was trying to cause with its rate hikes?” [SJN] Source: @the_chart_life via [The Chart Report]( Wrap Up I would answer the question I posed in this Rude’s title by saying, “No.” The balance of probabilities shows there’s more downside to the energy story. And that it’ll probably get much worse before it gets better. But I must stress these aren’t bad companies, just bad timing. It’s hard to believe only a few months ago, Germans were googling “firewood” to see how they could heat their houses. Now, we’ve got our shades on and our jackets off in mid-March. But keep your chin up and your head clear. More opportunities are coming our way, but we need to see them. And while we wait for energy stocks to rebound, [buck up on your gold knowledge by reading this]( if you haven’t already. Have a wonderful weekend! All the best, [Sean Ring] Sean Ring
Editor, Rude Awakening P.S. Earlier I told you I don't make single stock recommendations in the Rude, but I'm here to serve you. There's potential for me to start a new, trade-focused letter. But I wouldn’t think of doing that without asking you first. So… would you be interested? Let me know either way (yes or no) by writing to feedback@rudeawakening.info. Thanks for taking the time. It’s a YUGE help! [Paradigm]( ☰ ⊗
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