Dancing on the Bubble’s Grave

Wall Street’s circle of life… [Morning Reckoning] May 09, 2023 [WEBSITE]( | [UNSUBSCRIBE]( Dancing on the Bubble’s Grave - Wall Street’s circle of life… - Don’t cash everything out and give up. - Look for where opportunity hides… [Do NOT pay your May electric until you see this!]( If you live in one of these 43 states… [Click here to learn more]( You must [watch this urgent warning]( immeditaly. (You Need To Learn About AOC’s “Green New Scam” In Order To Opt-Out) To learn the single most important move you need to make to protect you and your family this summer... [Click here now]( or the play button above. [LEARN MORE]( Baltimore, Maryland May 09, 2023 [Greg Guenthner] GREG GUENTHNER Good Morning Reader, Moving at the glacially slow pace that only the government can maintain, our medical overlords at the World Health Organization on Friday officially declared an end to the “global emergency status” for COVID-19. With the pandemic officially in the history books, I also wasn’t surprised to see retail speculators have thrown in the towel on their favorite bubble stocks. Yes, the Covid Bubble buying frenzy is now dead and buried, according to the analysts at Goldman Sachs. By Goldman’s proprietary calculations (and perhaps a healthy dose of common sense) retail investors started to ditch their holdings in early 2022 as the major averages lurched lower. “The selling intensified in early 2023, and we estimate retail investors have now sold more than twice what they acquired during the pandemic," a Goldman research note declares. There you have it – the retail bubble speculator has left the building. Pour one out for the last Wall Street Bets bucketeer as he sells his AMC shares and remaining Dogecoin for a loss and closes his Robinhood trading account. Not only are they selling their meme stocks – these poor souls are also stitching other “stable” investments, even ETFs. The psychology is simple: persistent downside action has soured sentiment throughout even the more stable areas of the market. It’s the circle of life – at least, for the stock market. Main Street investors pile into the red-hot, popular stocks in an attempt to strike it rich. During the Covid Bubble, this meant chasing meme stocks like GME and AMC, cryptocurrencies, tech-growth, the trendy work-from-home names, and cult stocks like TSLA. Of course, the short-term returns were outrageous at the height of the bubble in late 2020 and early 2021. But as the months wore on and additional gains in the unprofitable tech basket failed to materialize, speculators began to trickle toward the exit. By the time the broad market [New Biden Bucks Follow-Up Available Now]( Hey, it’s Jim Rickards. Since posting my original Biden Bucks presentation online, millions of people have viewed it. Snopes and the Associated Press have even attempted to “fact check” me and claim my warnings are false: [Click here to learn more]( Point being, my message has raised a storm and caused a lot of controversy. But in the time between my message and now, a lot of new developments have come to light. That’s why I’ve just released an update to my original prediction… one which will likely be even more controversial. [>> Click here now to access my new 2023 Biden Bucks follow-up](. [LEARN MORE]( Throwing in the Towel To be clear, I’m not here to dance on the graves of the struggling bubble buyers. I’m much more interested in using this information in an attempt to gauge sentiment extremes – and figure out when market conditions will improve, along with what investments will outperform as we leave the latest bubble era behind. First, a quick question: Have maddening market conditions tempted you to sell your investments and hide under a rock? I assure you the retail investors aren’t the only folks throwing in the towel. Even so-called professional investors have given into their frustrations and sold out of stocks at some point over the past two years. While the major averages haven’t fallen to new lows this year, they’ve also failed to break out above key levels that would trigger meaningful technical buying. The result is chop… a lot of chop! We can clearly see this indecision across a variety of sectors and asset classes. Crude has traded in a wide range for more than five months, most recently exploding into the mid-$80s in April before abruptly flash-crashing to $65 last week. It has since recovered and is back to trading where it was in… early December. Any recent bets long or short have suffered from severe whipsaws. Precious metals have also frustrated traders for the past six weeks. Gold futures finally got legs and made a run above $2,000 in early April. But any positive follow-through has been sporadic at best, with prices swinging from the $2,060s back into the $1,980s. Then there’s the ebb and flow of large-cap stocks so far this year. The S&P kicked off 2023 by powering off its lows with a double-digit January rally, only to give back almost all of this move by the end of February. More recently, it’s flirted with rallies and drops around the 4,100 level (we discussed the importance of a breakout at 4,200 [last week](. No matter where you turn, back-and-forth market conditions and the absence of clear-cut breakouts – or breakdowns – is causing some serious frustration amongst traders and investors. Turning the Corner Capitulation is a rare and powerful force. There’s an old market adage that says “if the market doesn’t scare you out, it will wear you out.” We experienced some terrifying drops last year. But there’s nothing scary about this recent market action. Instead, stocks are grinding away, wearing down the resolve of anyone who managed to survive last year’s dismal drop. If Goldman’s calculations are true and the last retail speculator has flicked off the lights and slammed the door shut, we could begin to enjoy more favorable market conditions – especially if sold-out bulls begin to chase any emerging rallies. Could there be no one left to sell? It’s possible. I’m especially interested in how the old tech-growth names react over the next several weeks. We’re slowly beginning to see some favorable earnings reactions throughout this beaten-down group – many of which have been building wide bases for a year or more. If breakouts start to stick, fast gains could follow. These stocks won’t necessarily turn into long-term market leaders. But when it comes to the cleanest set-ups, some follow-through momentum to cap off the January move off the lows isn’t out of the question. Let me know what you think of this article, or if you have any feedback, suggestions or questions by emailing me [here](mailto:feedback@dailyreckoning.com). Best, [Greg Guenthner] Greg Guenthner Contributing Editor, Morning Reckoning feedback@dailyreckoning.com [BREAKING: Elon Musk Bets Big On One Crypto. Click Here Now For The Details.]( [LEARN MORE]( In Case You Missed It… America Can’t Be the Peace Broker Sean Ring, Editor [Sean Ring] SEAN RING Dear Reader, Good morning from Northern Italy, where it’s all play and no work. This week is the local holiday of Festa di San Secondo, which celebrates our patron saint. San Secondo was a 2nd-century Christian martyr who was beheaded under the Roman emperor Hadrian for refusing to abandon his faith. We’ve eaten, drunk and been merry from last Friday night to yesterday. Luckily, the town has opened today, so I can drink my favorite Lavazza Reserva di Tierra from my friend Fabrizio’s café. While we’ve kept to ourselves here in Il Piemonte, peace seems to be breaking out in the Middle East, heaven forfend! Saudi Arabia and Iran kiss and make up? Syria may be readmitted to the Arab League? What new devilry is this? The romantic in me would like to think the CIA has taken a permanent vacation. But the realist in me knows Chinese diplomats have done yeoman’s work in a region the USG has all but abandoned as a partner. In fact, the U.S. is now a strategic competitor to Saudi Arabia, thanks to its shale industry. And that’s put Russia and China in the driver’s seat. After their tiff drove oil negative in 2020, Saudi will never mess with the Russians again. And China buys more oil from Saudi Arabia than anyone else. That’s right; the petrodollar is already on life support. [[CHART] Could Inflation Hit 20%+ In 2023?]( [Click here to learn more]( 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](. [LEARN MORE]( The truth is, Saudi Arabia doesn't need America anymore. Chinese purchases easily replaced Uncle Sam’s old haul. And the plus in OPEC+ is Russia, thanks to Saudi insistence. That all makes sense, no matter how shocking it is. But what’s truly astounding is how Iran has worked its way back into the fold without an American diplomat within 10,000 km. And Europe? It’s an afterthought. The Chinese government richly deserves credit for bringing Saudi Arabia and Iran together. Of course, they didn’t do it for the good of humanity. And quite frankly, who cares? No, they want that New Silk Road built. And for it to work, they need Iran in the game. [SJN] Credit: [U.S. Global Investors]( Now that Iran is onside, it seems the Arab League will let Syria back in. The Arab League is a regional organization of Arab countries in and around North Africa and the Middle East. It was established in 1945 to promote economic, cultural, and political cooperation among its member states. As of 2023, the Arab League has 22 members. Syria was suspended from the Arab League in November 2011 in response to its government's violent crackdown on anti-government protests that had erupted earlier that year. Forgiveness for Syria? Or taking advantage of having a dribbling dementia patient in the Oval Office? The United Arab Emirates (UAE) may have even achieved peace with Iran before too long. And this would affect what’s happening in Yemen. Wow, maybe they all don’t hate each other over there. Because of all this progress, China has been called a fair and impartial mediator. This isn’t merely stepping on America’s toes. It’s slipping into its shoes and doing a better job! I asked myself, “Why hasn’t America done a better job over there?” And I came up with three answers. [Ex-CIA and Pentagon Advisor: “This is How Biden will End the Republic”]( [Click here to learn more]( Former advisor to CIA and Pentagon Jim Rickards just got his hands on a Congressional document that he believes details Biden’s plan to end the Republic. [He’s urging you to take these five steps now…]( Because if you don’t prepare, you could soon lose your life savings, god-given rights and your constitutional freedoms. [Click here now]( because we can almost guarantee this expose will be censored by Big Tech and the corrupt media. [LEARN MORE]( 1. America’s Various Diasporas Prevent It The USG can’t possibly do a good job when hyphenated Americans always go to bat for their ancestral homelands. Can you imagine the Jewish-American lobby allowing the USG to sanction Israel? Of course not. Same as Italian-Americans vis-à-vis Italy, Indian-Americans with respect to India, and so on. The USG can never be fair and impartial. To throw this point into sharp relief, let me tell you a story about how a group of hyphenated Americans inadvertently brought a new financial instrument into being in the 1950s. In 1954, the USG established the "Food for Peace" program to provide surplus agricultural commodities to countries in need, including the Soviet Union. According to the United States Department of Agriculture, between 1954 and 1960, the Soviet Union received 4.1 million metric tons of food under the program. This included wheat, corn, soybeans, and other commodities. However, following the Soviet invasion of Hungary in November 1956, the US government suspended the "Food for Peace" program to the Soviet Union. The USG decided in response to widespread public outrage over the Soviet action in Hungary and concerns about Soviet aggression more broadly. In short, Hungarian-Americans, along with a bunch of other do-gooders, made the USG stop sending food to starving Russians. Clearly, the Hungarian-Yanks didn’t turn the other cheek. Besides depriving the Soviet Union of food, the Soviets were worried that the US would freeze its assets held in American banks. (Sound familiar?) The question was, “How do you keep your USD without having it confiscated?” Luckily for the Russians, they owned a British-chartered bank called the Moscow Narodny Bank. The bank was founded in 1918 by Russian émigrés, and by the 1950s, it had become a major player in the London banking scene. One of its key figures was a banker named Andrei Kosygin. Kosygin was a Soviet who had been sent to London in the early 1950s to manage Soviet assets held in British banks. The MNB worked with Kosygin to create a system for holding Soviet assets in U.S. dollars outside the United States, primarily in London. Et voila! Now you have Eurodollars, which are USD held outside the USA. And since they’re outside the USA, they’re not subject to U.S. banking regulations and reserve requirements. Checkmate. Whenever someone says nothing can replace the USD as the world’s reserve currency, I think about how Hungarian-Americans inadvertently forced the Soviets to invent Eurodollars. “Nothing” just hasn’t been invented yet. 2. The Military-Industrial Complex Doesn’t Want Peace If you tell me nonsense like “peace requires strength,” I’ll laugh at you. Not because it isn’t true. But because of context. In matters of defense, strength certainly matters. But the USG has specialized in offense since the USS Arizona sank. (My great uncle was there and lived. Unfortunately, but understandably, he refused to talk about it.) I won’t belabor this section with anything other than a chart that says it all. [SJN] Since September 10, 2001, LMT is up 1,937.03%, NOC is up 1,733.19%, GD is up 757.60%, the Dow Jones US Aerospace/Defense Sector is up 657.63%, and Boeing is up 609.61%. The SPX pales in comparison, only up 277.06% over the same period. Marine Corps Major General Smedley Butler was correct when he wrote War is a Racket. But that racket makes some people very rich. And they usually have ties to Washington. In this sense, “America” isn’t one unit. Neocons and defense companies always want war because they profit by it. 3. The “Stick” Isn’t as Big as It Used to Be, and America Doesn’t Do Carrots The rest of the world is getting together under Chinese and Russian leadership to escape Dollar World. Many influential economists think this is impossible. But the difference this time is that the move isn’t organic or passive. The BRICS and the Global South are actively looking for alternatives. It’s the same spirit that created the Eurodollar. Just because we can’t see what that alternative will be doesn’t mean it won’t come into being. Most other countries know America can’t stomach a full-blown war. If it could, US troops would’ve been in Ukraine months ago. (Ok, but not clandestinely.) Not only that, but America can’t fight on two fronts anymore. It simply doesn’t have the same industrial capacity it used to have. So the world has become bolder and more brazen. It’s not nearly as afraid as it used to be. And what’s worse, when America comes up with a benign idea, most countries simply don’t believe it. America always has an ulterior motive. So a Russian/Chinese alternative is an excellent bet for these nations. Wrap Up China’s diplomats have embarrassed Foggy Bottom. Peace broke out in the Middle East, and America was caught on the back foot. But can America act as an impartial peace broker anyway? I don’t think so. Though the U.S. is technically at peace now, it’s been at war for [226 out of 246 years](. Twenty years of peace. Ever. There are too many factions inside the U.S. for “America” to act as one unit. And the warmongering factions are happy to send someone else’s sons to fight their war for them. Someone is always ready for battle, whether it’s defense contractors, neocons, or diasporas. So it’s no surprise that the U.S. isn’t viewed as a peace broker. Nor is it a surprise that it’s considered a warmonger. Have a lovely weekend! If this is the sort of thing you’d like to see more of, please let me know [here](mailto:feedback@dailyreckoning.com). Or if you have any suggestions for future topics, do let me know that as well. All the best, [Sean Ring] Sean Ring Contributing Editor, The Morning Reckoning feedback@dailyreckoning.com Thank you for reading The Morning Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:dr@dailyreckoning.com) [Greg Guenthner] [Greg Guenthner, CMT,]( is chief strategist at Forge Research Group. He has spent the better part of the past two decades developing long-term and short-term strategies with a single goal in mind: to help everyday investors generate outstanding returns and control their financial futures. Greg’s charts, analysis, and insights have appeared in Marketwatch, Forbes, Yahoo Finance, and many other financial publications. [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. 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