Risk Off Continues

Fed Minutes are Worthless

So the markets continue to be pounded by sellers, and we are glad to finally say that the markets are carefully assessing the future of our economy. With the FRB continuing to reduce their balance sheet (barely), markets will not see Central Bank support, well at least not from the FRB. (The PBOC is getting desperate so they are a wild card) The FRBs egg heads continue to believe the recession will be averted, much like Bernanke thought back in Feb 2008…yea this aged well didn’t it? NOT!

Source: NPR

We know the truth, the FRB does not care about the economy, what it cares about is continued concentration of wealth, continued US fiat dollar hegemony and a continuous flow of credit and capital to those that can leverage it up the most. Higher and higher balance sheets! Remember make public the losses and privatize the gains…you know how it goes. Rules are for the Plebeians…

Anyway, the market ramp up is clearly over and we don’t care what the bulls say, the technical set up and the fundamentals as we discussed in yesterday’s post, are all saying the same thing, SELL.

Now if you haven’t sold and were lucky enough to catch this absurd AI run up…well you are not being prudent and no we don’t care about your time frame for investing, IT DOES NOT MATTER.

Taking profits is all that matters and then you can properly let the cards shake out and reassemble your chips at a later point.

Here, look at this chart, we know the Nikkei has led the way up and we know its looking like its going to get hammered, you really want to be the hero and grab this knife right now? (All charts are sourced from CQG data and Magnelibra quotes)

Here look at the SP500 same thing:

and the Nasdaq, same thing:

Yes, we tossed in our target as well some 37.7% below the highs…we should see that level before we see new highs, yes that is exactly what we are saying.

Now if technicals change and a miraculous event occurs and markets stabilize, we still feel that the lows will be seen before new highs are seen again this year. This is our opinion, you can trade how you will, we will position how we believe the story to transpire and make our best risk adjusted trades accordingly.

As far as other charts we see that tell the same exact story but in a different way, if you don’t know what they are all saying, they are saying we are in FOR A VERY HARD LANDING!

Here look at Gold, you think this is a buy all the inflationista’s will say yes, well if we do go to full blown recession, this will crater:

Crude saying the same thing as well, rejected off the highs:

Now, these are all the technical charts, could gold trade above $2100, could Oil trade above $85 sure, then if it does the technical’s change, but for now, the picture is clear.

Even when we look at the US yield curves we can see that they are bear steepening for the majority of the last month. spreads dis-inverting while yields rise:

This is what we expect to see actually as we move into a recession, then the FRB will end up talking soft, changing their rhetoric and long time readers know what we are looking for…That is right a NEGATIVE NON FARM PAYROLL PRINT!

Once we get that bad boy, the FRBs tune will be forced to change and they will admit they were too late, went too far and now the brakes come…then the equities realized that layoffs mean equity liquidations, means sellers continue and the vaporization of leverage continues at a rapid pace which then leads to an emergency FRB rate cut.

Who the first real victim will be, well most likely some larger over exposed to CRE bank, or a hedge fund that cannonballed itself catching this knife by selling VIX and Selling SP puts…

Anyway let’s continue on to today’s settlements page where we rolled the Energies and Metals (Silver and Copper):

When we look at the GFBP no changes are made and we await a relief rally to add to Nasdaq shorts:

We know FX hasn’t got the memo yet, that they too will not be immune and that the US Dollar strength will continue as they flounder their own economies.

Looking at our MEGA8s, the option hedged P+L is now above the unhedged. Although no options are on as of end of day today, the MEGA8 Tracker will continue to sell calls in the QQQ most likely to hedge this group. Our initial goal with this was to recognize the turn and its safe to say, we have turned as the MEGA8s are now down about $816 Billion off their total market cap highs:

Here is a nice graphic to show you how hard Microsoft and Apple have been hit:

Alright guys, that is all for now, we hope you learned something, we hope you stick the course with us. The journey is going to be epic as we watch this unwind. We keep hearing that leverage is not out there, that low rates are locked in that there is no need to worry. If there is one thing that 2 decades of trading has taught, us, when we start to hear excuses for the inevitable…the inevitable becomes crystal clear!

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DISCLAIMER: For educational purposes only. This is not a solicitation to buy or sell commodity futures or options. The risk of trading securities, futures and options can be substantial and is not for everyone. Such investments may not be appropriate for the recipient. The valuation of futures and options may fluctuate, and, as a result, clients may lose more than their original investment. Nothing contained in this message may be construed as an express or an implied promise, guarantee or implication by, of, or from the author Michael Agne owner of Magnelibra Capital Advisors. Magnelibra the CTA and its Global Futures Benchmark Program may hold long and or short positions in the various futures and markets that Magnelibra covers. We will never claim that you will profit or that losses can or will be limited in any manner whatsoever. Past performance is not necessarily indicative of future results. Although care has been taken to assure the accuracy, completeness and reliability of the information contained herein, we make no warranty, express or implied, or assume any legal liability or responsibility for the accuracy, completeness, reliability or usefulness of any information, product, service or process disclosed.