The Bear Market is over, and the next major Pullback will kick off Wave-2-FOMO.... lower highs from here.
RISK-ON Behavior
Market Breadth continues to expand- More stocks advancing than declining (near breakout)
Volatility is reflecting confidence in RISK Taking
- Why buy insurance when Market Risks (Inflation + Recession) continue to ease?
Liquidity is Rising
Your Thesis doesn't matter When Liquidity rises,
This is the Fed's Balance Sheet minus TGA (treasury general account) + Overnight Reverse Repo.
Net Liquidity = Fed Balance Sheet - ( TGA + Reverse REPO)
Reverse Repo Liquidity Fueling Risk Assets
- When CPI doubled in April 2021, Liquidity left risk assets finding a safe haven in RRP
- As CPI collapsed, RRP liquidity peaked & Stocks ripped in 2023
- Now that CPI is in restrictive territory, RRP is draining back into risk assets
Global Liquidity 📈
- China is cutting rates
The 2nd largest Economy (China) is back in Q.E.
M2 Growth (Money Supply) is rising in China and Japan
The 2nd and 3rd largest Economies are expanding
There's no inflation in China, so they will KEEP PRINTING
Expect CB-Balance Sheets to Keep rising....
The U.S. will join soon....
When Regional Banks BREAK 🤯 expect more BTFP, aka Liquidity from the FED.
- BTFP = Banks Term Funding Program
Rolling Recession or Expansion
The U.S. Economy is still holding up- It's likely we don't see a real housing crash because no one is selling their house at 3% to lock in 6% rates.
- The Labor market remains strong driven by the services economy
- Higher Stock market means more confidence & More spending
Housing
The Bedrock of the U.S.Economy (Housing market ) is recovering!
Homebuilders are optimistic
We saw the Largest MoM uptick of New Residential Construction in 3 years.
Zoom out, is the bottom is in?
Building Permits are Rising to support new construction builds
The Homebuilders ETF confirms market sentiment - Near ALL TIME HIGHS
The Market is smarter than us
Consumers
Consumers are still Spending (YoY- positive)
- Services are Expanding with the exception of Gasoline stations which is great news (lower energy prices)
- Goods are contracting with the exception of Motor Vehicles which boosts GDP
Inflation may collapse
I expect CPI to be sub-3 by August - Maybe 2.5%, because Oil is Set to collapse
- Make no mistake, the global Manufacturing economy is still slowing while RUSSIA and IRAN selling CHEAP oil. So I think We see Oil in the '50s. Crushing Inflation expectations.
Shelter CPI is falling in real time
- Remember Shelter is Lagging....ZILLOW and Redfin data Suggest SHELTER CPI collapses soon, along with is Headline and CORE CPI.
- Once the Cost of Services drop (heavily influenced by SHELTER CPI), the cost of capital can drop (further igniting risk assets)
Top 5 Picks next 18 months
Bitcoin
Blockrock ETF
- Opens the door for Retirement /401k/Pensions/
- Institutions that don't want to mess with private keys
Defi
- Stablecoins
- NFT's
Metaverse
- Super Charger Network
- #1 Selling car in the world
- CyberTruck like Model-Y in 2019
- Dojo super computer (lease)
- Closest to Autonomous Taxi Fleet
- Pure AI
Data Analytics
PoR - Proof of Reserves
- CCIP - Cross Chain Interoperability
- ZKP- Zero Knowledge Proofs
- A.I. resistance (Deep Fakes)
-