NYC Journal

[Calzone]

The Japanese Nikkei is down 12% already, and the sell-off underway is global.

Evidently the carry-trade outlined above is of “epic” proportions.

Also the markets are saying the FED is “behind the curve” meaning and translating into a sudden hard landing.

The future’s markets suggest a bigger drop than what has happened over the last few days is happening today. The DOW futures are saying over a 1K drop at the open.

Pretty much Kaa-Boom. There are comparisons to 1987. The markets open in a little more than 25 minutes.

Cal

 

[Calzone]

Update: the DOW futures suggest an almost 1300 point drop at the open. The Nasdaq an over 5% drop and pretty close to 6%.

The Japanese Nikkei down 12% on the other side of the world. Will this carry over?

Cal

 

[Calzone]

If I were a player, I’d place a buy gold on a limit order.

The day range has been about $2400-$2500, but my limit order would be low balled perhaps $2350-2360 range. Since I’m such a small player you never know when a low ball order could be filled.

Cal

 

[Calzone]

The losses on the DOW moderated to down only slightly above 1100 points at the open, but in the meantime the Nasdaq losses at the open well exceeded 6%.

The blood bath begins. Understand that a lot of electronic trading could occur. There are lots of stop-loss orders in play, and it is still early in the day. Right now is only the open. It will be a long day.

How far and deep is this carry trade, and how crazy was leverage used? Is it really “epic?” If it is “epic” as they say the U.S. markets could follow the 12% drop in the Japanese Nikkei.

The exterminator is here and he is suited up to dig out the yellow jacket nests. Also I had him look around the house. We also have carpenter ants.

Anyways because we live close to a forest, undeveloped land, and have an empty basically abandoned house nearby, part of our yearly maintenance now. Not inexpensive.

Cal

 

[Phil_F_NM]

That Prince solo was out of this world. And where did the guitar go when he threw it up in the air? Some folks said he gave it to George. I think the "lead" guitarist in that lineup of incredible musicians, was Eric Clapton, who played on the original recording.
Phil

 

[Calzone]

Phil,

I think it was the roadie/guitar tech who caught Prince when he did the backward crowd surf. The Guitar Tech caught the guitar at the end of the performance, and then it was gifted to Oprah Winfrey, who later gave it back to the guitar tech.

This induction to the Hall Of Fame in George Harrison’s case was done Post-Humorously, mean he already was dead.

Eric Clapton was the guitar player on the original Beatles recording in the 1968 original version.

For guys like you and me, George Harrison represents a late bloomer, but IMHO I think he is the greatest Beatle and surpasses John Lennon and Paul McCartney. Think of the White Album and Abbey Road. Think of the songs “Something” and “Here Comes The Sun.”

As far as songs go, I can’t imagine the 60’s without the song “While My Guitar Gently Weeps.” I can’t even imagine the early 70’s either without that song.

Clearly Prince is/was a great guitar player, and a wonderful performer. Ego is a real problem that goes with talent, but the more I dig into the back story, the more I see the role model of cool. The first two solo’s by the other guitarist are good, but they get crushed by Prince’s performance.

BTW Prince was known to dismount and detatched from his guitars at the end of a show. Many were damaged and were repaired after being thrown.

There is a half hour U-Tube video that dissects Prince’s solo and deconstructs the transformations, passages, and how he built upon them.

Eric Clapton’s solo from the 1968 recording is a very highly rated best solo of all time. Just so expressive. It still kills me. Another video recording worth watching is a live recording of Cream doing “Crossroads” in some small venue. I favor this performance because of the energy and rawness it preserves and promotes. No way to describe it other than pure raw energy. Crazy great. It makes you believe the expression “Clapton is God.” This recording is just amazing.

The drumming and the bass with the guitar expresses what no other power trio has ever done.

I’m kinda inspired. The songs While My Guitar Gently Weeps and Here Comes The Sun are both in the key of A. There are some shifts between major and minor, but my idea is to interweave the brightness and upbeat Here Comes The Sun with the darker message of While My Guitar Gently Weeps.

What a great contrast. Kinda reflects the severe weather, the storms, and the flooding that is happening due to global warming, and also the fractured and broken world we live in. I heard in my head the modal change that linked these two songs from me by a Tommy Emmanuelle Beatles Medley that he performed at some upstate New York Bluegrass Festival. Somehow a chord change when he was playing Here Comes The Sun made the link and jump to While My Guitar Gently Weeps.

Anyways my Jazz influences helped me recognize the jump, and if I ever could perform this idea/concept, it could be like how Jimi Hendrix took ownership of the Bob Dylan song “All Along The Watchtower” even though Bob Dylan originally wrote the song.

My friend Tim mentioned that at a Bob Dylan show Bob Dylan actually announced the song All Along The Watchtower that he was going to perform next as a Jimi Hendrix song. I don’t know if this is a fable or not, but how cool is that if true?

Cal

 

[Calzone]

The sell off has tapered some of the early day losses. Some headlines are starting to use the word “Crash” to describe what is going on.

Tomorrow is yet another day, and it likely will take a while to settle. It was a long build up, and now even some are speculating this as a buying opportunity.

Gold did not dip below $2400.00, but like I said tomorrow is another day. This turmoil is not going away.

My lawn has wet grass, and it taxed my mower to the point where I’m now taking a break and recharging the batteries. The mower generally has enough juice for a 3/4 acre property, but the wet grass are my 1/5th acre too much. I only have a tiny patch left.

Cal

 

[Prest_400]

Tomorrow is yet another day, and it likely will take a while to settle. It was a long build up, and now even some are speculating this as a buying opportunity.

I checked my company provided pension funds last weekend, just 2-4 years (I am young) and saw really nice numbers of 30-50% returns. The latter is a US index. Got some Fomo as I basically saved cash on deposits.
Having grown in the Great recession, if I manage to keep this job well, there is some nice opportunity to buy.

I am university trained in economics but should be ashamed to have forgotten a lot. A while ago I came up this thought logic: How can the stock market be so high up in 2021-23 if the situation isn't as happy as 2019?!
If returns of the last 6 months were wiped out in a day... Yeah but put the 5 year view and it's not that bad of a picture, look out below because there I would want to buy.


Guitar wise, Deep Purple has 2 concerts in my region and writing this on the way home from the 1st. Very cool to know 3 of the guys in stage are the same as the classics, and I pictured myself in this experience as if I was in the Budokan 1972.
Saw the Rolling stones 2 years ago, 79 year olds with energy! Tbh never grew up listening to them but it was a great experience.

Clapton is not touring that internationally, but would love to see him. In his latter years I liked his reggae infusion. My HS self wants a proper audiophile release of the Crossroads 04... The I shot the sheriff solo he did was a crazy fusion.

 

[Calzone]

Jorde,

The “Magnificent Seven” are reported to be below their 50 day moving averages. They were very over priced and overbought because of hype and herd mentality. The Mag-7 are all tech stocks… Hmmm

I look at a certain individual who sold half of his position of Apple stock to sit on a pile of cash. Certainly someone is waiting on the sidelines with a pile of cash for a good reason.

One trick I learned from attending the “Money Show” held in Times Square at the Marriott Marques was to expand the timelines of the charts. I also learned about pivot point analysis, and how to interpreter candle stick charts. I learned a lot by attending these shows, and in particular this one trader John Person made me a lot of money.

Pretty much I evolved into a position and swing trader, because of tax reasons and to save on trading costs.

Basically you don’t need to know a lot to do well. I only had a few skills, but my understanding of the news and my journalism background (Masters in TV broadcast Journalism and Screenwriting) came in handy in connecting the dots and seeing how news events effected the markets. Pretty much I was a news and data hound.

We live in an unbalanced world. The Japanese Central Bank raised their interest rate, and now the Yen’s strength is unwinding the carry trade. Margin calls are happening and the selling in other markets is to cover the margin calls and to forestall forced selling.

Much of the declines in markets around the world is the unwinding of this crowded carry-trade that involves crazy leverage. Think hedge funds… Think 30 to one leverage…

Pretty much most of the gains is pretty much a crowded market, not so different than the Mag-7. In other words a crowded trade…

Central Banks are accumulating and hoarding Gold. Ask yourself why? Is it a hedge? Ist it a store of wealth? Are currencies going to fail? Is inflation a problem? Are we heading towards a world war? Are they worried about rule of law and paper assets?

Next I would say it would be good to be sitting on cash with so much debt around. During the Credit Crisis I was sitting on cash that were profits from my oil and natural gas trades. Treasures and heirlooms were being sold for “no-money” by people who needed cash.

Pretty much it was about two years where it was a great time to buy assets.

Remember recent economic history: first there was a housing crisis in 2007; and then a credit crisis in 2008. It pays to wait and let the other shoe to drop.

If you are a “Bankster” you should understand and know that the headlines are just the tip of the iceberg and that economics is very-very structural.

Speaking of which, they are now saying the FED is behind the curve, but when interest rates drop in the U.S. what do you think will happen? And also how will this effect the Yen carry trade? Might those U.S. assets deflate more because of the yen carry trade? Did the carry trade push U.S. assets above their fair value?

Might there be a second follow through of the yen carry-trade that is a lot worse than now when and if the FED lowers rates in the U.S.? Understand that in Japan deflation was a problem for decades, Japanese interests rates have been low for decades, and this carry trade is being called “EPIC.”

Hmmmm…

Valuations are insane and crazy. Pretty much it is as if millions of people did not die, and there was no Pandemic, and pretty much productivity continued to grow.

Cal

 

[Calzone]

The Nikkei rebounded 10%, and it looks like a big bounce is happening. Somehow things are “normalized,” but is there still a recession risk in the U.S.? There is some debate.

Consumers are still spending as if things are normal, but meanwhile 50% of credit cards have balances on them that are not getting paid off. Households are living on debt. Is this the new normal?

The unemployment numbers definitely indicate a slowdown, the numbers don’t lie, but do they indicate recession? Maybe not.

The FED has kept and maintained interest rates relatively high, and so far this has only gone so far to lower inflation. While higher unemployment is unpleasant, it could make a difference since the FED has capped a ceiling on further rate hikes. Time is now the weapon against inflation and now unemployment will be the variable.

The downturn that was exposed yesterday and last week didn’t really go away. The structural issues still exist where the carry trade began to unwind. The interest rates in the U.S. have not dropped yet, but if they do expect volatility to return. Could get very ugly fast…

Gold never fell below $2.4K. I thought things could get ugly and forced selling might of offered a buy opportunity.

Cal

 

[Calzone]

Still sore from pull-ups and pushups done two days ago. I’ll see what I can do today.

I’m feeling a bit old and tired lately.

Saturday we have a house party to attend. Looking forward to the event.

I guess I’m just trying to recover from all the drama that involved the kids.

Going to bed early, taking it easy, and getting a good sleep seems to be just slow progress against the accumulated fatigue.

I’m beginning to wonder if this is just aging?

Cal

 

[Calzone]

Went for a 2 hour 40 minute ride on the Empire State Trailway to pump some blood. Pretty much a gentle pace with a 12.4 mile average speed, and a top speed just under 30 mph.

These paved railroad grades have long inclines and long descents. I only covered 32 miles. I certainly beat myself up a bit and I wonder how I will feel tomorrow. Felt great to be on a bike.

Drank a half gallon of water on the ride, sweated so much that I did not have to pee. I learned if you drink 16 ounces of water it takes about a half hour to get absorbed. This information I gained through the chapter that described death via dehydration.

I am a sweat machine, and know I did this ride beginning at 11:20 AM, so I rode into the heat of the day.

I also wanted to test my gearing. Before converting the Ti IBIS into a 1x11 XTR training bike I wanted to know if I needed a lower gear to climb this long ramp of a climb in Carmel. I’ll calculate the gearing, but I was able to stay on top of a moderate gear using my strength. My speed was only slightly above 5 mph, but that’s alright.

I see many cyclists walking their bikes up this hill. Even with UBER low gears this hill is long enough to be either a burner or a grinder.

Today I stayed on the big ring and relied on strength to crank my big gears. It was a good workout, and one that I needed. Been a while since I biked.

As soon as I got home I ate.

I took a beating like a man. The trailhead in Yorktown is 11 miles away, or about a 20 minute ride.

I like starting the ride at Carmel across from their town hall because there are less road crossings, less walkers, and less dog walkers. Things really open up around Carmel.

Time for a shower, then dinner.

Cal

 

[Calzone]

My thinking that a FED interest rate cut will exacerbate the unwinding of the yen carry-trade is validated by an article that was published today. In that article they stress that the FED is behind the curve, but also because of that an aggressive amount of cuts would be needed.

From my reading the carry-trading is of great proportions. This is a very popular trade and involves lots of leverage.

This could be a reason why Central Banks are acquiring and hoarding gold. This involves the entire world, but where will the weak link be. Understand that this is a very crowded game of musical chairs and involves an unheard amount of funds. The beginning of this unwinding has begun, but the end is still way out in the future.

Warren Buffett is sitting on a record level of cash… Central Banks are stockpiling gold… Something is up…

Cal

 

[Calzone]

On the drive to the trailhead I was listening to NPR and I heard part of an interview with Bill McGiven, the environmentalist. Recently last month I met Bill McGiven in Boston at that event “Maggie” had to attend. Bill and Maggie were on a panel.

The world is not that big.

Cal

 

[Calzone]

“The money has to come from somewhere,” I say.

Home Equity Lines Of Credit is a source of cash that seems to be a way for homeowners to pay for college, consolidate debt, and pay for home improvements.

But this also falls in line with increasing debt loads and pretty much living on credit.

Also housing the shortage, an estimated 1.9 million homes, is not universal. In some places they are developing and building to meet a the demand. The area near Wilmington North Carolina is an example, and certain parts of Texas are areas that are undergoing hyper development.

The problem being reported is that these areas being developed are prone to either flooding or wild fires.

Hmmm…

Crazy stuff.

Cal

 

[Calzone]

JP Morgan says the carry-trade unwind is 50%–60% done. So there will be a round 2.

So will a U.S. recession or interest rate cuts make this round 2 worse than round 1?

Markets are lower, so to sell winners to cover losses and margin calls will mean smaller profits to lock in.

There is a lot of talking of some aggressive rate cutting by the FED which would worsen the carry-trade unwind. Remember the Fed is said to be behind the curve.

If we are in a recession or heading into one, any rate cut might be too late. The yield curve inversion has been inverted for the longest time ever recorded. A recession could be a bad one. There is a lot of debt out there.

My thinking is the consumer is using debt to maintain their standard of living, or are living beyond their means by doing things like tapping into their home equity again like in 2007-2008. Debt is debt, and not a sustainable lifestyle.

Cal

 

[Calzone]

Credit card delinquency rate has hit 9.1%. It has not been this high since 2011. The 2011 delinquency rate was caused by the 2007-2009 recession.

So far we are not in a recession yet officially, yet we are already in the realm of post 2007-2009. Credit card debt also is at record levels…

Interesting data… Clearly debt is a problem. Lower interest rates to the rescue, but then likely and probable reignition of inflation that only has moderated.

Cal

 

[Calzone]

I kinda feel relaxed and great. Not really tired.

Let’s see how I sleep tonight, and the tell all will be how I feel tomorrow.

Will I need a rest, or will my body tell me to work it harder?

I have the capability to use a 52T chainring on my Ti IBIS. A 52 tooth is usually a big chainring on a road bike, but the IBIS with a Kojak 1.5 wide slick has a small diameter of only 23.5 inches. I figure with a 11-40T XT 11-speed cassette I will get a 30.55 low and a 111.09 high.

Some of the steps in the gearing might be big jumps, but the IBIS responds well to standing, and the short wheelbase and quick steering make for great acceleration and great for climbing. Pretty much a hammer bike.

The Newsboy does not have a UBER high gear to go Gonzo on downhills, and the geometry is relaxed kinda for touring or leisurely relaxed long rides.

My Ti IBIS is the hyper agile aggressive bike for sporty riding. Really great for standing and stomping.

The Kojak tires have armor belts to provide puncture resistance. The Ti IBIS will be an evil bike. Kinda handles like a BMX bike. I think when I remove the front drivetrain (2x11) and convert it to a 1x11 I could be around an 18 pound bike.

Today’s ride showed me I could use taller gearing, at least for the Empire State Trailway. I’ll have to see how it works on my local route down Washington Street and through the towns of Verplank, Buchanan, and Montrose. Lots of rolling hills, long descents, and some crazy speeds can happen.

I have the option of adding a SID Race suspension fork and having a front disc brake. Already have this kitted out. Would add some weight, but better brakes that could be useful. Another option would be upgrade the front brakes to a V-brake.

Standing builds a lot of strength, and more of the body is used, including the upper body and torso. Not very efficient though. Pretty much great to have and use torque to accelerate and for climbing. A bit of chain stretching happens…

Pretty much a fitness bike to hammer on. Could be exciting and fun.

Cal

 

[Calzone]

I’m posting a lot of spins on news headlines. My credentials are a Master’s degree in TV Broadcast Journalism (and screenwriting). Pretty much I create narratives from facts by connecting the dots.

I have to announce a disclaimer: I am not a financial professional, I study the markets, and I put a plausible spin on things. I am not always right, but I post these items as information and learning exercises.

We live in a complicated world, and the world of finance and economics is fraught and corrupt. Participate at your own peril.

Cal

 

[Austintatious]

If we are in a recession or heading into one, any rate cut might be too late. The yield curve inversion has been inverted for the longest time ever recorded. A recession could be a bad one. There is a lot of debt out there.

Not looking good for many many folks.

Americans Prepared For Lasting Inflation | Armstrong Economics

Americans are preparing for a prolonged inflationary period, based on new data from the New York Fed. The New York Federal Reserve's Survey of Consumer

www.armstrongeconomics.com