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Bond Massacre Continues and the Fed Dove Rally Fails Already

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34 comments on Bond Massacre Continues and the Fed Dove Rally Fails Already

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Indexes and Bonds courtesy of Investing.Com

Well, That Was Fast

Smack in the face of yesterday’s rally attempt on very dovish Fed comments, both the stock and bond markets revolted today. 

Yesterday’s Action

Indexes and commodities courtesy of Investing.Com

Yesterday the Nasdaq rallied under 400 points. As I type, it is now down over 600 points. 

Six Things Guaranteed to Be Transitory

Stocks, Gold, Oil, Rip Higher as Dovish Powell Wins Hoot of the Day Award

That was my observation after yesterday’s action. In my post, Stocks, Gold, Oil, Rip Higher as Dovish Powell Wins Hoot of the Day Award I also made these comments.

The reaction today does not change in the least. We are now in a bear market. This is another Fed-induced bear market orgy that won’t last.

All Powell can do is prolong the pain. How is the jump in crude today in the Fed’s (or anyone’s) best interest?

Powell would be better off getting it over with. But he won’t. And he is clueless about what’s coming.

The longer the Fed tries to stave off recession, the deeper it ultimately goes. We are headed for a waterfall event.

Hoot of the Day

  • Reporter to Powell: “Do you think the Fed has a credibility problem?”
  • Powell: “No, I don’t …. And I want to keep it that way.”

That was from the post FOMC Q&A video that I watched.

For his performance, and arrogance, Powell wins my Hoot of the Day award by a landslide.

Cathie Wood Bonus Hoot

Beautiful Observation by Suburban Drone

Stopped Already 

Yesterday and Today

Yesterday: “This is another Fed-induced bear market orgy that won’t last.”

Today: “Well, that was fast”

Panic Buying Turns to Panic Selling 

Tick counts are a measure of stocks bought on upticks (rising markets) or downticks (declining markets).

Sustained counts over +1000 is panic buying, under -1000 is panic selling. 

My hoot of the day is this observation “Panic Buying Turns to Panic Selling“.

Will add a tick chart as soon as I have one.

Repeating Comments Made Many Times

The S&P 500 could and probably will decline 50% from the top. And if it does stocks will not even be cheap.

I repeat my April 22, 2022 message Expect More Stock Market Pain Because It’s Coming

By the way, If You Think I’m Bearish Please Read John Hussman.

This post originated at MishTalk.Com.

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Mike Shedlock

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34 Comments
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Oldest Most Voted
killben
killben
4 years ago
Peter Schiff is right in this case…
“If you think the #StockMarket is weak now imagine what will happen when investors finally realize what lies ahead”.
Mish has more or less been saying the same thing.
“There are only two possibilities. The #Fed does what it takes to fight #inflation, causing a far worse financial crisis than 2008 or the Fed lets inflation run away!”
I would agree with us. The Fed is trapped (leaving me deliriously happy)
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Scooot
Scooot
4 years ago
Reply to  killben
Rampant inflation is the worse of the two. Bailing out the financial sector at the cost of rampant inflation wouldn’t be a vote winner.
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TechLover1
TechLover1
4 years ago
Reply to  Scooot
It may be worse for you but it is better for a lot of debtors. And there a lot of them, including the government.
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TechLover1
TechLover1
4 years ago
Reply to  killben
FED is expecting that goods inflation will moderate as supply chain and manufacturing normalizes.
I believe they will take small steps in QT and rate increases till the end of the year. If inflation is still over 8% by then, all bets are off. They will slam hard on brakes at that point as election will be done and two more years before the next elections.
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PapaDave
PapaDave
4 years ago
Loving the volatility! A traders dream. I keep buying energy stocks on the pullbacks. Only to sell them soon after. Energy is going to do very well going forward so its a great play on pullbacks.
Techs are starting to look attractive, but I’m willing to wait a bit longer.
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Billy
Billy
4 years ago
Mish, you are predicting a hard landing or a recession. By your definition would that be two consecutive quarters of GDP 3MMA decline?
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Lisa_Hooker
Lisa_Hooker
4 years ago
On a lighter note, MOEX and RTSI are both up over 0.5% for the day.
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Nuddernoitall
Nuddernoitall
4 years ago
The S&P hasn’t fallen to these terrible levels since March of …..2022. (Editor says while that is factual, try something a bit more dramatic.) Ok, how about this: The S&P hasn’t fallen to these shockingly low levels since June of way way back in 2021. (Editor says, I’m really not feeling the pain, here.) Ok one last try: Tomorrow the S&P will begin the journey to another 10% plummet to levels not seen since the very first month of the calendar year in the ancient times of 2021. (Editor says, don’t call us we’ll call you.)
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WTFUSA
WTFUSA
4 years ago
Reply to  Nuddernoitall
“The S&P hasn’t fallen to these terrible levels since March of …..2022.”
The S&P closed lower last Friday (4/29) than it did today. So did the Dow. They are both positive for the week with one trading day left…
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Nuddernoitall
Nuddernoitall
4 years ago
Reply to  WTFUSA
S&P 4131.93 last Friday. 4146.87 today. You are correct. Thanks for catching my error.
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MPO45
MPO45
4 years ago
All the metals (on Kitco), including gold, are down across the board. Gold stocks are down too. GDX down over 3%. So much for the theory of gold safe haven.
Puts paid out well. cha ching.
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Esclaro
Esclaro
4 years ago
Reply to  MPO45
Gold and the miners are for geezers who can’t remember their own names. No one under 70 buys this crap anymore!
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TexasTim65
TexasTim65
4 years ago
Day traders probably having a field day the past couple of days given the wild swings in the market.
My stomach can’t handle day trading so it’s not for me but I have friends who like it because they crave action.
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Nasty Edwin
Nasty Edwin
4 years ago
Mish says we are headed for a waterfall event. I tend to have the same view but the event is very hard to predict. Trying to trade a bear market is tough. You can get whiplashed out of your position very easily. The best I can see as a fairly decent indicator is using a monthly chart on the S&P 500 and fill the chart going back to 1999. Use ema 8 and ema 20 and you will see what I mean. Of course this is just an observation.
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Six000mileyear
Six000mileyear
4 years ago
Reply to  Nasty Edwin
Germany is a better example of a waterfall event. The DAX topped in November 2021 and rolled over a little. No bounce has made a new all time high despite US markets making new all time highs in 2022.
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Dean_70
Dean_70
4 years ago
So where is the save haven besides cash?
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Zardoz
Zardoz
4 years ago
Reply to  Dean_70
Shotgun shells and Spam.
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jfpersona1
jfpersona1
4 years ago
Reply to  Zardoz
How do ads for erectile disfunction help?
Oh…wait,…
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TexasTim65
TexasTim65
4 years ago
Reply to  Dean_70
I would not consider cash very much of a safe haven given it’s losing 5-10% to inflation. It’s merely the least of the bad options.
Assuming you don’t want to invest in shotgun shells and spam, then physical assets like gold would be a safe haven. Also pay off your debts if you have any.
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Lisa_Hooker
Lisa_Hooker
4 years ago
Reply to  TexasTim65
Whiskey, tobacco and vacuum packed coffee.
Inflation? If you are still working do not pay your debts until you absolutely must.
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Esclaro
Esclaro
4 years ago
Reply to  TexasTim65
Gold is not a safe haven. A strong dollar destroys gold and it’s only going to get stronger. DXY 120 here we come!
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Billy
Billy
4 years ago
Reply to  Dean_70
A wise old man once told me Drugs and Prostitution. He’s never been wrong so far.
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Bam_Man
Bam_Man
4 years ago
NASDAQ trading gets halted at a 7% decline.
Getting close.
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dbannist
dbannist
4 years ago

I sold 25% of my stakes in energy yesterday. I needed to cash out and have a bit more cash.If there is a rebound a bit tomorrow I’ll sell my entire fertilizer position (about 40% of my portfolio). It’s up a huge amount, especially my 3 year old NTR. It’s time to take some money off the table. I’ve learned that taking profits is far harder than buying low. Anyone can buy low. It’s the selling high that’s always been my problem.I’ll hold onto my Barrick gold position. I think it will play out nicely over the next year even if it’s not so good the next 2-3 months from turbulence.

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Maximus_Minimus
Maximus_Minimus
4 years ago
Reply to  dbannist
I wanted to unload my ETF, but too late I guess.
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dbannist
dbannist
4 years ago
Reply to  Maximus_Minimus
It is never too late until it goes to zero. Then it’s too late.
I’ve held a losing position all the way to zero, thinking it would recover.
The best thing to do is assess where something is going, not hope it does better. Look at the reason you originally invested, assess if those reasons are still true, and if not, sell.
And if you bought because it was going up and that was your only reason? Sell immediately and promise to never do that again. I’ve lost money educating myself on why that’s a bad idea, never again.
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Maximus_Minimus
Maximus_Minimus
4 years ago
Reply to  dbannist
It is a long-term retirement fund, but it hurts.
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MPO45
MPO45
4 years ago
Reply to  dbannist
Energy is the one thing you should keep. Oil and gas is going higher from here, way higher. My XOM and BP is doing very well. Pays nice dividend too.
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dbannist
dbannist
4 years ago
Reply to  MPO45
XOM is what I sold yesterday.

I believe there will be a dip in the price of oil over the next month. If so, I’ll buy back in.

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QTPie
QTPie
4 years ago
Calling the PPT. Need you down here on the trading floor, stat!
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El_Tedo
El_Tedo
4 years ago
Paul Volker is lionized for his aggressive rate increases, in spite of the nasty recession that followed. He’s almost universally respected. Powell failed to get the message. He seems more afraid of Wall Street and the bankers than inflation.
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killben
killben
4 years ago
Reply to  El_Tedo
He might be taught a lesson on whom to fear by the time this mess ends
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Nasty Edwin
Nasty Edwin
4 years ago
I vote for more than 50%. It may take a few years but I’m betting on 80%. Too much debt!
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Steve_R
Steve_R
4 years ago
might go limit down today, maybe waiting for the end of day, should trip breakers around 210 down, I think.
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