The Second Leg Down

Equities to leave la la land

Review

Nothing has really changed since my last writing on Nov. 16th. I am still looking for contagion to hit crypto. I am still expecting equities to take a hit.

Then Why Am I Writing?

Equities moved sideways, moved up large after Powell went dovish on his speech, calling for a slow down in hikes, and the result was that shorts were squeezed.

Ask yourself, why would he change his narrative? Well it’s because something broke in the system.

Something broke, and we will not know for weeks. Maybe its a massive global event in a few weeks. I do not know, that is why they call these black swan events.

That does not mean that the markets will not tell you in advance.

First, a short story of my experience of shorting the covid crash

I posted this on twitter, but I will explain it once more.

When the markets ignored COVID/China for a couple months, I was worried that we would see a collapse. Powell had struggled to raise rates in 2018 which caused him to pivot to repo agreement QE. He had to step…