30 March 2022

I get like this sometimes; I am just so frustrated and disillusioned with all the fake fickleness that makes up society. It feels like we have learned to accept the status quo and forget the principles that make humans great. Loyalty, truthfulness, friendship, integrity, support are all conditional, gone are the days where ones word was their bond, where friendship and support meant you have your friends back even if it is inconvenient. I am no angle trust me, I am just trying my best.

I will not comment on the Budget in Australia where the politicians behaved like politicians.

When Socrates was sentenced to death by the majority of the judiciary for putting forward ideas of philosophy he could have escaped his death sentence. Instead he chose to accept his fate by standing by his principles.

I have had many conversations on a daily basis with my brothers in Ukraine. I have such incredible admiration for the strength you have shown and like Socrates some of you could have chosen a safer part but instead you have chosen to honour what you believe in. You are all hero’s to me and I salute a world where some people have put principles first.

Market Watch

The S&P500 is only 3.98% from its all time high as you can see above. I believe this is where things are about to get super exciting.

You can see a new feature below with the Ditto Navigator how I am doing trading this symbol. I have traded this symbol profitably however I am currently short and losing. Having said that this is a setup I usually get quite bold with as I can see a good place to put my stop losses (the previous high) so I am adding to my shorts.

Money Complex

Lets talk yield curve, yesterday we saw parts of the longer (30yr) yield curve invert. However all eyes are on the 2y – 10y which overnight got to 1 bps point from inverting. As we have heard since 1950 every recession has been proceeded by an inverted curve, not every inversion has resulted in a recession though.

In 2019 we inverted and got a recession, however everyone blamed it on Covid. I should add that this is not a market timing tool. The yield curve is a very important structural element of the money complex, one that should not be ignored. It is something I have been watching closely for some time.

I am seeing more debt servicing costs on the horizon. I am seeing many zombie companies that will eventually have to shut their doors when they can no longer service their debt load.

Take the Australian forecasts for their debt servicing over the next 4yrs. It is has doubled their model worked on a 2.3% yield for the 10yr over the next 4 years. Yesterday the 10yr yield was 2.9% so many companies and families are going to get their budgeting wrong. This will put pressure on solvency and in turn the economy.
I remain on the watch for China’s economy stalling and putting strain on the global economy. China has a major debt overhang and is dealing with Covid lockdowns. The war in Ukraine is now estimated to have cost the world $2.6 trillion, a significant head wind for the global economy due to its impact on gas and oil prices, wheat and other grains and supply chain bottlenecks.

For now we are still at record low interest rates and low unemployment and there is still a lot of money sloshing around in the system. Be nimble and ready to trade the short term with small size as we are in extremely volatile conditions.

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