Central Banks Must Choose, Save Banks Or Save People!

Recap of Stock Market Activities

The transcript provides a recap of the stock market activities on Monday, March 27th. It covers important stories of the day, including news about American CEOs in China and the banking crisis.

American CEOs in China

• Chinese government threw a jubilee for American CEOs led by Tim Apple.

• Chinese propaganda machine is using this event to show how America treats China unfairly.

• The speaker questions why he should be hard on China when everything around him is made in China and American CEOs are having a Love Fest in China.

• U.S investors are assured that probably China will not retaliate against Apple, Nike, Starbucks, etc.

Banking Crisis

• First Citizens Bank acquires Silicon Valley Bank with $70 billion credit courtesy of FDIC or taxpayer money.

• Saudi National Bank loses $1.2 billion due to Credit Suisse's collapse.

• Financial markets can misinterpret information leading to losses.

The Market and Its Limits

In this section, the speaker talks about how there are no limits when it comes to pumping the stock market. He also discusses what is going on in the market theme and what it means.

Pumping the Stock Market

• There are no limits when it comes to pumping the stock market.

• Market participants don't care about AI or idiosyncratic factors; they only care about catching up on something fake.

• Mom and Pops get sucked in and slaughtered later on.

What's Going On in the Market Theme?

• Bond traders seem to be vehement that this is going to be a recession, with bond yields going down, gold catching a bid, and oil crashing.

• The yield curve inversion indicates that there is a high probability of an upcoming recession.

• However, some market participants are still buying technology big caps because they believe that bond yields are going down.

Stagflationary Crisis

In this section, the speaker talks about stagflationary crisis and how assumptions will be proven wrong if we have one.

Dismissing Inflation Problem

• Everybody seems to be dismissing the inflation problem as if it never existed after bank failures and risk of recession looming.

• This is absolute [ __ ] because there is no guarantee that bank failures and tightening credit conditions will take care of inflation problem.

Stagflationary Crisis

• If we have a stagflationary crisis, then many assumptions will be proven wrong.

• For example, gold may not go up immediately during a stagflationary situation.

• Overvalued companies may not do well under such circumstances either.

Reading into Today's Market Action

In this section, the speaker analyzes today's market action and what it means.

Inflationary Theme

• Today's market action was led by an inflationary theme, with energy stocks rebounding significantly higher and commodities recovering from steep declines.

• Bond yields are recovering again, and the dollar is starting to creep back higher again.

Stagflationary Crisis Looming

• The speaker suggests that we may be heading into a stagflationary crisis eventually.

• Regardless of which theme it is (expansion or recession), healthcare and consumer staples have performed well.

Investing in Pharma and Consumer Staples

In this section, the speaker talks about investing in big pharma and consumer staples during a recession.

Regeneron Overextended

• The speaker mentions that Regeneron is overextended and has a reversal candle on its daily chart.

• The majority of the speaker's investments are in big pharma, not biotech.

• The speaker recommends General Mills as a value pick during a recession.

Performance During Recessions

• Consumer staples provide reliable performance during recessions while technology companies may collapse.

• The speaker advises against chasing technology stocks and instead adding to positions in consumer staples.

• Some names will recover faster than others under a recession scenario.

Central Banks: Save People or Save Banks?

In this section, the speaker discusses the broken choices central banks face between saving people or saving banks.

Inflation Problem

• Core inflation moved higher months over months, indicating an inflation problem.

• Core Services X housing made a new high since last year's summer, further indicating an inflation problem.

Impact on Consumers

• Americans are spending an extra $371 per month due to inflation.

• Credit card debt is skyrocketing as people struggle to keep up with the rate of inflation.

The Financial Struggles of Being a Grown-Up

This section discusses the financial struggles that come with being an adult, including credit card debt, student loans, high rents, inflation, and expensive auto loans.

Financial Struggles

• Being an adult means facing financial struggles such as credit card debt and student loans.

• Inflation is on the rise with electricity prices up 14% and gas bills skyrocketing in California.

• Auto loan payments are at an all-time high with new cars averaging nearly $50k and used cars averaging $28k.

• Americans are seeking cheaper products due to inflation affecting everything from groceries to clothes.

Wall Street's Purchase of Single-Family Homes

This section discusses how Wall Street has purchased hundreds of thousands of single-family homes since the Great Recession. It also highlights how Blackstone Group is buying San Diego's affordable housing and hiking up rent prices.

Blackstone Group's Affordable Housing Purchase

• Wall Street has purchased hundreds of thousands of single-family homes since the Great Recession.

• Blackstone Group is buying San Diego's affordable housing and hiking up rent prices as much as 64%.

• A report claims that Blackstone purchased thousands of affordable housing units in 2021 and raised rents between 43% to 62% in two years.

The Problem with Gangsterism Economy

This section explains why the purchase of affordable housing by companies like Blackstone Group is not capitalism but gangsterism. It also highlights how these companies can take loans with zero interest rates and scoop up single-family homes.

Gangsterism Economy

• The purchase of affordable housing by companies like Blackstone Group is not capitalism but gangsterism.

• Small business owners have to take a loan from the bank to expand, while companies like Blackstone Group can take loans worth billions with zero interest rates.

• Companies like Blackstone Group are scooping up all the single-family homes, making it difficult for people to own a home.

Blackstone and Evictions

This section discusses how evictions have been increasing across the country as landlords seek to recoup money lost during the pandemic due to federal and state eviction moratoriums.

Blackstone's Role in Evictions

• Blackstone is responsible for the increase in evictions across the country.

• Data from Princeton's eviction lab shows that more than 9,300 eviction cases were filed in the first week of January compared to just over 7,700 cases filed during the week at the end of December.

• A Blackstone representative claims that they have the most favorable resident policies among any large landlord in the U.S.

The American Dream and Foreign Investors

• Many Americans are cheering for an economic crash because they feel that foreign investors, like Blackstone, own much of what was once considered part of "the American dream."

• Inflation rates are skyrocketing across Europe, including France, Germany, Spain, and England.

Fight Against Inflation

• Inflation remains a major problem despite attempts by central banks to stop it.

• Banks like Silicon Valley Bank and First Republic Bank knew about impending financial crises but chose to cash out before they occurred.

• Central banks will always choose to save banks from their own misdeeds rather than give people relief from inflation.

Stock Market Information

The stock market indices for the day are discussed, along with the sectors that performed well and those that lagged. The breadth of the market is also analyzed, as well as commodities such as oil and metals.

Closing of Indices

• Dow Industrial average closed up by 0.60%.

• NASDAQ closed down by 0.47%.

• S&P closed up by 0.16%.

Sector Performance

• Energy was number one, followed by financials and industrials.

• Communication services and technology were laggards.

Market Breadth

• NYC had 76 advancing versus 22 declining.

• NASDAQ had 57 advancing versus 39 declining.

Commodities

• Oil prices rebounded due to Saudi Aramco investing in Chinese petrochemical companies.

• Gold and silver were down about one percent each.

• Gold will be a buy from this point on because it will thrive under the recession theme.

Energy Holdings

The speaker discusses their energy holdings and how they plan to reduce them due to the recession theme being predominant.

Reducing Holdings

• Speaker plans to reduce their energy holdings for now.

• They have not made any moves but are well hedged with puts.

• They want to reduce holdings to Chevron, Valero, and possibly SLB.

Recession Theme

The speaker discusses how the recession theme is strong and will be the predominant theme going forward.

Oil Performance

• Oil prices will fare better in stagflation than in a recession.

• Energy companies can turn a profit with oil prices sticking at the 70s.

• You have to hunt for value within energy stocks.

Gold Performance

• Gold will thrive under the recession theme.

• If we have a stagflation theme, gold is not going to perform as many expect.

Market Indicators

• Today was not an inflation or expansionary theme.

Recession Fears and Unusual Options Activities

In this section, the speaker discusses recession fears and unusual options activities in the market.

Recession Fears

• The banking crisis is being contained, which reduces recession fears.

• The speaker believes that inflation is not being considered enough in conversations about the economy.

• Nvidia is expected to experience a massive pullback of 5 to 10 percent.

Unusual Options Activities

• Tesla had around 1.3 million contracts traded with calls making up 60% of breadth.

• Nvidia had around 500,000 contracts traded with puts making up 51% of volume. Market makers are selling shares to hedge against potential losses.

• Puts were bought for SPY, Q's, and IWM with expectations that they will go down by May 5th. Someone may be spending on a massive pullback coming across the board.

• Google was shorted with expectations that it will lose more than 12% of its value by May 5th.

Market Performance and Corporate News

In this section, the speaker discusses market performance and corporate news.

Market Performance

• Energy moved higher while gold moved down. Small caps outperformed large ones contrary to recession theme. Big caps down along with chips, Chinese names, and software names.

• Healthcare and staples continue to perform well.

Corporate News

• Schwab announced plans to acquire TD Ameritrade for $26 billion in an all-stock deal.

Schwab, Disney, Apple, and Tesla

In this section, the speaker discusses various companies such as Schwab, Disney, Apple, and Tesla. He talks about layoffs at Disney and how CEO Bob Iger is willing to fire employees to pump up the stock price. The speaker also mentions that executives at Apple are dumping shares while the company's stock price is high. Additionally, he warns Tesla shareholders that Elon Musk may need to sell more shares due to Twitter's declining value.

Schwab Credit Default Swaps

• The speaker expresses concern about Schwab's credit default swaps skyrocketing.

• He believes something bad is happening in Schwab and urges the company to release new numbers on their balance sheet.

Disney Layoffs

• The speaker discusses how CEO Bob Iger is willing to lay off employees to pump up the stock price.

• He explains that step one for Iger is announcing massive layoffs followed by raising prices across the board and destroying enemies.

Apple Stock Dumping

• The speaker mentions that executives at Apple are dumping shares while the company's stock price is high.

• He warns that Apple may be next in terms of a declining stock price.

Tesla Shareholders Beware

• The speaker warns Tesla shareholders that Elon Musk may need to sell more shares due to Twitter's declining value.

• He supports Musk in his efforts to clean up Twitter but acknowledges that Musk needs more cash for this endeavor.

ETF Heat Map

In this section, the speaker discusses the ETF heat map and what it means for different sectors.

Energy and Financials

• The speaker notes that energy is higher, which is inflationary.

• He mentions that financials are rebounding, including XLF, XRE, and IWM.

Exodus from Technology and Large Caps

• The speaker questions why there is an exodus from technology and large caps.

• He suggests that the market may be realizing these are not safe investments.

Bond Market Indicator

• The speaker uses the bond market as an indicator to suggest that the market is saying not too fast with the recession theme.

• He believes that inflation hasn't been solved yet and yields need to be pumped up a little higher to see what the FED will do.

Market Analysis

In this section, the speaker provides an analysis of the stock market and various indicators.

Bearish Signs in the Stock Market

• The speaker notes that the stock market is showing bearish signs.

• A bad closing candle on the daily chart indicates a possibility of reversal.

• Confirmation of a reversal would be if the chart goes down and breaches below 3960 support.

• The QQQ's 30-minute chart shows weakness with a close below 309.

Small Caps and Regional Banks

• The IWM hourly chart shows short covering but did not manage to close above 174.22 support.

• If IWM trades above 174.22, there could be more gains to come in regional banks.

• However, look at the daily and weekly charts for potential reversals.

Dollar and Gold

• The dollar is consolidating for now with no clear message indicating a rush to safety besides USD.

• Gold has negative divergence in momentum indicators, indicating weakening momentum.

• A pullback in gold may give a good buying opportunity, but make sure there is a recession theme in play.

Market Analysis

The daily chart for the two-year yield shows a rebound and support, indicating that the fight against inflation is not over yet. The VIX is gathering energy and may blast significantly higher, so it's better to buy longer-term put options instead of immediate ones. Apple has negative divergence from RSI and momentum, while Tesla has a bear flag pattern below 194.55 with lower highs on the four-hour chart.

Two-Year Yield

• The daily chart shows a rebound and support for the two-year yield.

• This indicates that the fight against inflation is not over yet.

VIX

• The VIX is gathering energy and may blast significantly higher.

• It's better to buy longer-term put options instead of immediate ones.

Apple

• Apple has negative divergence from RSI and momentum.

Tesla

• Tesla has a bear flag pattern below 194.55 with lower highs on the four-hour chart.

Market Analysis Continued

TLT could lose more momentum if it tests 103.5, while Bitcoin needs more buyers as it looks for support at 26,555. Mosaic (MOS) has severe oversold conditions in its daily chart, but there are plans to convert call options into shares if MOS trades above 50 by May-end.

TLT

• TLT could lose more momentum if it tests 103.5.

Bitcoin

• Bitcoin needs more buyers as it looks for support at 26,555.

Mosaic (MOS)

• MOS has severe oversold conditions in its daily chart.

• There are plans to convert call options into shares if MOS trades above 50 by May-end.