Market Horror: Three Witches and a slice of Fruitcake

3.2 Trillion in leveraged bets to unwind this week

Gold in relative terms up 50% vs Bitcoin, up 20% in Yen

Powell’s Rock and Hard Place question: Implode or Inflate?

Market Horror: Three Witches and a Slice of Fruitcake

June 14, 2022

“You do have this growing probability not only for a significant market decline from here, but a whole adjustment phase, where if we are in a new cycle where inflation sticks around and interest rates have to go a lot higher, we haven’t even begun to see the extent of adjustments to take place in the stock and bond market. Do you want liquidity, which is a form of optionality in that eventuality? The answer’s a solid yes.” — David McAlvany

Kevin: Welcome to the McAlvany Weekly Commentary. I’m Kevin Orrick along with David McAlvany. 

David, I love our listeners, and sometimes it hurts a little bit. I’ve got friends who listen and they’re like, “I listen to the show every week, but you guys are really missing it in this area or that area.” I don’t want to hear that too often, but I want to listen to him. One of them, one of our listeners, he contacted me. He says, “You’re not getting the whole story across with Ukraine. You guys are reading just a little bit too much of the media.” Now I had an idea that maybe he was right, but now the Department of Defense is admitting something that was just conspiracy theory two weeks ago.

David: Well, right. I mean, I think this is where if you have studied Elliott Wave or studied the ideas related to socionomics, there’s a sociological and a psychological impact when you get to the end of a credit cycle. It starts showing itself in weird places, like the length of a skirt, the design of a car, the kind of lies that are told and how boldly.

Kevin: And how many biochemical labs or what bioengineering labs are in Ukraine.

David: That’s what I’m getting at because the lie factor, the deception factor doesn’t matter if you have an MD or a PhD, or you’ve got some other three letters as an acronym that should justify yourself as an authority. So where do we start today? How good of the Department of Defense and the Pentagon to admit not six labs, what they originally denied, but 46 bio labs in Ukraine.

Kevin: 46.

David: 46 bio labs. Peaceful cooperation, it’s all straightforward scientific stuff. You wouldn’t understand, but just move along. It was Russian fake news until the admission this week at defense.gov. Then we wonder why the DOJ, the CDC, the DOD just mentioned, and every other extension of government is having credibility issues. Let’s not forget the quasi governmental as well, the Fed, also three letters. All of these could be four letters, frankly. But it’s telling when your reputation is doing the toilet dance and the best an administration can come up with is Department of Homeland Security is to partner with big tech and refine the narratives and the news feeds on everything from election rigging, climate change, and anything else that doesn’t fit a prepackaged storyline.

Kevin: This is why you have to seek the truth yourself. You had mentioned all of the misinformation, but sometimes you can coat over truth if you can just print money and get away with it. Jim Grant is somebody that we’ve had on the show a number of times. We’ve read his books. You take his letter called the Grant’s Interest Rate Observer and to be quite honest, for 10 years, Interest Rate Observer should have been Interest Rate Tranquilizer, Interest Rate Bedtime Read because interest rates, even though this sounds like a very boring read, but interest rates actually tell you the cost of the risk of money. It was coated over, a little bit like the Department of Defense lack of admitting what they knew, for about a decade. That’s changing this week, Dave. I mean, it’s been changing,