The Typical Week After Easter?

There's a pattern of positive stock markets around Easter. There's even data that tells us the entire month of April brings the strongest stock market results of any other month in the calendar. 

Whoop-de-so.

So is that what's going on? Well, it's only mid-April, so who knows for sure. Stock prices have been pretty much range-bound for weeks and weeks. So being at the top of a range doesn't really make much of a statement.

Meanwhile, bonds have continued with lowered yields - lower than what swamped us last year.

Inflation - according to this week's CPI report - was down from last year at this time. Of course, since it was rather elevated then, being lower now doesn't mean much. Sure, pundits (and the typically effervescent economists) think inflation's "peaked." Peaked? Based on what time line? If peaked means peaked for the latest run up, then sure. But peaked once and for all? 

Gold seems the most resilient and - dare we say it - exciting item out there these days. If you've got some in your portfolio, you're seeing a boon. More so if you've got some silver, and some mining shares. Now there's something you can sink your teeth into.

So with that summary as the celebration of Passover and the Octave of Easter draws to a close, here's a little sampling of the wisdom of one of our Brain Trust: 

-   Bear Market in stocks will continue – Traditional worst part likely next, when bulls disappear and big money dumps stocks to raise cash

-   Most Sectors still overvalued 20%-30% - But remember Bear Market selling does not stop at fair value, but at exhaustion.

-   Focus on longer-term now – Don’t be fooled by short-term moves

-   Remember too: When dust settles you want to be one of the few with cash to put into the market, depending on the sector.

-   If you haven’t already done so, investing in short positions can wait – April usually a stronger month for stocks.

-   Bounces that could last a few weeks show in charts of various indices. – Bear Market should resume by late April.

-   After recent strength, Gold looking bullish for the longer-term, but could correct some in April. – Case for gold now getting stronger, especially as a safe haven.

-   Fed reversed “tedious” QT after banking fiasco – Had shed $400 billion in assets; now added $300 billion.

-   The more you hear “the banking system is sound,” the greater the chance that it isn’t – Estimated $2 Trillion in unrealized losses.

-   The fact that the banking crisis is international (Credit Suisse) is very negative.

-   Crisis began with the failure of big Crypto firms in 2021.

-   Government seems to have guaranteed all bank deposits – These total $18 Trillion.

-   Inflation unresolved – Will be a brief pause due to belief that a deep recession will suppress inflation – But historically that hasn’t been the case, e.g., Weimar Germany, Zimbabwe, Venezuela

-   Possible: Massive CB artificial money creation could offset reduced bank lending (which seems underway).

-   Recession and Bear Market will be deep unless offset by money creation. – But that creates higher inflation.

-   Markets will now be choppy. Keep positions small.

-   Possible that the loan contraction occurs, inflation will decline.

-   NB: 2024 an election year: Will do everything they can to keep same people in power.

-   If inflation rises because Fed balance sheet increases, that would create illusion of boost to economy, as numbers are not adjusted for inflation.

-   Only virtually infinite backstops with CB money creation can resolve bank crisis.

-   Economists think won’t be a recession because of bank the crisis. – Wrong: avalanche of corporate failures and unemployment ill accelerate recession.

-   When many firms cannot get bank loans, will trigger resumption of Bear Market

-   That will trigger serious selling of stocks.

-   Compare to 2008: If Fed cuts rates, worst part of the Bear Market could be a year away.

-   Bond prices could rise if CBs panic

-   Delinquencies in subprime auto loans up.

-   Don’t be fooled by April rally – Plan long term.

Hope you found this at least food for thought if not outright helpful.