Individuals transform, money moves, nations collapse. But what about you?

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Federal Reserve VS S&P 500


I do not seek in any way to please you with my analyses. On the contrary, my intention always points to a rational, behavioral and psychological control based on facts and data widely disseminated by reputable institutions focused on the financial sector.

In this way, by exercising your now rationalized mind, you can maintain an adequate emotional balance when faced with alarming news and massive unilateral behavior.

VALUE AROUND FEDERAL RESERVE

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Major seasonal movements observed in the S&P 500 are formed – intentionally or not – by tightening or loosening of the American monetary base. Above, we identify the moments in which the Federal Reserve caused in the markets: lengthening and retracting the general indices.

Every time there was a monetary “tightening”, followed by an increase, even if insignificant, in interest rates, the S&P 500 had a negative trend in the stock flow.

However, the opposite movement – positive – is also clearly noticed when the same Central Bank (FED) loosened its monetary base. Right now, despite the words to the contrary from FED members: that they will start with the taper in 2022 [currency tightening] followed by the rate hike. The Federal Reserve is still printing money and buying assets in the financial markets, literally, as shown below.

BALANCES

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The image clearly demonstrates the consequences absorbed by the S&P 500 – and also in other markets – when the Federal Reserve maintains its monetary easing. The Black Line indicates just that, while the Blue Line depicts the S&P 500 index since 2008.

When the FED rises (Black Line), its illusory monetary creationism, whether for “debt suppression” or As assets rise, the S&P index maintains a steady and genuine rally. However, by just maintaining, or decreasing, its currency balances, the S&P 500 tends to retract sharply. It’s not magic! It is monetary creationism.

THE STORY OF THE FUTURE IS REPEATED

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Therefore, despite the see-saw effect that the FED maintains on markets, the sectorial composition also absurdly influences the behavior of individuals operating in these same markets: creating momentary and permanent bubbles in determinants broadly media sectors.

Look at the image above and note that in periods of financial bubbles, some sector was always extremely overvalued.

  • In 1980 the energy boom was created: those who did not have energy assets were considered crazy, or even stupid!
  • In 2000, the sector technology was absolutely unanimous among the media, and consequently, among investors.
  • Already in 2008, the financial and real estate boom was clearly noticed by a few investors.
  • And here we are, in 2022, reviving the tech bubble once again. Now, however, with an aggravating factor: cryptoassets (I like to call it crypto-wind, because they are worthless), MetaVerse, and parallel markets. That is, everything that is composed of the words NFT or Bit, are traded at absurd prices.

RELATION: 10-YEAR TREASURE VS VARIABLE MARKET

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While interest rates are practically negative and the Fed does not raise them: indicating that 10-Year Treasuries will not have high returns (Dark Blue Line). All in peace in the changing markets. This indicates that much of the cash flow is still heading to the equity markets. Assets rising dangerously: mainly for the tech sector.

As soon as the10-Year Treasury Bond starts to skyrocket: this is already happening. The Fed is certainly indicating that it will raise nominal interest rates by approximately 2% through 2023. It will certainly be painful for those unprepared individuals who follow absurd daily news, youtubers and so many other “influencers”. digital financials”.

Money flow will be mostly oriented towards Fixed Income Securities, even with a small increase in interest rates. This is because, the entire financial chain will be purged: clean.

Some consequences:

  • Funding will not be easily accepted;
  • Bad payers will not be credited;
  • Good payers will also have credit difficulties: and when they do, it will be very expensive to pay with higher rates;
  • Indebted companies will have a high risk of bankruptcy;
  • Medium companies will not be able to leverage themselves to increase their business;
  • Investors , generally speaking, will also have high risk in leverage processes. Therefore, they will adopt conservative measures regarding their investments.

CAPITAL MARKET BUBBLE

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The last image is just for learning: the future repeating the past. The only company that remains at the historical top, WITHOUT LATERALIZATION , is Microsoft.

Intel, GE, Cisco and Walmart continue to be great companies, however, after the 2000 bubble burst, they went through almost 10 years negatively lateralizing the price of your actions.

Will you have the stomach to see your heritage in this situation?

Translate That Shit, Foreigner of Yourself..

On this night of writing, Saturday night, I have nothing to write that will please your hungry eyes. Yea! Hungry eyes that search incessantly through the mirror of the world, where they only reflect their own selfishness, still incomprehensible, of their internal illnesses.

Go to your own mirror, unique and still available. Observe carefully how weak and small you are compared to the mirror of the world that is so compared. The feeling of impotence and subpotence soon takes over his being: like a mosquito that haunts him during sleepless nights: so fragile that a simple, light wind destroys him .

Why then do you want so many things? Your life is just a countdown that will imperceptibly turn everything that is just to dust. You’re dust, and you’ll never get past that!

So go back to where you came from; whence your soul cries out for penance for its own restoration. Abandon this empty shell, this dry and cracked vessel, and beg for your Life.

Phrases Your Favorite Financial Influencer Will Never Say!

Your Favorite Financial Influencer Will Never Tell: – I created my financial pyramid (ponzi): my followers!

Vinícius Capucho

I know it took me a while to write something on this humble site, but it always takes time to re-establish ideas and information – especially at the end of a year. Everything deserves a break, a time, to rethink and rethink the mistakes and rights we all make throughout our lives.

I always seek to interpret my entire journey with a spiritual, Christian and Catholic view of my actions. For those who have read my third book, they are able to interpret my described words well.

LET’S GETTING IT’S EARLY 2022.

I’m starting my analysis based on the January 3 data: the *&%$ of consumption has continued to fall wildly for almost two years. Even the holiday period didn’t manage to open the wallet of consumers.

So, American consumption remains absurdly stagnant while the S&P 500 (Top American Companies) index continues to sustain and hit historic highs. After all, will these same companies really have consistent profits to send such prices from their stocks?

Another index dated December 21, from the University of Michigan, already told us that consumer expectations (Light Blue Line) would be terrible compared to the Price/Profit of the S&P 500 (Dark Blue Line).

Your Favorite Financial Influencer Will Never Say: – I make more money from your views than from my investments.

Vinícius Capucho

On December 18th, the caption itself already highlights: there is always a good reason not to invest in the USA stock market, at this moment.

Of course there’s a good reason not to screw up following thousands of digital influencers in the American market: DON’T STAY IN THE MIDDLE OF SHIT.

Look closely at the sheer greed based on the very companies that are bombarded with positive news on their social media. Always the same, always a reason to buy no matter the price. Social networks potentiating the stupidity and greed of the vast majority of “investors”, worldwide, cause absurd distortions in prices – before considered of extreme importance.

Don’t worry, when it comes to a complete meltdown in these markets, the first one to lose a large chunk of equity indefinitely will be the individual who most values ​​their favorite influencers.

Your Favorite Financial Influencer Will Never Say: – as an investor, I’m a great youtuber!

Vinícius Capucho

While you follow your favorite influencer, he doesn’t inform you that, depending on your investment, you will have a ridiculous (destroyed by inflation) or mostly negative return for long, long years (like it happened in 1999): depending on the *&$% of the asset you buy.

Note in the image below where we are already experiencing right now. S&P 500 overvalued by 28x.

So follows the largest financial market in the world, being pulled by endless profitable expectations with no possible recession being feared. As much as its track record has been growing over the decades, there were periods of deep recessions that destroyed investors’ wealth at certain times. Following the range determined by the light lines, one can see the historical top being reached since the last century (red arrows).

What is M2?

M2 is a money supply calculation that includes all the elements of M1 as well as “quasi-money”. M1 includes cash and demand deposits, while M2 (almost cash) refers to savings deposits, money market bonds and other time deposits.

Summarizing the image below: while the S&P 500 (Red Line) hits its highs, the M2 has remained at its lows since 2007.

Lots of money accumulated in the financial market, not much real money.

M2 is a broader measure of the money supply than M1, which only includes cash and demand deposits. M2 is closely watched as an indicator of money supply and future inflation, and as a central bank monetary policy target.

The Federal Reserve (FED) has zeroed its funds (balance sheets), transferring them to the financial markets: preventing an immediate collapse of the markets (Red Line Variable). The markets reacted and are being supported by the Fed: at unbelievable historical highs (Black Line).

You don’t need to be a genius to understand what happened in 2008 with the same situation.

Your Favorite Financial Influencer Will Never Say:
– I have 1 million followers: I buy some shit first and make a video. If 20% of them buy this shit that I recommend, I make the sale and get rich.

Vinícius Capucho
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Decompositions

NASDAQ COMPOSITE

The divergences in the technology sector are “epic” and 64% of Nasdaq Composite (COMP.IND) annual growth can be tracked in just five companies (Microsoft, Apple, NVidia, Alphabet [Google] and Tesla), which match approximately 3,780 points across Nasdaq (15,630 points).

Notice below for inconsistency when sticking only to Nasdaq Total Index, SP 500 and others. General indices become “virtual” as they do not actually represent the strength and strength of the market. As we delve into other companies, it is clear that the vast majority of them have been suffering declines in their stocks since March 2021, but overall indices continue to hit record and higher record.


This is because the cash flow is inflating the main assets bombarded by social media: the five technology companies cited.

NASDAQ-INDICATOR:
REAL VS VIRTUAL

The graphic below shows the Real Nasdaq (GREEN) vs Virtual Nasdaq (RED).
If the top five or six companies (MSFT, AAPL, TSLA, FB, GOOG) had prices or close to their actions, the Nasdaq Index would be at 12,500 points.

As ​​macroeconomic problems continue to arise around extreme financial leverage, as well as the obsessive greedy behavior of individuals in the markets, the Green Line (Nasdaq Real) have been decaying over 2021. However, the Red Line (Virtual Nasdaq) continually hits new highs.

This makes the great mass active in the markets to continue to faithfully believe in a strong market and in the ease of making money.

SPX VS HY

The moment of market irrationality (SP 500, NASDAQ, DOWJONES) being demonstrated in the Yellow Line (SPX) is so absurd, it has completely taken off this year from the current HY pricing (sovereign bonds) Blue Line (HY).

What are high yield bonds (HY)? These are debt securities generally issued by companies. Therefore, investing in high yield is investing in fixed income. The differential of this product is the fact that it pays more interest than the average of the segment’s investments. This is because it is an investment in which there is a risk of default.

In other words: The market (large investors) is already seeing a lack of monetary liquidity in the economy (also due to the possible increase of the American interest rate), causing a correction in the variable income market and advances in investments in Fixed Income. walk close to each other. Thus, pricing the SPX at approximately 3800 points at the current juncture.

Consumption-Index vs S&P 500

The image below demonstrates the intoxication that the current generation is experiencing. The alcohol level matches – or surpasses – the.com bubble in 2000. There is exactly the same narrative circulating among investors, but now it is widely pulverized by social media.

There are thousands of visions converging on a single one point: disruption! “This time is different” said previous generations when they reached the same point. The lack of creativity even in the justifications they elaborate are easily recognizable when we look to read the books and articles that report the previous bubbles.

Always the same characteristic: the future; cryptoactives; the internet of the future; the virtual economy in NFTs and Metaverse. A future that obviously doesn’t exist. One day it will exist, but the price will always be converged by the productive and profitable capacity of the company. Nothing to justify what is happening.

Ratio: S&P 500 vs. Real-earnings Yield

Real earnings (Black Line) are increasingly negative, meaning it is much more difficult and time-consuming to profit from anything in the stock markets. Since 1993, negative returns – or losses – have only been detected, again, in three crucial moments that preceded major corrections in the markets.

The years 2000 and 2008: the two biggest recent corrections than the market American experienced.

Believe: The damage was painful for the “unwary”. In 2022? 2023? I don’t know what proportion it will take, but it will be the biggest bloodletting ever experienced in nearly a century. An entire generation over the past 100 years is about to do something terrible in terms of liquidity, losses and deep financial shakeouts across the economy.

S&P 500 Returns vs. Recessions

Observed time: 1871 to 2021

Blue Line: Price of the overvalued S&P 500.
Black Line: Adjusted Price/Profit Cycle of the S&P 500.

strong>Dotted Blue Line: Price Real of the S&P 500 according to the profits of the
companies.

As ​​signaled by the Red Arrows, the historical tops of the S&P 500 suggest a strong correction in the markets, in which there should be a retraction until, approximately 2050 points. Currently the S&P scores 4700 points.

A ~50% correction.

Growth Trend

Another historical index indicating the severity of the bubble-of-everything (when shopping following the crowd), please note: since 1905 , the individual who acted irrationally and emotionally, fatally went headlong into overvalued assets – famous at the time – with a high expectation of quick and fantasy profits. However, the median growth trend demonstrates that the S&P 500 should correct by approximately 2000 points. It is obvious that there is a distortion potentiated by the excess of liquidity generated by the Central Banks; through social networks; for easy access to markets by smartphones and computers with internet access.


Easy access has enabled everyone to enter markets anywhere in the world. However, individual emotional, psychological and behavioral behaviors, added to educational deterioration, lead to these absurdities experienced.

Price/Sales vs. Bubbles

The Price/Sale (Price/Sell) ratio is a valuation ratio that compares a company’s stock prices with its earnings. It is an indicator of the value the financial markets have placed on every dollar of a company’s sales or revenues.

Like all indices, the P/S ratio is most relevant when used to compare companies in the same industry. A low index may indicate that the stock is undervalued, while a significantly above average index may suggest an overvaluation. In the chart below, the P/S of 3.11 has surpassed all limits observed since 1964.

OVERRATED

Nonsense

Dark Blue Line: Current price of the S&P 500 breaking records.
Light Blue Line: Expected Price/Earnings performance of the same S&P 500.

Since 1991 os markets have experienced absurd size, where the S&P Price is abusively higher than its expected earnings – outperforming the.com bubble. At these Price/Profit levels, the S&P 500 should still approach a maximum of 3000 points.

Federal Reserve-Bubble

Below you can see the dangerous moment that the FED (Central American Bank) is causing, by “normalizing” its monetary leverage to absurd levels ever seen, along with the inexpressive rate US interest rate (Black Line).

Since 1955, the Fed has never been as leveraged as it is today. Note that after the same FED started the deleveraging process, along with raising the interest rate, the markets underwent long and hard corrections.

SOME consequences: Massive impoverishment of the population due to equity loss, increased interest rates that raise prices in the general production chain and weakening of underdeveloped countries’ currencies due to lack of investments due to the rush to the strong currency: dollar.

Bubble FED

Valuation vs. Deep Recession

In particular, these latest graphs make me a little more concerned about the future of the world economy. This is verified by the most turbulent points in world economic history signaled by the Red Arrows and their respective circles.

Since 1929, moments of extreme recession have been observed, not only in the United States, but all over the world. Many of these extreme recessive moments were followed, or occasioned by, by major geopolitical problems (wars or rumors of wars) as economic cataclysms have the power to deeply shake all nations.

These cataclysms lead to several generalized difficulties, especially in emerging countries. The loss of the value of the local currency is just one of the problems: I consider the political, ideological and social “invasion” as the main historical agents that the deep recessions produced in these countries.

CURIOSITY ABOUT THE MARKET TIME
APPLE INC.


THE WORLD’S LARGEST COMPANY (BY MARKET VALUE) HAS A 12.3% HIGH LAST WEEK, EVEN AFTER THE COMPANY ALERTS ABOUT SERIOUS PROBLEMS IN THE CHAIN SUPPLIES; REDUCING THE PRODUCTION OF IPHONES AND IPADS.

WHILE THE COMPANY INCREASES THE MARKET VALUE IN ITS SHARES, THE COMPANY ITSELF DISCLOSES THAT IT IS EXPANDING PRODUCTION DIFFICULTIES.

IN VULGO POPULAR: THE BUILDER HE INFORMS YOU THAT HE WILL ONLY DELIVER THE WORK 5 MONTHS AFTER THE AGREEMENT AND EVEN THEN YOU MUST PAY MORE FOR IT.

BEAUTIFUL TIME TO BE ALIVE AND WATCH THESE THINGS

Continue…

I give myself the freedom to continue writing a little more about the introduction of the previous post, as I am free – still – to write the words that come to mind.

About Weather: Ah! How good were the moments when we were free, in fact, in that time that doesn’t come back. A time when “thinking, speaking, writing and acting” was still possible. A time when the freedom of being sought to justify and represent its rationalities based on lived feelings. Boys becoming truly men; girls becoming women. The responsibility of the deeds were imprinted in its strongest characteristics: the true personality was imprinted and presented to the world. This world, with great strides, ceases to exist every day.

World where prints are replaced by copies. Bulk copies; not more than one person, but a kind of “community” being programmed to act in concert with a higher order. Personalities, once strictly individual, now transmuting into community characteristics. Trying to swim against this tide has become increasingly tiring: at one point the tide takes on its role: absorbing everything possible and discarding everything it deems “useless” to the shore.

The sweet illusion of freedom is increasingly turning into rubbish. A notoriously disposable garbage by the strongly relentless tide.

Real Economy vs Narnia Economy

Time is needed when we feel at the point of meltdown. Time is a holy medicine that keeps us on a firm path, with our feet on the ground. Time in writing also demonstrates just that: it’s not “just writing”!

If the reader still does not understand this ability to ‘give time’ and is still eagerly awaiting the “next chapter”, be aware that it is bad for your own life. There is a suggestive phrase that always makes me reflect:

Time is the time you have!

But I also never forget that life is a countdown and I need to identify the best time for everything! Time to think; time to work; time to read; time to write; time to do absolutely nothing!

My moments are necessary and crucial for a good psychological, rational and emotional performance in the face of so much absurd information that I have read while studying. If you haven’t done something like that yet, I suggest getting to know yourself better.

We will start with the latest most relevant data I consider on macro economy: public debt!

Stop fooling yourself and thinking that it doesn’t matter, or that it’s not interesting! This debt is YOURS! The very word ‘public’ clearly indicates who the debtor is: the government; the people! The difference is that the debt is paid by the production capacity of a people, an economy. So, before trying to mistakenly compare Brazil, Venezuela, Suriname and others with the United States and Canada, ask yourself first: what are the general differences in production capacity between underdeveloped and developed countries? It’s obvious! Economic freedom! Productive freedom! Tax cuts! Monetary system! Government Machine!

Therefore, the public debt of countries can be seen reaching – or exceeding – 100% of the countries’ GDP: Gross Domestic Product (generation of wealth for a nation).

Debt/GDP is Chile 33%, Paraguay 33%, Uruguay 73%, Argentina 102%, Mexico 52%, Peru 35%, Brazil 88%, Colombia 63%. Look, if we consider similar countries, we are very close to Argentina!

If the Debt/GDP is 80% this means that it would be necessary for the government to collect 80% of everything that companies and people produce in value during the year to pay off this debt, in other words, debt is equal to 80% of everything that society produces of value every year.

Consequences

Let’s understand this simply. The governments of countries do not generate wealth. They all take wealth from businesses and families through taxes and fees. When governments spend more than they collect it can have some negative consequences like:

  • increase in debt, as they spend more than they constantly collect;
  • increase in taxes so that they can spend more and more;
  • increase in inflation, when the government decides to adopt measures equivalent to “printing money” to pay its debts without generating wealth.

Resolving the problems of a country or a family through debt amounts to pushing the problem to be solved in the future. In the case of a country, it’s like throwing the problem to their children and grandchildren who will have to work harder to pay more taxes to be able to pay the debts that previous governments have made.

The government increases its debt by selling government bonds to people, financial institutions and foreigners who want to earn interest in the future. It is a way of borrowing money from society at present rather than simply borrowing society’s money through taxes. Governments pay their debts by charging more taxes or taking measures equivalent to printing money. In both cases, the cost of living is higher and inflation increases (loss of money purchasing power). To fight inflation, governments tend to raise interest rates.

High interest, high taxes, people and companies with less purchasing power end up harming economic growth and consequently this results in devaluation of company shares, as they earn less, earn less and grow less.

Verifying that the public debt/GDP of the United States surpassed the debt in the period of the great crash, in 1930, makes me a little more apprehensive about the current situation, mainly due to the ‘generation’ factor . The generations of the last 90 years have not gone through any really deep crisis and this determines the behavior of men over these decades. Only in acute crises determines the identity of the future.

The market and the economic cycle do not repeat themselves unintentionally: the feelings of individuals do repeat themselves.

ABOUT INFLATION

Simple graph to demonstrate what I’ve been reporting for two months now: the growing statement by companies throughout 2021 that inflation is affecting their earnings; your profitable margins. This means that there is a high possibility that your profits will stagnate or shrink throughout 2022. As a result, it will affect the entire consumption chain.

PROBABILITIES

By Shiller’s (Dark Blue Line) estimate: absolute valuations alone point to the risk of a correction, but real growth returns strong and low anchors in the short term. According to Shiller’s background, we are entering a prolonged period of recession (market correction) as seen in 2000 and 2008.

Reinforcing: Anchor in the SHORT TERM! For “social media investors”, it’s worth rethinking pointing out any shit to your followers – if have some sense of responsibility.

VALUE’ IS ONE THING, ‘PRICE’ IS ANOTHER

It is clear that markets are underestimating any kind of recession. Just close your eyes and believe that everything is normal, following the great flow. However, the data doesn’t lie: we reached a record level where the S&P 500 (Blue Line) no longer wants to identify cyclical economic adjustments (Black Line). Therefore, they overvalue companies that make up the markets in an absolutely exaggerated way – as if their profitable capacity were infinite, regardless of consumption.

SPEAKING ON CONSUMPTION

A suggestive indicator demonstrates the absurd, incoherent distortion between the tons carried by trucks and the S&P 500 index. You don’t need to be a super economist to realize that there is something historically very wrong between the real economy vs narnia economy (financial markets) that have always walked together.

And don’t give me the raw word: technology. Technology without consumption does nothing to foster a real economy. What’s making the economy weaker these days is ‘money printing’ government aids – purely that. The real reason for the Government benefits are: massive zombification of previously productive individuals.

PRICED TECHNOLOGY SECTOR

If, on the one hand, the technology sector is pricing itself: Price-to-book (B/W) convergence – Stock price according to company accounting.

At the other end, we have the extremely overrated energy sector – compared to the .com bubble of 2000.

Finally, while the American market, mostly represented by the S&P 500, is “distant” from the real world (Dark Blue Line) vs (Light Blue Line), I prefer be cautious in the purchase of assets of value compatible with your actual profits.

The world of narnia, despite MetaVerse, is still unreal.

Make no mistake, the vast majority of the S&P 500 index is being supported by fewer than 100 companies. Most companies have been in decline since March 2020.

Weekly Report | Collective Feeling

The real meaning of life should condition the singular individual on the path to the formation of a personal, personalized, individual and, above all, rational character. In a completely opposite sense, humanity systematically absorbs the “facilities” conditioned by Social Engineering massively present in the virtual environment. The characteristic of ‘intellectual difficulty’ became directly proportional to the technological advancement of Artificial Intelligence, increasingly present in “sociovirtual” media.

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Weekly Report | “Almost” Bubble!

FINDING REASONS TO STAY AWAY FROM OVERVALUE LARGE COMPANIES, WHETHER PURELY SPECULATIVE OR REALLY PROFITABLE.

In the first graph below, allows us to follow the extreme “greed” compounded in the main market of the world. Why a crisis in the American market interferes with the other markets of the world? For the simple fact that the world’s top companies are also listed on it. Furthermore, the entire world economy is driven around the US dollar due to the economic development of the United States: dragging the rest of the world.

” The financial market revolves around the economy, but the economy does not revolve around the
market.”

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LAST-WEEK’S REVIEWS

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Weekly Report | S&P 500 MACRO!

ENJOY WITH A GOOD COFFEE!

The “suggestive” title of the first chart represents the massive desperation of individuals operating in the market – in general: Reasons To Sell!

DON’T SELL IN DESPERATION!

If you are a conscious, rational, controlled investor and can interpret the harmful environment of the markets, you will be able to identify that the news is extremely harmful. These induce the great mass to follow the same path: almost always towards the cliff. By the way, this can even bring you a certain comfort, after all, you followed the majority and threw yourself: when the act is collective, the pain tends to be “minor”, right? Your responsibility and yours mental suffering has become practically nil as everyone around him has taken the same irrational path.

Your guilt – and your prejudice – is now acceptable; since there’s no way to “envy” someone you haven’t seen “get along.”

Be a part! This is typical petty human behavior.

The graphic below demonstrates just that. All red dots indicate some moment of ‘fear’ or ‘extreme fear’ that caused those anxious and desperate for news to start the “cliff run”. But it all passed! While many followed the flow of chaos and threw themselves headlong into the beautiful, finite precipice, a few others simply continued to go on with their lives.

They interpreted the moment in the appropriate, rational and individual way: many accumulated a sum of money to go shopping: it’s like going to the Mall after Christmas.

IDENTIFYING THE CLIFFS

Again, I advise that my intention is to identify the exact opposite: visualize the cliff ahead and hold steady waiting for the flow to throw itself into the mall avoiding the transit.

Below: the first macroeconomic index to be analyzed.

Settings:

1. Compound Economic Index (EOCI): Statistical tool that groups many stocks, bonds and different manufactured indices to create a representation of general market or general economic performance. Composite indices are used to conduct investment analysis, measure economic trends, and forecast market activity.

2. ISM Manufacturing Index: The ISM Manufacturing Index, also known as the “managers’ index Purchasing” (PMI), is a monthly indicator of US economic activity based on a survey of purchasing managers at more than 300 manufacturing companies. It is considered a key indicator of the state of the US economy.

A Orange Line informs us, since 1964, of the Composite Economic Index of the United States (EOCI). Every time this index touched above 50% of the ISM Manufacturing Index, soon there was a strong correction (retraction) – both of the of the economic index itself, as well as of the American market.

In October of this year approximately 60% of the ISM Manufacturing Index was registered. The S&P 500 (Black Line) followed up afterwards (by earnings estimates of the companies that compose it). Historically, it indicates to us that there will possibly be a sharp correction in the American market.

It is not interesting to follow the irrational flow of individuals operating in the market contrary to a history of nearly six decades: many of them may be heading towards the cliff.

Don’t despair! Hold your ground to continue on your way to the mall.

Another intuitive chart relating ’10 Month Average Movement’ data (Blue Line) to the S&P 500 Index (Black Line). Over the past 20 years it has become quite clear that there was an intense / prolonged correction of the S&P500 as it drifted more sharply from its ‘Average Movemen’t.

From another perspective:

The High Yield Total Returns (Light Blue Line) have been stagnant since the end of 2019. Consequently, the entire S&P 500 bullish (Dark Blue Line) is based on and Credit: subsidies; indebtedness rollover and; principally, an absurd addition of the monetary base by the FED (American Central Bank). In a very basic and weird way: The Market is being fed practically “artificial”, almost like a Ponzi scheme.

Now, let’s get down to business:

INFLATION!

The graphic below demonstrates the history of the S&P 500 (Blue/Red) when faced with the Inflation Instability (Black Line) in the respective periods (1985 to 2021). It is observed that every time there was an inflation above normal, from ~3%, then there was a strong retreat, or stagnation, of the S&P 500.

In some cases, there was a sharp drop in the index (Red). Remembering that the significant increase in inflation is based on general economic instability.

The individual who kept his behavioral characteristics exactly the same as the vast majority, without trying to understand the moments of the market cycles, inevitably followed the great flow of the market. Obviously it is not useful to see the invested equity being “eroded” abruptly, however, by closely following the movement of this macro cycle, it is possible to have a good management of the assets themselves, using cash more effectively.

FINALLY

FLOW AGAINST THE FEELING

The “Fear & Ambition” Investor Sentiment Index demonstrates daily how general market sentiment is. It is used more in the short/medium term to determine the levels of ‘fear and ambition’ that individuals operating in the market find themselves.

As ​​we manage to improve emotional and psychological self-control according to the current cycle, we get used to our behavior exactly at the opposite time to the Sentiment Index. Sometimes we “torture” ourselves when trying to control the greedy instincts that permeate our inner human being, mainly because these smaller cycles take weeks or months to complete, leaving us to understand that we are ” failing to win”, being left behind, or even by emotional incapacity about anxiety, nervousness or anguish of seeing the money just there, standing in the Brokerage’s ‘Cashier’.

Note that I have identified the moments that are most promising to ‘buy’ the assets, which can generate a greater return over the time invested and, consequently, “reduce” the Intrinsic risk of investments: with qualitative assets.

Make good deals with the Extreme Fear of the other! For that there is the study of market cycles.

Weekly Report | Insane Individuals

Sometimes I have an absurd urge to give up the basic and healthy fundamentals that support the concept of “Market” and Economics. It simply became abstract to obtain and trust an adequate, rational and coherent view of the logical movement of this insane world.

Those old Newton laws: Law of Inertia and the Law of Action and Reaction just don’t exist in the realm of markets. Human behavior has become inexplicable, as there is always a “coherent” individual justification that supports the entire abnormal and irrational basis of a mathematical economy involving supply, demand, production, cost and flow.

Definitely not even Adam Smith – father of modern economics and considered the most important theorist of economic liberalism – would not understand current economics; or go to a psychiatric clinic.

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Weekly Report | Personal Vision

Based on the last charts collected, referring to the S&P 500 and NYSE indices, we were able to acquire some rational interpretations that help us to make decisions. I’m not talking about selling anything, however, we managed to remain calm and practice the wisdom to look for Value Companies still with Fair Prices.

FOLLOW THE MOMENT WE ARE IN!

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Weekly Report | Desired Corrections

More indicators correlate expectations of the reality experienced in American and world markets. The Asian markets, Hong Kong and Shanghai, have been undergoing prolonged corrections for almost a year.

Alibaba, for example, has already lost 53% of its stock value. Nio – Chinese electric car manufacturer and self-employed – it has lost 41% of its market value since January 2020. Tencent, China’s largest and most used internet services portal, is also taking a 42% loss this year. These are just three examples of the widespread correction that has taken place in major Asian markets.

The issue of correction does not only involve the overvalued prices that the assets were at, but mainly the irrational characteristics of a large part of the individuals operating in the markets. They allow themselves to be elevated by exacerbated greed and forget the intrinsic Fair Value that is behind each asset. I always consider it a behavioral and rational issue – little else. In fact, the greater the level of short-term volatility, the more accentuated and aggressive the corrections and valuations of these assets will be. In this scenario, individuals who seek Fair Value in their acquisitions benefit, abusing their purchases during periods of extreme volatility.

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Recessive Intuitions – Last 30 years

Below is some interesting weekly information that makes us reflect a little more on the moment we are living. Retail sales have declined drastically in recent months, contrary to investors’ positive expectations. In the previous article, found in the ‘News [english/Portuguese]’ menu, there were many cumulative distortions that indicate a strong recession is approaching: the third in the last 30 years.

FOLLOW THE CHARTS AND UNDERSTAND A LITTLE OF WHAT IS TO COME, ACCORDING TO PAST MOMENTS.

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The Bubble of Everything

ONLY THIS POST WITH ACCESS IS RELEASED TO GIVE A PERSPECTIVE OF WHAT I WRITE.

Some still insist on telling and influencing people with the objective of encouraging them to enter into extremely complex and risky situations. It already happened several decades ago, centuries past, and in 2020, it did not happen as designated by the “magic potions” of Governments and Central Banks – abruptly worsening the future context. We are increasingly on the verge of a delayed collapse – not just painful in the short term, but especially in the long term.

I reported this in quite a bit of depth in my second book. A pity to watch what is approaching in a sneaky and cruel way. Unfortunately we will see many individuals suffering from deep depressions; families destroying themselves because of monetary and material goods; a large, impoverished and unemployed mass; and finally, suicides.

COMMENTED DETAILS

Briefly interpreting the chart above, right in front of us, the amount of records that the American markets have been reaching recurrently comes to our eyes. The highlighted image only refers to the S&P 500 index. The Nasdaq index has become even scarier in its practically daily records.

Upon reflection a little more, we infer that: as soon as the index extrapolated its consecutive highs, there were in the following years absolutely significant drops to the point of mental, psychological and behavioral “break” of individuals operating in the financial markets. The split point of investors becomes clear approximately 3 (three) years after repeated lows, which obviously made them fearful about the future to come. Year after year in new lows, they made those individuals begin to feel the strong momentary losses in their assets. Pain slowly appropriated its positivist bias: greed in fear, enrichment in poverty, happiness in sadness.

Even though the big players in the markets – hedge funds – understand about the variable income dilemmas, strongly manipulating the markets, their clients, on the other hand, are completely emotional and sensitive to their assets left in the hands of third parties. In this intention, customers take the lead – before, made by managers – in their irremediable decisions and start generalized sales of their shares and redemptions of their assets: withdrawing their profits.

The graph above demonstrates well how the actions of market tamers make dystopia a reality. In almost all cases, the big losses are high for single, inexperienced, and lay people who are in the throes of excitement. In times of index records, the same fateful feature of previous crashes is always repeated: any individual, no matter how little they have studied, has their equity allocated in the stock markets.

Demonstration above the 200-day annual average without strong index correction. Still a little far from the crash average in 2000 and already at the same level as in 2008. From the year 2015 forwards, the highs are increasing without corrections in a smooth way.

In 2018 there was a longer correction of approximately one year. In 2021 we surpassed 0.30 and there was still no correction in the index in a “somewhat adequate” way.

Average Cash Levels still extremely low, indicating that investors are heavily allocated – long.

In other words: Market players are greedy, with little cash reserves and overvaluing many assets – some even without as much added value.

Despite disproportionately high expectations in the markets in general, there are still a few alternatives that have been relatively “discounted” since the 1995 recession: Energy!

Among the sources of energy matrices that are most discounted, Uranium stands out.

I’ll write about the uranium thesis, which I’ve been commenting on my social networks since early 2020, in some future post.

We probably still have some highs along the way, up to 2 (years), since EPS (earnings per share) is agreeing with that. However, we must pay attention to how American companies will start to suffer more accentuated impacts on their profits due to the expressive increase in taxes determined by the current government.

It Makes No Sense!

When faced with the following graphs, I become extremely skeptical of how disproportionate the American market has been since 1987. The maximum discourse is applied, in the current moments, that everything can be justified by the configuration of the current globalization, with massive performance of the technology and, mainly, of Artificial Intelligence [AI] – not leaving out the efficient logistical and informational expansion in which we live. On the other hand, numbers have always been numbers, determining the coherence – or not – of gains and losses over the years, decades and centuries. I’ll leave just one image – of the many in the rest of the content – very intuitive of the frantic, exciting moment we’re living and explain in detail the next sensational graphics below.

S&P 500 accounting for 29x return in 2021. In practice, in a simple and summarized way for understanding: You applied $100.00 and will only have the return on the same amount in 29 years. In 1999/2000, when the.com bubble burst, the Risk x Return was significantly high and did not compensate for the time period of approximately 36x. I won’t go into the speculative details of that moment so as not to make the post too tiring, but I’ll leave a link at the end for the curious.

WATCH THE NEXT AMAZING PICTURES WITH SOME PERSONAL ANALYZES ABOUT THE POSSIBLE FUNDS.

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Value History and Indication of Deep Recession

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The image above presents us only a review of the Current Value, Expectations of Return and Leverage totally far from the reasonable of the investors. It is not up to me, at this moment, to make such conceptual approaches on the subject, I just present to the subscriber in the graphs below the quantum behavior of individuals operating in the markets that are extrapolating their own perspectives on the world economy. We are a clear way to live at the beginning of a deep retreat, which is also the place to experience the glorious makeup through government institutions.

I always emphasize the same idea of ​​obtaining assets that are still undervalued and with prices far below what they expect. The great advantage of this totally coherent strategy is that: even with broader recessions, one continues to buy assets (businesses) at prices considerably below market expectations.

It is well worth reading and interpreting the graphs below. My intention is always to take the subscriber to the macroeconomic reality and constant observation about the absolute importance of Fair Value.

PROFIT, LEVERAGE AND RECESSION

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