The Morning Line

The devastating bear market in Treasury paper since 2020 may be nearing an end. I was pessimistic about this myself when TLT, an exchange-traded fund, that tracks the long bond, broke down last week. But a bigger picture saw this as occurring in the context of a market that may have bottomed last October. The bounce from that low triggered a theoretical 'buy' signal in bonds in mid-December when it touched the green line shown in the chart. Don't expect a meteoric rise, however, since it could take a while for T-Bonds to build a base for a sustained move higher. Assuming the 107^04 low holds, however, the worst may be over. That would imply that long-term rates, currently at 4.53% for 30-Year T-Bonds and 4.38% for the 10-Year Note, have peaked. In any event, I do not expect them to exceed the highs they achieved in October at, respectively,  4.99% and 5.15%. Debt's Real Cost I should point out that this is not necessarily cause for jubilation, especially if recession causes asset values to deflate. That would return us to the financial environment of the 2007-08 Crash, when even 4% mortgages placed a crushing burden on homeowners whose property values had gone underwater. It is real rates -- yield minus inflation -- that ultimately matter, not nominal rates. Unfortunately, there is no escaping the debts we have amassed publicly and privately, and there are reasons to strongly doubt that those who owe will get to stiff creditors via hyperinflation or even sustained inflation. Regardless, and irrespective of the nominal level of rates, payback will exact a heavy toll on future production and our standard of living.

[Many readers of these weekly commentaries may not be aware that the focus of Rick's Picks each day is on timely trading ideas. Below is chat room banter for a typical 'freaky Friday'. The discussion includes several trades that were posted ahead of actionable opportunities in a few stocks, including McDonald's, Tesla and Amazon. All the links are live, most of them displaying charts with the ABCD patterns we use to trade. Some display two key pieces of the pattern: Hidden Pivot midpoints (p) and targets (D).  For some of you, the jargon might take a little getting used to. However, trade instructions are usually phrased so that even beginners can follow them. There is a separate chat room called the Coffee House for off-topic conversations where 'anything goes'. IF you'd like to sample Rick's Picks, click here for a free two-week trial subscription. RA ] Microsoft's Hat-Trick 8:55 Rick: MSFT setting up for a hat-trick of mechanical winners -- or will it be a rare failure? 09:00 Formula382: Looks like a trampoline Rick. Ya need that energy to get the bouncy bounce. 09:52 Rick: I just sent out a tout update for MSFT that offers a perspective on the bounce. 10:03 Formula382: Anyone in here have any idea how nat gas sits in the dumpster while the pipelines have been quite good to own for example, KMI, OKE, KYN, FCG. I own them all, but that was based on the predication that "surely nat gas has to go up", which it has not! 10:07 Spartacus: McDonald's... A trouper 10:14 Rick: Here's my MickeyD prognosis 10:22 Spartacus: Now Short NVDA and TSLA using Apr 12 puts 10:23 Spartacus: MCD Thanks Rick I think I will cover off of that chart 10:23 Ronbl: Gold is obviously going to go up but

[My colleague Charles Hugh Smith is a true outside-the-box thinker who tackles big questions with intellectual rigor and bold imagination. In the commentary below, he explains why neither our political system nor technological wizardry have been able to solve problems that threaten to topple the global economy and destroy our quality of life.  You can support excellence by subscribing to his blog, Of Two Minds, on Patreon.  RA] We say we want solutions, but we actually want a specific subset of solutions: those that already meet with our approval. The possibility that none of these pre-approved solutions will actually resolve the problem is rejected because we are wedded to the solutions that we want to work. The sources of our resistance to admitting that our solution is now the problem are self-evident: holding fast to an ideological certainty gives us inner security, as it provides a simplified, easy-to-grasp frame of reference, an explanation of how the world works and a wellspring of our identity. Our ideological certainties also serve as our moral compass: we believe what we believe because it is correct and therefore the best guide to solving all problems faced by humanity. If we frame all problems ideologically (i.e. politically), then there is always an ideological "solution" to every problem. If we frame all problems as solvable with technology, then there is always a technological "solution" to every problem. If we frame all problems as solvable with finance, then there is always a financial "solution" to every problem. In each of these cases, we're starting with the solution and then framing the problem so it aligns with our solution.  This is not actually problem-solving, and so the solutions--all blunt instruments--fail to actually resolve the complex, knotty problems generated by dynamic open systems with interconnected feedback loops. Self-interest also

The Fed's main job supposedly is to manage our expectations. But have Powell & Co. painted themselves into a corner? At the moment, it would appear that investors have no clue what to expect from the Fed. That wouldn't necessarily be a bad thing, except that their default mode has been to push stocks with multitrillion dollar capitalizations into unsustainably steep rallies. This trend is growing more dangerous and delusional by the week, and even a slight feint toward monetary clarity by policymakers could pop the bubble, turning an economic boom quickly into a global downturn. Meanwhile, the Fed's credibility suffers every time they suggest inflation is mellowing. What their hemming and hawing suggest in reality is that no one on the Open Market Committee has bought gas or groceries in a long time. Stocks have been in an unnaturally steep climb since October, and no one would be surprised to see it end.  Yeah, you've heard that before. But we'll continue to serve up bear market porn anyway because the bullish case is too stupid and boring to write about. However bullish you might be, let's face it: Stocks do not remotely deserve to be trading at these levels, and only an imbecile or someone paid to lie about it would argue otherwise. Lunatic Sector So how soon might we expect the market to go into a hellish dive? The chart above suggests the S&P Index could make an important top just 2.6% above these levels. We like the target because there is so little drama in the chart pattern that produced it. However, before we infer that the end is nigh, we need to put aside the fact that some key stocks in the lunatic sector -- specifically Microsoft, Nvidia and Facebook -- have already topped within a

For nearly a year, I've promoted the idea that the post-covid bull rampage would end when Microsoft shares hit $430. They effectively achieved that benchmark on Friday with a pre-dawn print at 428.95 that gave way to a $16 plunge. If this was not THE top, it certainly felt like A top, and a potentially important one. However, before we draw any conclusions, let's see if the selloff gets legs, since we don't want to underestimate the power of a market that has been in the grip of mass psychosis since October. If there were any doubt about this, consider how stocks have rallied into the Fed's decision to stay tight even after investors had deluded themselves into expecting aggressive easing in 2024. Originally I'd picked Apple as our infallible bellwether, because it is the most valuable company in the world, and because its shares are so heavily owned by institutions. But so are Microsoft's, with a key difference:  Although iPhone sales are poised to implode in the severe economic downturn that's coming, Microsoft is unlikely to feel much pain even in the hardest of times. That's because revenues from Microsoft 365 will continue to flow from more than 60 million subscribers, regardless of the economy's condition. The company's earnings are nearly bomb-proof, and that it is why it is arguably the best stock in the world to own, as well as the most important stock to follow. When it is rising strongly, the broad averages cannot fall; if it falls, it will take the broad averages with it. What If? However, the technical picture is not complete without considering the very bullish chart of the S&P 500. It says that before the 15-year-old bull market ends, the S&Ps are likely to hit 6118.34, a 20% gain from current levels.

Bitcoin mania looks likely to blow itself out at somewhat higher levels. The bitcoin ETF chart above suggests buyers will encounter significant resistance at 64.95, a Hidden Pivot target that lies 5% above Friday's closing price. If this impediment gives way easily or is exceeded for two consecutive weeks on a closing basis, however, you can expect more upside to the alternative target at 70.35.  That's fully 14% above these levels, and although that might seem to portend a powerful move, especially if it occurs in a matter of days, it would probably come as a huge disappointment to countless bitcoin fanatics who have been weaned and nurtured on predictions of $100,000 or more. I doubt we'll see anything like that, especially since the shitballs who control bitcoin, Black Rock chief among them, will have reaped more than their directors could spend in a thousand lifetimes if it climbs 'only' another 14% . It is for their benefit that regulators approved bitcoin ETFs in the first place, making the cryptocurrency affordable to riff-raff who had been priced out of the market even at its bear-market low near $15,000 in January 2023.  Fractional ownership, including with leveraged options, made it possible for kids who were collecting Pokemon cards just a few years ago to become players in the global casino. Virtual Tulips It's hard to imagine how high tulip-bulb prices would have climbed if Dutch teenagers had had access to virtual tulips in 1637, when the mania peaked. We are going to find out, though, when the crypto blowoff sputters out, as all manias eventually do, for lack of greater fools. In the meantime, here's a link to a recent interview I did with Howe Street's Jim Goddard. It explains why bitcoin would be more reasonably priced at $1-$2 instead of

The endgame inched closer to singularity last week with rigged rallies in stocks that had rightfully been given up for dead.  There was the more than doubling in the price of Beyond Meat, for example.  Until last week, shares of the veggie-burger upstart seemed content to scuddle sideways on a tortuous path to death. At $7 a share, the stock had lost 97% of its value since peaking at $240 after its 2019 debut  When it was apexing, Wall Street incited the usual wack-jobs into believing that meatless burgers were the food of the future. Cattle ranchers parried this nonsense with a campaign that emphasized why real meat was better for you. They needn't have worried, however, since most people had already discovered that real meat also tastes a lot better. Carvana is another stock to have received premature last rites from Rick's Picks. Consumer complaints about the used car dealer had been piling up mountainously, like grievances against the airlines, causing the stock to pancake from $376 to under $4.  Its clever handlers managed to waft it back up to $40, which eventually became a launching pad for an undeserved pop last week to $80. Watch for freaked-out shorts to continue covering their bad bets in the weeks ahead, giving the stock an artificial boost before it finds well-deserved obscurity in the low teens during the next recession. Two Kinds of Sardines Even so, if Carvana had just one Pontiac Aztek or an AMC Gremlin sitting on a lot, the company's intrinsic value would exceed that of the world's entire supply of bitcoin. This inconvenient fact seems not to have deterred speculators from bidding up BTC to $64,000 last week, where it sat poised to take on the all-time high at $70,000 recorded in November 2021.  We expect the

So much for the wall of worry!  Optimists and visionaries supposedly climb it while ignoring troublesome signs that leave most investors on the sidelines, paralyzed with fear. Last week, as soaring shares of Nvidia tugged stocks higher around the world, speculators swarmed the wall like cockroaches gorging themselves on dried beer, glue and animal feces. Do insects ever pause to worry? More likely is that even the dark shadow of a size 14 shoe descending on their wretched banquet would not quiet the feverish din of a hundred thousand mandibles crunching away. And so it is these days on Wall Street, scene of an epic wallow that is far removed not just from worry, but from reality. The so-called Magnificent Seven -- we have always referred to these stocks, more appropriately, as the Lunatic Sector -- all by themselves created more than a trillion dollars of 'wealth' in just the last week or so.  This occurred when stocks took volumeless leaps on earnings announcements whose details, whether bullish or bearish, were of scant concern. No one maintains any longer that this is rational behavior. But leave it to Wall Street's hype machine to tell us that earnings eventually will catch up to the craziness. Really? Celebrate This! The megastocks have gone vertical at a particularly unsettling time.  Commercial real estate is collapsing, government is doing most of the hiring, brutal price increases for nearly everything have crushed middle-class purchasing power; and borrowers, led by the U.S. Treasury, will need to refinance more than eight trillion of debt this year at significantly higher rates. To make matters worse, inflation is poised to take off again, in part because of higher costs incurred by shippers avoiding Houthi missiles in the Suez. Under the circumstances, it is far more likely that the next

[Globalism has peaked, says my colleague James Howard Kunstler, and with it a trend toward corporate bigness that has all but extinguished quality and vitality from the marketplace.  Bloated corporatism is about to come crashing down, he says, in a process of creative destruction that will allow us to rescale the economy so that it better serves our needs as individuals.  With his permission, I have reprinted his most recent essay, Think About It, from Clusterfuck Nation.  On Amazon, here's a selection of his brilliantly insightful books, many of them bestsellers  RA ] *** “It’s not enough to be against globalism or the WEF, we have to also be for something better.” — Tom Luongo, Gold, Goats ‘n Guns Mr. Luongo makes an important point. I want you to think about this: There is a reason that the WEF-Globalist cabal is losing the battle to control and dominate the rest of us. They are trying to power straight into the opposing currents of reality. Above all, they seek to centralize power and decision-making. But the world is moving in the opposite direction. All of the WEF’s aims founder on the macro trends unspooling in history. The rising rule for human affairs now is that anything organized at the giant scale is going to wobble and fail. There will not be any world government run by the creatures of Davos or Brussels, or Washington DC, or any other place that the grandiose imagine would be their seat of global power. It’s not going to happen, so you can stop worrying about it. But you’d better prepare for what is happening: everything in our world wants to get smaller, slower, finer, and more local. Anything that opposes these trends is pissing into the wind. Since every activity we humans practice has to