S&P,Nasdaq, Dow ALL HIT RECORD HIGHS! Thank you President Biden!

[Biggins]

Operators, ***The Following is an excerpt from a Market Note recently sent to Collective members. Click here to learn more*** Consider this a PSA… The Russia/Ukraine hot takes I’m seeing getting bandied about on Fintwit by half-brained Putin lickspittled nitwits are so awful that I feel compelled to say something. First, a quick note about my background so you know that I’m not completely talking out of my arse here. I spent over a decade working in intelligence (Human intelligence, counter-intelligence, interrogation, etc…) for the DoD, DIA, FBI, and on the private side as a consultant for Palantir. I sat on the Russia desk when I contracted for the FBI and focused on that region for much of my intel career. So I’m not a complete noob when it comes to these things. However, I spent enough time in that game to know that these situations are highly complex, variable, layered, nuanced, and difficult to predict. This is because there’s always a lack of information, intentional moves to misinform, and most of the time even the lead players themselves don’t know exactly what they’re going to do next. With that caveat, let’s do a real quick overview of the basic facts on the ground. A little setting of the scene for you. To start, Russia is a dying country… I say dying because the country is quite literally dying. It’s shrinking in size and this is only going to accelerate, with the population expected to contract by 5-8% over the next 15-years alone. Harvard’s Davis Center for Russian and Eurasian studies, notes the following (chart from them, annotation by me): In Russia, the age-sex pyramid looks like an unstable Christmas tree. The indentations every 20-25 years represent the long-term cyclical impact of the country having lost so many people in World War II. Each subsequent recovery is narrower, suggesting that the number of fertile women in each generation is getting smaller and smaller. That doesn’t bode well for the birth rate.​ ​ ​ The Russian government is keenly aware of this and has been trying its damndest to reverse these trends. They’ve enacted policies such as the Maternity Capital program, which gives out cash for newborns. They’re making it increasingly easy to immigrate and gain Russian citizenship. And they’ve been aggressive in “passportizing” ethnic Russians in contested territories (Moldova, Georgia, Eastern Ukraine), going as far as annexing Crimea, which brought another 2.5mn “citizens” into the country. The national security website War On The Rocks points out a few of the errors with this approach (emphasis by me). There is a worrisome potential relationship between demographics and Russia’s foreign policy today, including the long-standing practice of “passportization.” During his annually televised question and answer session in 2018, Putin suggested that one of the solutions to the demographic problem is liberalizing citizenship policy to integrate Russian compatriots. The implied message was that Moscow sees refugees from conflict as a potential positive in light of the demographic challenges the country faces — compatriots, or those Russia considers to be part of the Russian world (Russki Mir), are part of the solution.​

 

[Biggins]

In the long run, demographics, not geopolitics, may prove Putin’s chief error in undertaking a confrontation with the United States. Undoubtedly, Moscow can keep up the contest, but it will come with a strategic price tag for Russia’s future during a crucial decade when the country needs to focus resources on its demographic problem. The population structure will change in the 2030s such that a second demographic “dip” will become more pronounced, rendering later efforts less effective. There is an inherent tradeoff between Moscow’s prioritization of the country’s demographic health and its geopolitical pursuits, and this does not seem to be accepted by the national leadership. In the long run, demographics, not geopolitics, may prove Putin’s chief error in undertaking a confrontation with the United States. Undoubtedly, Moscow can keep up the contest, but it will come with a strategic price tag for Russia’s future during a crucial decade when the country needs to focus resources on its demographic problem. The population structure will change in the 2030s such that a second demographic “dip” will become more pronounced, rendering later efforts less effective. There is an inherent tradeoff between Moscow’s prioritization of the country’s demographic health and its geopolitical pursuits, and this does not seem to be accepted by the national leadership.​ ​ ​ Second, Russia is a small and dwindling economic power. Here’s a side-by-side comparison to my home state of Texas (image via Forbes). The data is a couple of years old but the main point stands. Russia’s GDP is over 20% smaller than that of the Longhorn state. Its GDP per capita is a tiny fraction of that seen in other modern countries, owing to the fact that it's an extreme kleptocracy with stagnant real growth.​ ​ ​

​

 

[Biggins]

Third, Russia has indefensible borders… Much of Putin’s geopolitical strategy is directly explained by the country’s vulnerability to land attack through the great flatland that is the European Plain to its West, as well as its lack of access to warm water ports. Countless invaders have used the European Plain to attack Russia throughout history; the Poles in 1605, Swedes in 1707, Napoleon in 1812, and the Germans in both World Wars. The plain stretches to a width of roughly 2,000 miles along the Russian border. This makes it a geographical nightmare for a paranoid authoritarian type.​ ​

These two reasons explain nearly all of Putin’s geopolitical moves. It’s why Russia annexed Crimea; it gave them access to the warm-water port at Sevastopol. It explains their backing of Asad in Syria; they have a naval base in the port city of Tartus, which is located on Syria’s Mediterranean coast. And it explains why Putin feels he (Russia) needs to maintain control over Ukraine and not allow it to fall further into Western/NATO influence, and why he’s gone as far as threatening nuclear war to stop it. The fall of Viktor Yanukovych and his replacement with a pro-Western government made the current military standoff, inevitable, at least from the Russian viewpoint. Putin needs the land buffer of Ukraine to protect his borders from invasion. He also wouldn’t mind annexing the more pro-Russian parts of the country in order to bolster his demographics. Ultimately, he will do whatever he can in his power to stop the creep of NATO and western influence from moving to his doorstep.​ ​ ​ Okay, so a quick recap. Russia is a nation that’s in structural decline. Its population is shrinking, it’s a tiny resource-driven kleptocracy that hasn’t seen its economy grow in real terms over the last decade +. The only power that Putin has is his large arsenal of nukes. Europe’s dependency on Russian oil and gas. And Russia’s considerable global intelligence / influence / propaganda efforts along with their willingness and aggressiveness in pulling on that lever.​ ​ Putin still operates under the cold war era might makes rightmindset. Considering Russia’s decline (one which he has helped accelerate due to his poor management of the country’s economy), he’s somewhat of a desperate despot. This is why he will do whatever he deems necessary to not cede control of Ukraine to the West. And it’s why he desires control over the security policies of every former Soviet state that broke away after 1989. This is why he’s amassed over 150,000 troops along the Ukrainian border. It’s why the Russian military will not step down. And why it will likely escalate, until it gets what it wants, either through concession or by force. This brings us to the present day and to one of the reasons behind why I wanted to write this piece. For whatever God-forsaken reason, there’s a growing portion of the American right (looking at you Tucker…) that has coalesced around this narrative of Putin being some kind of a geopolitical chess grandmaster, who plays the US and its western allies like a Balalaika. And that, in this instance, it’s the US administration that is somehow hankering for war. I can’t begin to understand the mental contortions one has to do to get to an opinion this piss poor. It’s so bereft of sense and any basis in reality, that it’s ridiculous to even try and refute… like having to argue why the Pacific ocean isn’t actually made entirely out of tapioca. I only assume that paint chips and errant parents are to blame for this collective brain damage, but I digress… I’m not sure what the difficulty in understanding is here. Give me a holler if you’ve got any questions or comments. In the meantime, stay frosty. Your Macro Operator, ​

 

[PatsFan1283]

Biggins you got a cliffs on that

Doesn’t seem to have much investment thesis

 

[Biggins]

Biggins you got a cliffs on that

Doesn’t seem to have much investment thesis

Yea it wouldn’t let me copy and paste the whole article so l kinda gave up. It’s in my e-mail my brother sent out. See if this helps.

 

[Biggins]

The administration has been purposefully leaking intel to the press about Putin’s plan. This intel is no doubt being picked up from SIGINT. The word is that they move by early next week.

Of course, this is all just informed speculation so take it with a helping of salt. The geopolitical prediction game is a tough one, and you inevitably show your ass if you play it enough. That’s just the table stakes.

As far as how this impacts markets.

The public has a tendency to overweight the market importance of geopolitical events. The truth is that the vast majority of the time, these things don’t really matter except for a very short while. Of course, that’s different if things escalate significantly. Which, unfortunately, this has the potential of doing though I still see that as a low probability outcome.

Inflation and the Fed’s response to the former continue to be the two big things driving the outsized repositioning we’ve seen over the last two months. If credit continues to be a solid lead, then the pain isn’t quite done yet. I’ll be out with more over the weekend where I’ll go into this further.

In the meantime, we’re still holding large amounts of cash. And we are still short RTY and NQ from higher levels. This has helped keep our book up 5% on the year, versus the SPX’s -8% year-to-date decline. It’s our belief that the market is setting up for a great buying opportunity in the next few weeks. And lucky for us, we have a lot of dry powder to do some shopping.

If you’d like to join us in our market adventures and our hopeful upcoming shopping spree, then click the link below and sign up for our Collective. This is shaping up to be one of the most engaging macro environments in over a decade. There will be a LOT of money to be made and lost if you don’t know when to hedge your risk and cash your chips. Enrollment to our group closes this Sunday at midnight. So if you’re thinking about joining the team, make sure to do so before then. Hope to see you in there and happy hunting!

 

[Ricboff]

'

'HUGE week coming up, gotta believe a defense occurs before Powell speaks mid March............... think it holds (may pierce the tail of the 4th candle from the far right, but bid back up) . And volume has decreased (bottom histogram) over the last 3 weeks, selling maybe drying up. i think a catalyst will need to break that, and if it does expect a huge spike on the VIX . That catalyst could very well be Putin, so could happen.'

...............

on the NQ (qqq futures, yesterday the markets were closed but not the futures ) it has indeed pierced the tail of the weekly candle of 4 weeks ago---now the question is will the second part come to fruition?--bid back up and end the week (friday 4 pm) with a green candle and a tail. And play back in the box 340-360 until Powell mid March

Nasdaq Futures Streaming Chart - Investing.com

Free live streaming charts for the Nasdaq Futures.

www.investing.com

click candle, click 1W (this is the weekly , ends Friday 4 pm), click widescreen

 

[PatsFan1283]

No way 9 rate hikes in the next year, you would start breaking shit in capital and equity way before that

Better get lucky to avoid some stagflation

 

[Ricboff]

powell buys the spy/qqq before 9 rate hikes, lol...might as well copy Japan to the letter...he may get FB at $150

needless to say the second half of #167 is highly unlikely to come to fruition, lol. Best here is end the week with a doji--need some bulls to show up thursday/friday....or do we have an all out rush to the exits...

 

[Ricboff]

may have given up on the second part too early! LMFAO

tech trying to lead the repair, as the everything else market fades .

XLF (financials) have lost its 50 sma on the weekly and its 200 sma on the daily, yikes

 

[JackStraw77]

It's like in the movie Schlinder's List where Oscar was talking about how he failed in so many businesses but this time was different. The one thing that changed "War". That's what caused the reversal today. Once the war actually started it was a plus for the market hence the short covering and the rally. This factor is why you can't beat the market. In the old days the market would have continued to tank and the guys sitting on cash would just continue to build positions and clean up when the market eventually rallied even it took months. Now the computer algorithms who have no emotion just pounced when they perceived value and left the shorts holding the bag.

 

[Ricboff]

yeah,gotta believe a % over 50 was short covering . Stretch the band too far and it can rebound violently. Waiting on the anatomy of this weekly candle , got a shot to be pretty good

today was insane shit-- the qqq reversed over 6.50% from its open.off the charts type shit VIX rejected yet again at 38ish...150 pt swings can happen in a few hours

 

[PatsFan1283]

Don't think rally had much to do with algos at all, just fed officials signaling a re-evaluation of rate hike schedule because of Ukraine

Ukraine is pretty insignificant in grand scheme of things, most geopolitical incidents tend to get oversold

 

[Ricboff]

where u getting that from? did that come in during cash hours?

 

[PatsFan1283]

https://twitter.com/i/web/status/1497027305905942531

Obviously not an emphatic statement of any kind but not nothing either, enough for a little bounce

 

[Ricboff]

Mar 10 cpi is a biggie....further acceleration is the worse scenario. Gotta get back in the box before then lol

 

[StevieRay]

The stock market has lost $11 trillion.

The national debt has increased by $3 trillion.

The average gas price is $5.01.

This is Joe Biden's America.

 

[StevieRay]

Wall St Trifecta hits on Friday!

Refreshing to see real leadership lead to real results

THANK YOU PRESIDENT BIDEN!

The stock market has lost $11 trillion.

The national debt has increased by $3 trillion.

The average gas price is $5.01.

This is Joe Biden's America.