July 14, 2022: Bear Market; Bear Down Chicago Bears

By Jeffrey Cohen, Your Investment Advisor Representative
US Advanced Computing Infrastructure, Inc.
A non-discretionary investment advisor in Illinois.

We are very bearish on today's US Equities markets in this video. However, it is all 2nd order effects and macro-economic factors at this point.  Lots of indirect causes and malaise. We think the market has only one way to go in the short-term, and that is down to continue the bear market decline.

We discussed multiple issues.

• Inflation is up
• US Dollar is up
• Risk-free interest rates are up (short-term money for investors)
• US Treasuries bonds and notes are up, but bills are down.
• Economically sensitive commodities are down, but that could be due to being priced in USD, and not demand destruction.
• Corporate earnings for US companies with large investments in bonds and MBS, and companies that have significant operations globally will show lower earnings in Q2. This will not help stocks.
• Daily price volatility is up
• Fewer stocks in our CQNS UP run and more stocks in our CQNS Down run. This means that more stocks are falling from the equity equivalent of Investment Grade to High Yield
• Market Breadth (new lows vs. new highs) is showing continued weakness. It was around 19 new lows (fixed income and equities) for every 1 new high. That was consistent across fixed income and equities.

There is probably more that we discussed, such as our discussion with our daughter explaining how the government broke the US dollar and inflation is really high. It is bad for a 12-year old and her 19-year old sister. It is bad for everyone.

We worry that the US Federal Reserve and the US Federal Government won't do what it takes to correct inflation, and we worry that they will do what it takes to correct inflation. Unfortunately, by waiting too long and letting the market forces do the heavy lifting, they only have lose-lose options. Those options will cause widespread global poverty. It isn't a good choice.

We also worry that Russia will declare war on NATO. This is our black swan event concern and it will change things for the remainder of my lifetime, and likely most of yours.

Good luck in the markets today.
Jeffrey Cohen