Waiting For THE Crash

What we've seen so far is child's play. What we're waiting for is the REAL Deal.

Step back to the beginning of 2025. Imagine someone had told you ahead of time that within five months Trump would have started a global trade war and steel tariffs would be at 50%, auto tariffs would be 25%, and Chinese tariffs would be 30%. Moreover, global stocks had already crashed once and were back near all time highs. Global central banks ex-U.S. were rapidly easing and the World Bank just downgraded global growth to the lowest level since 2008. Within one month a second and possibly larger round of global tariffs were due.

Would you buy or would you sell? That is the only question right now.

It gets better, or worse depending on how you view these things.

As U.S. stocks approach their prior all time high, volume, volatility and breadth are all collapsing. Momentum algos are struggling to keep the market churning back towards all time highs as market liquidity collapses.

Global central banks (ex-U.S.) are creating a lethal disconnect between fantasy and reality.

Note the pandemic (blue circle left) versus now. Back then the commodity currencies moved in tandem with stocks. Now, global growth as indicated by the Aussie dollar is going lower and stocks are going higher.

Complacency and speculation are rampant. Bloomberg warned today of another meme stock bubble. The two leading stocks this time around are AI stocks Palantir and CoreWeave which is a company that went public six weeks ago and is already 400% higher.

"Palantir trades at 71 times estimated sales, making it by far the most expensive stock in the S&P 500...The average in the S&P 500 is around 3 times."

Another story this week from the Wall Street Journal about the number of companies using Bitcoin for their Treasury (cash) holdings.

"Buying bitcoin is becoming a fad for a growing list of companies that have nothing to do with crypto but believe digital assets can boost their stocks."

About 60 companies with no previous ties to the market are now pursuing the “bitcoin treasury strategy...Some aren’t just buying bitcoin, but are piling into smaller tokens such as ether, solana and XRP."

Here we see Microstrategy which initiated this so-called "Bitcoin treasury strategy". The stock peaked last November, then it lost half its value, and now it's making a second lower high.

In summary, since the lows of April two months ago, investors have been panic buying the highest momentum stocks faster than they bought them ahead of the last crash - on the belief that all of this trade war risk, interest rate risk, and global recession risk is just a mirage.

This time, I predict the fall will be much farther and much harder and on a new record for volume and dislocation.