Today, the trading volume for the SPY was the lowest in 3 years, and the 4th lowest in 18 years. This is anomalous even for an early holiday close.
The spread between the high and the low, as a percentage, was the lowest since 2017, and the 5th lowest ever for the SPY.
Three dojis have appeared in a row, which can often signal an exhaustion of a trend and a potential reversal. However, the #SPY is heading into a typically bullish seasonal period of the year.
Reverse repos ( #RRPs ) continue to collapse. They're now approaching 900B. The clock is ticking for the #Fed to pivot.
At the current rate, including end-of-year window dressing, RRPs will likely be completely unwound no later than around February 2024. After this point in time, the Fed will, as a mathematical certainty, need to pivot (failure to do so will otherwise cause massive #liquidation spirals to raise cash).
A significant economic downturn is coming due to the extreme monetary tightening that occurred in 2022 and 2023. It is overwhelmingly likely to begin in the U.S. by the end of 2024. The current prolonged 10y/3m yield curve inversion hints that the coming recession will also be prolonged. Right now, however, much of the market is believing the soft landing narrative. A soft landing always seems most plausible right after the central bank stops tightening but before the effects of that tightening result in an economic recession.
Unlike recessions in the past several decades, the coming economic recession will be characterized by high inflation (i.e. stagflation). Inflation will be amplified after the Fed pivots back to monetary easing.
The inflationary situation will get far worse in the years and decades ahead as interest payments on public debt spiral higher while #GDP growth slows. The combination of these factors will necessitate explosive growth in the currency supply, resulting in yet even higher inflation.
During this phase, the price of #Bitcoin will spiral higher, unnerving central banks. Countries at the forefront of the hyperinflationary spiral will begin to outright adopt a Bitcoin standard, while those countries most entrenched in power under the current fiat system will more strongly oppose #Bitcoin and decentralized ledgers in general.
Perhaps most alarming is the need for central banks and central governments to find a scapegoat for the catastrophe they've created. Often that scapegoat becomes an opposing nation-state, raising the prospects of #war.
