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Dear Fed: The Chickens Are Finally Coming Home To Roost Part II

Kurt S. Altrichter, CRPS®
Kurt S. Altrichter, CRPS®
  • The rally we saw at the beginning of the week was short sellers covering their bets.
  • There are some high-quality buys out there, but we are going to sit on our cash.
  • If the US continues to rack up debt, a bear market could be the least of our worries.

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Click HERE for the full analysis below.
Dear Fed: The Chickens Are Finally Coming Home To Roost Part II
This week, the market had a strong rebound at the beginning of the week, raising hopes that the bear market is nearing its end. The Ivory Hill RiskSIGNAL is still negative, and the trend is still downward. We are sitting on over 85% cash today. Since this rally had minimal impact on the trend, even over the short term, it is likely that short sellers are covering their bets and perhaps some speculators looking to make a profit drove this surge in stock prices.
By the way, there are some fantastic deals out there. If you were to buy today, would you be happy about it in three years? I’ll use odds to answer my own question. I would suggest that there is a 90% or better chance that the market will be higher in three years.
When you look at stocks like Qualcomm, Inc., Wells Fargo, and even Microsoft and Apple, they are looking like a generational buying opportunity here.
We need to be patient and wait until the market tells us when the trend has changed.
We are in a bear market where market conditions are signaling that the probability of a further selloff is more likely than not.
We have a significant amount of cash on hand, and we are sitting in a great position to benefit from a fresh bull market. And I guarantee a new bull market will come; the only question is when.
Our business cycle forecasting model shows the following:
  • The US will have slowing economic growth until Q2 of 2023.
  • The US inflation target is 4.83% by Q2 2023 (still a problem for the Fed).
The takeaway here is that we could be sitting in this position for a while, so set that expectation for yourself.
This graph caught my eye. It demonstrates that midterm years have a significant downturn, but returns a year later are excellent.
I have been saying for well over a year now that the US has a major debt problem.
The markets are currently concentrating on the effects of a short-term increase in interest rates.
The market for U.K. pension funds was on the verge of collapse.
The solvency of one or more of Europe’s big banks is in question.
Institutions lack the time to respond and hedge themselves when borrowing costs fluctuate quickly, as they have done over the previous few months.
They abruptly overexpose themselves, which is when the system starts to break.
Let’s focus on the long term.
Debt accumulation and its servicing costs move considerably more slowly and aren’t always as obvious. Although its influence is more gradual than immediate, it is present and may represent the greatest market danger of all.
Click HERE for the full analysis.
Outperformance is achieved through the avoidance of major market crashes.
Best regards,
-Kurt
Schedule a call with me by clicking HERE
Kurt S. Altrichter, CRPS®
Fiduciary Advisor | President
8400 Normandale Lake Blvd, Suite 920, Bloomington, MN 55437
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Kurt S. Altrichter, CRPS®
Kurt S. Altrichter, CRPS® @kurtsaltrichter

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8400 Normandale Lake Blvd, Suite 920, Bloomington, MN 55437