Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

Free Markets and the Purpose of Shorting (by XerxesTraderGF)

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With markets feeling quite top-heavy, I am going to get ahead of an argument that I have heard in the last “real” bear market, meaning the 2007-2009 market*, specifically the argument against shorting. In any market, there tends a very “protective” mindset from market bulls. Most that I have spoken in the past with tend to have a “This market is my property and the value should go up” mentality. As such, they seem to take things a bit personal when market bears tell them “This market is overvalued”.

They seem to get insulted and defensive and look for someone to blame because they can’t believe or don’t want to believe any reasons that their market value could possibly be going down. In their minds, the value should always go up, as it has since the beginning of the US Stock Market (from a nominal perspective). In fact, in many cases, the market “seems” late to digest any bad news at the end of bull markets.

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Hellflation or Liquidation Ahead

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Is the Fed trying to blow another, more covert asset bubble?

[edit] With a note that another, less viable option is possible as well. That would be a ‘just right’ Goldilocks gently disinflationary option similar to the 2012-2019 phase.

[edit2] A subsequent post notes another reason the Fed may be erring dovish, as the Bank sector negatively diverges long-term yields (30yr has ticked the underside of our target zone of 2.5% to 2.7%, after all) and the yield curve continues to flatten.

The asset bubble that almost ended in Q1 2020 was rescued by two main saviors, 1) unsustainable bearish (no, terrorized) sentiment and even more so, 2) balls out central bank inflation, led by the US Federal Reserve. The resulting bubble leg was in the bag from the moment the dovish Fed made its first headline about asset purchases and rate cuts.

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