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Why This Wall of Worry Is Different


There is increasing confusion in America about how to handle the rapid spread of Covid’s delta variant. The stock market can usually tell us how much fear is out there, but this time Wall Street seems, if not quite clueless, then certainly heedless. The broad averages have moved steadily higher in recent weeks, caused more by nervous short-covering than by any particular bullishness. There have been no dramatic surges, only a steady, ratcheting ascent that suggests an army of bears have been hard at it, trying to get short at a major top. The irony is that if they would just relax, bull-mania would end overnight, since the rally is drawing its punching power more from buyers driven by desperation than from any other source. With or without them, though, a very important peak is not likely far off. Delta-lockdown worries are bearing down on markets and nearing the red zone as state governors respond with increasingly onerous restrictions on 140 million Americans who have not yet been vaccinated.

One-Upping DeBlasio

Here in Florida, there are signs that serious trouble could be brewing in the nation’s school systems. In Palm Beach County last week, more than 400 students were quarantined just two days into the school year. Although most of them have not tested positive for Covid, contact tracing has put their school year in limbo. Unfortunately, such turmoil could prove to be a mere squall in comparison to the gathering firestorm in big coastal cities. In New York City, for one, DeBlasio announced last week that the un-vaccinated would be barred from indoor dining, gyms, bars and other places. Not to be outdone, California’s true-blue mayors have already one-upped him with edicts that go even further to restrict movement and commerce. As of Friday, Los Angeles reportedly was considering closing grocery stores and much else to the uninoculated. It is predictable that San Francisco and Chicago will not let L.A.’s quarantine challenge go unanswered.

Things have not yet reached the level of hysteria, but once the reaction to ‘delta’ has run its course, if it ever does, we can expect many businesses that survived the first lockdown to close forever. Crazed investors may have contrived to take the first tsunami of business shutdowns in stride, but reckless obliviousness may not yield such benign results this time (if blowing an epic stock-market bubble can be described as benign).  The giddy rally of 2021 was based in part on the delusion that as long as Amazon, Google, Netflix, Microsoft and a few other category-killers were doing well, then so was America. A spectacular bull market has reinforced this absurd idea, but it flouts reality, since small businesses account for fully half of America’s GDP. Shut down enough of them and the unemployment and falling revenues that follow will eventually take down the consumer economy and the online behemoths that serve it.

Rental Bubble

It will also affect the real estate market, especially rentals that have attracted big players such as Invitation Homes and Zillow. Such companies have created a bubble of their own by paying outlandish prices for residential properties, remodeling many of them extensively to attract upscale tenants. In a market as hot as home rentals has been, why should they care about upfront outlays when they can count on a steady stream of ever-rising rent payments over the next ten years? The fatal weakness of this strategy is that tenants are necessarily those who cannot afford to own a home.

None of this recklessness will matter as long as stocks continue to rise. Some technical forecasters seem to think the bull market has a lot farther to go and that the Dow Industrials could double or even triple over the next five to ten years. Although it is impossible to show why this can’t happen, my gut feeling is that the so-called “everything bubble” is about to pop.  It will very shortly be bucking not only seasonal headwinds, but a notorious history of stock market crashes and panics in the September-October period. If past is prelude, the broad averages are setting up for a memorable plunge. Can we actually identify The Top with technical analysis? Stop by the Rick’s Picks Trading Room and find out for yourself. Shorting lesser tops and making money at it has been our specialty, even if we’ve yet to nail the start of the Big One. The 4461.25 Hidden Pivot in the E-Mini S&P futures that was sent out to subscribers Sunday afternoon is a good example. At the moment, it is working nicely for traders who bet it would contain Friday’s ebullience, if only for a short while.  That is how we roll: take a profit and swing for the fences with the 25% that remains. You don’t need to speculate wildly to benefit from the bull market’s robust insanity.

  • John August 21, 2021, 7:55 pm

    Get the word out. No amount of money will protect you.
    The World Economic Forum plandemic book is 200 layers deep and want to implement world dictatorship “governance” everywhere; Including food: no more natural food, just a weekly insects cream ration.
    Work your contacts. Create groups of resistance, because no one will be able to hide from this evil.
    Time to regroup. They will always come up with a new virus variant to continue with the orders.
    We need to stop and say no. Video from an insider.

  • Ben August 16, 2021, 3:20 pm

    “There is increasing confusion in America about how to handle the rapid spread of Covid’s delta variant.”

    Not to hijack your topic, Rick, but I’ve not weighed in on the covid matter — here, nor anywhere else — for quite some time, and I need to get this off my chest (again) in face of rising covid problems (yet again)…


    They’re not God spelled backwards, without good reason! Why every county in every state hasn’t been implementing this since Finland started last year… But better late than never. Everyone should insist that their local, state, and Federal governments make this happen. Hopefully, they will!

  • Rich Cash August 16, 2021, 10:27 am

    With age and pain come wisdom and compassion.
    Once again Rick you tell the naked market truth.
    Paid Apologists rush to deny 200 Wall Street firms driving residential real estate prices manically higher.
    Austin up + 46 % in a year not a sure thing.
    Matrix Memers recite the latest market money myth that rents, like mortgages in 2008, always get paid, and deeper pockets always prevail over Leona Helmsly’s long-suffering Little People.
    The credit card disconnect is 100 million consumers without work are tapped out and 13.4 % defacto inflation means the Government Goosing Game is all over but the Venezuelan gnashing of teeth and wailing.
    The President’s CDC extended an illegal (according to recent Supreme Court decision) moratorium on evictions before going on vacation in Rehoboth, biting Champ dead, wife in an ankle bracelet foot cast reminiscent of Hillary and John and the Afghan graveyard of empires unraveling right before the new Ayatollah President of Iran.
    Even political agnostics see the party in power as circular firing squad in the Debt Destruction Dementia Derby. Chuck, Nancy, KamalaJoe, Say it ain’t so. Fewer believe you and it’s a long painful time until the Fall 2022 reckoning.
    Here in Nevada and elsewhere, law enforcement, locals and visitors openly ignore masked lockdowns.
    How long can Fed and Treasury Plunge Protection Team deny contracting economic reality, manipulating markets and volatility with electronic Fiat Funny Money ?
    All it takes is for one brave person like you to declare, The naked emperor truly has no clothes.
    Perhaps this morning is a brave start.
    We are NOT buying the f’ing dip.

    • Rich Cash August 17, 2021, 8:18 pm

      Between Covid Variants and 500 Air Quality Indices
      California Nevada Oregon on Total Mask Lockdown
      Can the end of the civilized world be any more likely ?

      • RichCash August 18, 2021, 9:18 am

        Please excuse some further peculiar observations of market dynamics:
        Big4 uncharacteristically long ten-year and under Treasuries = Rates down.
        Ags, usually short commercial producers, unusually long = Prices up.
        Stocks way short = a reckoning as reality catches up with Fed Chairs.
        Silver commercials a rare almost neutral = surprise wildcard when she blows.
        Never thought we would live in such interesting times.
        We have our Go Bag ready with escape route, food and silver.
        Not counting on Big Tech to avoid a wreck.

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