When we take a look at the past 22 years we can see when ever the 10 Year Treasury Note hit a certain level and the yield curve reversed and inverted the crisis hit. The QQQ like other ETFs dropped significantly. The reason this did not happen in late 2018 was because of the implementation the QE, Quantitative Easing, after the financial crisis. Increasing debt, is like printing money for Covid Stimmies and “Free Government Money” or excessive social programs by buying Mortgage Backed Assets and Bonds with it. This increases the Money Stock M2 and leads to inflation. Why? Because more money is chasing fewer goods. Money stock increase should only walk along GDP increase, nationally or globally for the USD. Now that the 10 Year Note is about to hit 2.4% in my opinion the chances are great to trigger the market crash we are all waiting for.

What is different to the 2008 Crisis?

Other than in 2008 when QE was implemented, QE was ceased on March 9th, 2022. Hence the support for the Stock Market is gone and additionally rate hikes will be implemented. A Market Crash like in 2000 and in 2008 are much more likely. An Inflation of around 20% for the mid term elections is not feasible for the Biden Administration. The Feds will crash the stock market instead. This is inevitable. That’s why I short the market

What happened to the inverted yield curve in 2019?

The Feds started hiking the rates but then reversed it just before the China Virus came. And then they were massively pumping money into circulation, which caused the inflation but saved the stock market. We can see even with an inverted yield curve neither the QQQ or the SPY took a beating in 2019. And that is because of money printing. But the economy was also strong and not stagnant as it is today. That saved Trumps economy from a downturn that was already written in stone /data. We also had a low inflation rate that could use some upticks. But not today. The Feds are running way behind the train.

Why do I expect a recession?

The Central argument is:

• When a recession hits the Feds cannot lower their Fund Rate since it is at almost zero. The Feds cannot stimulate the economy. The economy will fall deeply.
• 2018/19 didnt hit the stock market due to QE and printing money, Covid and the stimmies avoided a downturn.
• Interest hikes and no Quantitative Easing will crash the stock market
• Pick a choice: Inflation will go up faster or Crash the Stock Market
• All crises had an inverted yield curve ahead of time.

What’s possible?

A Markey Crash of 40% is very likely. This would mean for the SPY to settle around 288 and the QQQ around 245!! We are not there yet. But we see it is developing.
The magic level for the QQQ is 320 and then drop another 75 points.

For the SPY is means the crush level is sitting at 415 and then it can drop another 125 points. This is what I am waiting for.