April 2022, Chicken Little Portfolio Performance

The Piper will be paid (by us, not Jay Powell).

The bull market in everything was fueled by government overspending and Federal Reserve looseness. Stocks up, Bonds up, housing up, gold up, crypto up. Now, the Fed has decided that it is their best interest to end the party, and everyone else will have to pay

The Fed made a mess, and we all have to pay

Bear market operations de-escalate

Chicken Little has reduced the portfolio's short position in stocks. This move reversed the "bear market operations escalate" trade. I am still bearish, but market has not gone down in spite of bad news. Sold the Dow short at 34,550 and covered at 34,500 for no gain or loss. 

Bear market operations are reduced 

March 2022, Chicken Little Portfolio Performance

Historic increase in interest rates

Bond investors have been destroyed in recent weeks. On February 7, 2022, I wrote "paying the piper,' higher interest rates are coming. in the 4+ weeks since that post, interest rates have soared. The bad news is that rates can go a *lot* higher. 

First payments to the Piper (graph from WSJ)

Bear Market operations escalate

 

Chicken Little has shorted more stocks to re-establish the full size short position. The short was initiated at Dow 35,000 on Feb 4, 2022 (see post). On Feb 24, the position was cut in half at 32,300 (see post). Now back to full position at 34,550 today. The short will be covered if the Dow can take out the old high of 36,952. 

Bear Market operations are underway

February 2022, Chicken Little Portfolio Performance

 Paying the piper

Higher real interest rates are coming. Today, the 10-year Treasury yields 1.78% and CPI is 7.5% so the real rate is negative 5.72%. Over the coming cycle, the real rate can increase to over positive 5%. In the new environment, asset prices will decline, prudence will be rewarded, and profligacy punished. 

Higher real interest rates are coming

Chicken Little still uber Bearish, but managing risk

 

Chicken Little covered half the short stock position this morning. I am still as bearish as ever; this is simply risk management. I sold the Dow short at 35,000 risking 37,000. When the Dow went below 33,000, I covered half. Still have a stop at 37,000 to cover the second half. (See Chicken Little sells stocks.)

Still Bearish

 

January 2022, Chicken Little Portfolio Performance

 Stagflation

The Federal Reserve is - as I type - continuing to e-print money and interest rates are still at zero. Jay Powell and the rest of Fed have created a financial crisis via loose monetary policy. At least the fourth serious crisis created by the Fed (see my PBS article "End the Fed").

 

The Fed has created inflation

Chicken Little Short Stocks (again)

Chicken Little is short stocks for the third time in recent months (See one and two previous shorts).  The Fed is boxed in, the market may have turned. Short at Dow 35,000, stop-loss entered to cover position if Dow makes new all-time high. 

Bear Market operations have re-commenced

December 2021, Chicken Little Portfolio Performance

Wolf, Wolf, WOLF!

The Wolf is coming? Do you believe me? I have been crying wolf since December of 2009. Just over 12 years of being wrong every day. Wrong for more than a decade, but still confident. 

WOLF!

Chicken Little Sells Stocks (Again)

Chicken Little is short US stocks. The short was entered at Dow 35,800 and is 36% of the portfolio. The short will be covered if the Dow makes a new high. The Federal Reserve has laid the groundwork for stagflation and asset markets may be on their way down.   

Still bearish even though it has been costly

 

November 2021, Chicken Little Portfolio Performance

In 1958, AW Phillips created the 'Phillips Curve' concept that central banks could print to create a bit more employment at the expense of a bit more inflation. Recently, central banks tried to print a lot more employment, and argued that the 'Phillips curve is not dead." - see Jerome Powell's 2018 article favoring printing. Unfortunately, the mistakes of Central Bank overprinting threaten all of us.

The Price of easy money in Venezuela

October 2021, Chicken Little Portfolio Performance

 Bubblicious

Just when you thought it could not get crazier, it did. Markets exploded up in October 2021. Nassim Taleb tells an anecdote about our failure to predict. When the Lebanese civil war broke out in 1975, some people went to Cypress for the weekend expecting just a few days of trouble. The war lasted over 20 years. 

The Roaring 20s