‘Bear Market Rally Over’: Wilson Unplugs Stock Rebound

‘Bear Market Rally Over’: Wilson Unplugs Stock Rebound

I hope you enjoyed the bear market rally. Because it's over now. Or at least according to Morgan Stanley's Mike Wilson it is. "While Q1 was rough for most stocks, the second half of March was exceptionally strong," Wilson wrote, in a Monday note. He called the rally "predictable from a technical perspective," but said it was "always a bear market rally" in Morgan's view. "Now we think it's over." On Friday, I suggested that if one was comfortable comparing apples to oranges, the ISM apple has
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4 thoughts on “‘Bear Market Rally Over’: Wilson Unplugs Stock Rebound

  1. There’s no doubt that absurd volatility will be part of our whipsawed lives going forward, and thus no shock whatsoever that a financial analyst would sprinkle a trail of honey laced cocaine in front of fearless speculators that are addicted to pandemic jolts.

    Broken markets and broken metrics will fuel this age of information overload and misinformation and the concept of valuation will obviously become more and more irrational and exuberant.

    In this world of alternative liquidity there’s no better place to look for weird clues, than the tip of the DTCC iceberg, where one can examine US Treasury settlement fails.

    Settlement fails during the Lehman failure were about $2.7 trillion. Essentially, all these financial gurus misplaced or hid their collateral and ended up in a panic searching for cash as fire sales overwhelmed global liquidity.

    It’s utterly stupid to put out the massive surge in settlement fails going on lately, but, as a footnote, it’s interesting to point out, that after the GFC, the Fed created some structural limitations to how to manage this instability.

    The Fed won’t allow their trading desk to conduct agency MBS coupon swaps during periods of “prolonged fails”.

    This is a plumbing issue better left to plumbers like Zoltan, but he’s busy with engineering new solutions for next generation toilets. Maybe he’s already examined the tip of the DTCC iceberg and the magnitude of what lies beneath?

    These mysterious fails are sorta like a car title that’s been duplicated on a high speed copy machine, and 1000 different people each think they own a car, which never existed. The world of repo collateral is as insane as this analyst that’s screaming for people to buy…

  2. Rarely do we get such a clean prediction as indicated by the article. I like clean breaks. I took long strides toward the sideline Friday, and was honestly perturbed to see the Tech rally this morning. That AAPL increase of 2.37% in particular grinded my gears.

    What, is Musk going to run for prez now.

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