Is It Too Late Too Panic?

Nah!

TGIF…

Last week I wrote ‘is it time to panic’?

My thesis is if you must panic, panic first.

The week is now over and while the markets continue lower, it seems like today was still a good day to ‘panic first’.

I started getting calls today from some of my favorite trader and investor friends asking me if I was a buyer of stocks. I said…’I am the one that usually calls you so I doubt it.’

I imagine I will be calling them all next week asking THEM what they think.

Quickly again here is what I am watching and considering…

As I wrote last week here…

2008 had ONE crisis. A housing collapse.

2026 has THREE running simultaneously:
→ A private credit implosion
→ A war shutting down global energy
→ A bond market that can't absorb the shock

I would add today that I think we need to add a fourth crisis now that the dollar is surging and we are more likely to get a FED rate hike than a cut in our near future and that is the ‘Unknown Unknown’. When America sneezes, the world catches cold. The world we should be worried about is the emerging economies and Scott Galloway shared one such scenario that seems reasonable to me in his post titled ‘Patient’s Zero’. The gist ..


Above 26,000 feet, the human body cannot acclimatize — it can only deteriorate. The world’s most fragile economies have been living in the financial equivalent of the death zone for years: Unsustainable debt, thin reserves, and no margin for error. When oil prices spike, energy-dependent emerging economies get hit from three directions at once. The cost of importing energy rises, their currencies weaken against the dollar — oil is priced in dollars and everyone needs more of them — and the investors who lent them money start doing the math. That last part is the killer, as dollar-denominated debt is a hidden oil bet. When a country borrows in dollars, it’s implicitly betting that its local currency won’t weaken. Oil price spikes strengthen the dollar and crush local currencies simultaneously, making the country’s debt more expensive to service at exactly the moment it’s least able to pay it. That’s not one problem, it’s the same problem expressed twice. Since the war began, oil has spiked and the dollar has hit a 10-month high. Essentially, Trump ordered the surf and turf and, when the bill arrived, asked the server to split it 193 ways.

Next week I am watching the $VIX which continues to be elevated at $26 and the Stocktwits sentiment index which is spiking as well. Here is the Stocktwits sentiment index and you can track it on the homepage.

I track the $VIX via portfolio company Koyfin and here it is since the Covid spike to 90 back in March 2020…

The bears are coming out of the closet as we speak…

My gut opinion…

I would doubt (and hope) we ever see $VIX 90 again, but this market feels like we deserve at least a ‘tariff’ high spike of 50—60 since we still have the idiotic tariffs and now all the other issues outlined above.

Don’t count on this government to do the right thing right now as they have gone from ‘end all wars’ to ‘suck it up America’ in less than a year.

As for our SEC… they are very worried about ‘group chats’. My open letter to the SEC is… ‘there is this group chat called ‘Truth Social’ and the guy screaming the loudest has been offering misinformation and terrible advice forever. You can’t miss him…he has dead hands and an orange face. Can you please look into it pronto!

Gold started to crack this week and so I assume a liquidity crisis is brewing and all assets become correlated and break to the downside next.

One bright spot is that the software index ( $IGV ( ▼ 1.74% ) ), which has led technology to the downside, is still well above the lows set a few weeks ago.

Next week will reveal a lot more.

I hope this helps.

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