Hey, are you seeing this? Otavio Costa’s sounding the alarm—stagflation’s creeping in, and it’s grim! Real yields are dropping, but inflation expectations—4.3% for the next year, highest since November 2023—are diverging from falling nominal yields. University of Michigan’s February sentiment hit 64.7, way below the 67.8 prelim, and retail sales are tanking over 10% annually—nominal! In real terms, it’s even worse. The Fed’s Supercore inflation’s climbing at 9.5%—textbook stagflation, with fiscal spending slowing and global central bank assets shrinking. Are you blind to this? Banks are wobbling, stocks are at peak valuations with peak margins, and it’s a setup for pain.
Watch out—Peter Schiff’s piling on—the “Trump trade” is unraveling fast! Russell 2000’s down 1.6% year-to-date, 11% since its Trump-inspired high in November, and even 3% lower than election day. That index tracks the U.S. domestic economy—domestic!—and it’s screaming trouble. Wall Street’s greed hasn’t changed, fat and lazy from government backstops, but smart money’s bailing. Warren Buffett’s dumped stocks for nine straight quarters since late 2022, no buybacks for two quarters running, and Berkshire’s cash hit a record $334 billion—earning $13 billion in interest alone on bills. Are we watching a bubble pop while the pros cash out?
Listen up—S&P 500’s free cash flow yield’s below 3%, a far cry from 2009’s 8% bottom, with many firms hitting double-digit yields back then. After 16 years of multiple expansion, U.S. equities reek of overvaluation—mega-cap tech stocks are the most vulnerable, trading at nosebleed P/Es. Billionaire Steve Cohen just warned, “I’m actually pretty negative for the first time in a while. It may only last a year or so, but it’s definitely a period where I think the best gains have been had and wouldn’t surprise me to see a significant correction.” Is this the wall of worry, or is it different this time? Because risk appetite’s fading, global liquidity’s tanking—excess liquidity turned negative months ago, a leading signal for stocks to dive.
Pay attention—Jamie Dimon sold 33% of his J.P. Morgan stock on February 20, and Co-CEO Troy Rohrbaugh dumped 20% on Friday. That’s a massive sell-off—raises all kinds of red flags! Watch what they do, not what they say—Dimon’s not alone. Buffett’s sitting on $334 billion cash, signaling caution. Jim Grant’s warning folks to yank money from non-FDIC-insured platforms—banks are shaky, and this de-grossing by hedge funds over the last two weeks, the biggest since July, ranks in the top four “risk-off” moves in five years. Are we sleepwalking into a correction while the smart ones short it out, betting on an easy short soon?
Take note—don’t be the dope left holding overvalued stocks! That 4.3% inflation, 64.7 sentiment, Russell 2000’s 11% dive, S&P’s 3% FCF yield—it’s a roadmap to ruin! Sell equities, grab gold, real estate—anything solid—before this stagflation bites. How long ‘til stocks crash to reflect reality? The wise are bailing—Wall Street’s blind, but you’ve been warned. This could be the correction nobody saw coming, and the economy’s already limping.
Sources:
https://x.com/cryptoboysbr/status/1893055153046999234
https://x.com/SpencerHakimian/status/1892952691854254582
https://x.com/PeterSchiff/status/1893055300384481706
https://x.com/zerohedge/status/1893380560195658153
https://x.com/WillieDelwiche/status/1893361409733366129
https://x.com/MacroCharts/status/1893269519889768645
https://x.com/StealthQE4/status/1893364788475883564
https://x.com/bravosresearch/status/1893341664158327270
https://x.com/FinanceLancelot/status/1893101972028285242