Well, it's that time again to talk about the Spanish banks (I could talk about all banks in Europe but I'll choose Spain since I know it better and they are the worst).
The Spanish summer of tourist revenues was cut short and was very bad over all. The window of opportunity to
rebuild cash flows for business and households has passed. COVID complications will cause more economic pain and The Insolvency will become prevalent over the autumn and winter.
Last week the EU gave $73bn in help for the EU banks but that failed - they are down 14% since then.
But in Spain... yikes. Banco Sabadell is about to break key support
Santander is a total shit show...
It is about to take out its ALL TIME LOW, set back in 1992.
BBVA looks equally bad...
And remember the Cliff of Death? Its down over 50% since breaching that...
The merger of Caixa and Bankia just turns an ok bank into a shit bank. I still continue to fear that a large part of the equity of the EU banks is going to zero and ends up in state hands.
Meanwhile, the Ibex looks like a horror story...
It doesn't feel like the right time to be record-long the Euro... but that is the markets position, or therein there-a-bouts.
Welcome to The Insolvency.
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What is Macro/Crypto Summer and why does it matter?
Well, macro summer has started, its the part of The Everything Code cycle where the ISM picks up (GDP growth).... 1/
And that is driven by liquidity, which bottomed at the end of 2022... macro summer and fall are all about liquidity rising and is a core part of The Everything Code thesis...
And that, in turn, lifts tech stocks... they LOVE macro summer and fall...
Raoul's Easy Guide to the Business Cycle and Why it Matters:
Today:
ISM leads GDP by 3 months. ISM is around zero GDP growth currently, so GDP should be low Q4 and Q1.
This is where cyclical stocks, RTY and commodities live, and is why they are subdued.
ISM + 5 Months:
But our Lead indicator for ISM has been rising sharply. This is generally where the SPX lives (part cyclical, part growth) and explains the SPX strength vs Russell 2000 (RTY) or commodities...
ISM + 11 Months:
Using our GMI Financial Conditons Index, we can peer 11 months into the future, suggesting a strong year in 2024. This is where the growth assets of NDX and Crypto live. This is why they bottomed before everything else...