r/stocks
Is anyone else looking at this perfect storm hitting by November? ($150 oil, US debt spiral, and the IPO index drain)
Author warns of a November perfect storm driven by $150 oil, US debt spiral, and liquidity drain from mega IPOs like SpaceX.
- Geopolitical risks could push oil to $150, triggering a second wave of inflation.
- Fed rate hikes to combat energy inflation would explode US national debt interest.
- Mega IPOs like SpaceX will force passive funds to dump existing tech giants to rebalance.
I've been trying to connect the dots on a few massive macro risks coming up over the next few months, and honestly, the math is starting to look pretty crazy heading into the elections.
First, this US-Iran "deal" feels incredibly shaky. Markets are happily rallying today :). Even if the heads of state signed a paper, the IRGC has zero reason to play nice. If I'm them, the smartest move to hurt the US to the maximum extent is striking oil choke points right when the elections are around the corner. If they hit the Strait of Hormuz and include Bab el-Mandeb this time to really turn up the heat, Jamie Dimon’s prediction of $150+ oil is basically a guarantee. That triggers a massive second wave of inflation that we aren't prepared for.
Which leads to the next domino: the Fed and the US debt spiral. If oil hits $150, inflation screams back up, and the bond market is already pricing in a rate hike. But if the Fed has to hike rates to kill energy inflation, the interest on our national debt explodes. We literally enter a trap where the government has to borrow money just to pay the interest on the money we already borrowed.
Then you look at the plumbing of the stock market itself. SpaceX just went public at a ridiculous $2.1T valuation, and everyone is yelling "SpaceX to the moon." But look at the timing. Because of the Nasdaq-100 fast-track rule, passive index funds and 401k trackers have exactly 15 trading days to buy it. Since it's a closed pool of capital inside those ETFs, they mathematically have to dump existing tech anchors like NVDA, GOOGL, and AAPL to make room to squeeze SpaceX in. And there are two more massive IPOs (Anthropic and OpenAI) stubbornly lined up right behind it, swearing to repeat history.
Professor Jeremy Siegel was just on CNBC saying "global liquidity" will act as a floor and prevent a crash. But how does macro liquidity fix a forced structural index squeeze combined with a massive geopolitical oil shock?
Thinking about all of this hitting at the exact same time around November is getting wild. Am I missing something here or does this look like a massive systemic trap?
401k is an account type. It's not an index that can be tracked. Most indexes go by free float and they don't need to dump like most AI chatbots are suggesting. For most broad market indexes, it will be 0.15% or less of the index funds.
No it doesn’t.
Airlines cancelled flights in days and weeks not months.
Most fiat currencies naturally devaule due to inflation as more money can always be printed.
But please do share with us the datapoint showing USD has devalued by 20%.
https://finance.yahoo.com/quote/DX-Y.NYB?p=DX-Y.NYB
Put it to a 5 year timeframe.
right but to me this screams inflationary bubble, beware. but im just a simple regard.
The Iran deal is probably a scam but it will likely get oil flowing none the less. Iran and the US economy are both suffering so they both just want to open the strait and pretend it's a win regardless if anything else actually comes from it.
This is exactly where I disagree. Iran has two forces. The one making the deal is not the one who runs the show ... the IRGC. They hate this deal. They don't give a damn about Iran's economy suffering.
They truly run the show over there and I think Trump has opened a can of worms and the worms are out of the jar. No deal will fix it.
Either he should have stayed out of it, or now that he got into this mess, he should have put boots on the ground and neutralized IRGC completely.
Think of any moral story in any corner of the world. What do they say about a job half done?
Well I tried to discuss that in this previous post of mine and got "digitally slapped" by most of the users. So instead of repeating it, I will paste it below.
https://www.reddit.com/r/stocks/s/ylDHnlkh3E
Long story short, 0 cost collars for stocks that you seriously think has an upside cap, and naked puts for high conviction stocks, and sell off everything else.
The question still remains, what can you do (now)? I try tp diversify and if possible save some money. There's nothing else I can do at the moment
I believe that all is well and will continue to be well and no exit point is required. I am diversified and willing to weather the storm to see if I made the right choices.
I believe that August through mid-October will test my patience and then we will enter the traditional Santa Claus rally.
I believe that regardless of the winners, mid-term elections buoy the market.
I believe that Iran realizes that they are no match for a US force that is determined to win and that the "deal" is a sure thing.
I believe the Fed has the expertise to steer us out of trouble.
I believe that all this crap about SpaceX destroying life as we know it is the product of insecure people weaned on Chinese social posts.
That's what I'm going to do. Nothing. The market will relax at some point and I am resigned to that fact. I've made good money and unless every sector drops 30% I think I'll be alright.
Ya things will go down one day. Who knows when.
If you just dca consistently it doesn't matter because regardless of what happens the govt will print their way out of it causing inflation of asset prices and devaluing currency. So the only solution is to hold assets.
Sorry dude but this dca thing is a standard "Youtube's jargon" for folks to whom they are trying to sell something. Active portfolio management is not the same as simple dca. You really have to worry about details of all the forces, and prepare the portfolio for the risks involved. It's a lot of work.
But sure ... being invested all the time, or dca or any number of standard Youtuber's advice works if you are not retiring anytime soon.
Well I don't have to do that. I already spent 17 years dcaing through a work match and built my retirement so I know it works.
Tons of wars, economic turmoil, and everything in between, none of it mattered.
Glad it worked out for you and congrats on your establishing retirement fund. Happy for you.
I’m not taking a victory lap, merely explaining my opinions on any further conflict with the IRGC. Either way, I keep investing and the ups and downs won’t matter for at least another 10 years on my retirement timeline.