Volatility is Coming and The World Isn’t Ready

Everyone is caught in the euphoria of the market and they aren’t expecting what is coming. We do not know what the catalyst will be, but volatility is telling a story that people should tune into.

Fed induced boom and bust cycles combined with historic stimulus have created a new crop of ‘day traders’ and market worshipers but like a seismograph, volatility is telling a long term story that should bring sobriety to the cultural zeitgeist, one of financial drunkenness and greed.

The volatility index has completed a round trip from the March 2020 peak during the COVID crisis and we are consolidating for the next stage breakout. If the VIX doesn’t drop below the April 14, 2021 low of 15.4 then volatility will breakout by mid to late June, likely sooner. Time targets would place the breakout around June 15th.

What is most concerning about the chart is how with each market selloff, from 2018 to present, volatility is building on itself. This means each vol regime is getting stronger.

Though this is a simple chart, the point is that the initial gap from February 21, 2020 in the VIX is now filled, VXX has performed a reverse split, and the short vol trade for this cycle is likely complete. Also, the chart is suggesting that the next round of fear in the market could be of greater magnitude than the March 2020 crash. Meaning: whatever is coming, be that a true Black Swan or the Fed raising rates, could lead to a fundamental shift in the entire bull market thesis from 2009 to present.
This could be pointing to something bigger than the market, however.

In my book, End Game, I wrote about Bitcoin and it’s correlation to biblical prophecy. That was in 2015. With Bitcoin and cryptocurrency now mainstream in 2021 we are also seeing what could be future hyperinflation in soft commodities as a result of the COVID stimulus. That is, the potential beginnings of future Black Horse inflation. If that is true, and COVID is a 100 year marker from WWI and the Spanish Flu, it means that we should be closely watching the Middle East.

My belief is that Jared Kushner is still working out his Middle East plan with Israel through backchannels. He recently created the Abraham Accord Institute and this is significant. Kushner was responsible for getting Trump elected. Trump acted as a blunt force tool and cultural distraction providing the cover for Kushner to broker Middle East peace and he isn’t finished. Recent airstrikes by Israel in Syria near a Russian base on May 4, 2021 could point to future aggression by Russia not only in Ukraine but with the Astana accord trio of Russia, Turkey, and Iran in the Middle East bringing an engagement down onto Israel and prompting the nuclear aggression I wrote about in End Game. One thing is certain, relations between the United States and Russia are deteriorating further and as the Fed weakens the US Dollar we also weaken our stronghold on the world. This is weakening the nuclear Nash Equilibrium to the point where a significant global military engagement could be next.

The January 2018 and March 2020 market crashes all preceded significant events in Israel. In October of 2018 the US Embassy was moved from Tel Aviv to Jerusalem. In August of 2020, Jared Kushner would broker the Abraham Accords.

The next stage is looming.

Will the next market sell off be a run-of-the-mill pause or something much bigger? Time will tell.

*Disclaimer: Nothing mentioned here is investment advice. This is market observance and should be taken as opinion and not investment advice.

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