☠️ HALF OF CT IS WAITING FOR THE BLACK SWAN - THE REAL BLACK SWAN ARRIVED TODAY
Half of Crypto Twitter is waiting for the crash today.
@cryptorover asks it openly: Is Black Monday coming? He means his reasons. The Democrats' victory, the AI bubble, new attacks on Iran, rising bets on a Fed rate hike. A few hours later, he asks Grok whether the stock market will crash like it did in 2000.
Years ago, I read "The Black Swan" by Nassim Taleb. Last night, I thought about it again.
HOW YOU RECOGNIZE A BLACK SWAN
Taleb sums it up in three features: "Rarity, extreme impact, and retrospective predictability, but not predictability in advance."
The third point is the important one. No one has a Black Swan on their radar beforehand. Afterward, everyone explains it.
A crash that half the timeline announces on Sunday doesn't fit that definition. It can still come. But then it hits a market that's already afraid.
And the fear has been there for a long time. The VIX jumped 70 percent on Thursday, from 16.6 to 28.2. In the Fed data since 2018, there were only two larger one-day jumps. According to Vanda Research, retail investors sold as much on Thursday as on any day since COVID.
Anyone who's afraid today has been afraid since Thursday.
THE REAL SWAN ARRIVED YESTERDAY
On Sunday evening, US time, Jensen Huang writes to his employees. The Nvidia CEO admits to an affair. US intelligence agencies believe the woman is a Chinese spy. The board launches an independent investigation, Huang remains CEO for now, Beijing calls the allegations "baseless speculation."
Two weeks ago, no one had that in their model. @cdntradegrljenn, a trader account from Canada, already calls it a Black Swan, @zephyr_z9, an account focused on chips and AI stocks, thinks a resignation is very likely.
And the market? Nasdaq 100 futures drop 0.8 percent at the start of trading on Sunday and are slightly up again shortly afterward. In Tokyo, the Nikkei rises, in Seoul the Kospi falls 0.7 percent.
What's still missing by Taleb's definition is the extreme impact. That would only come if Huang has to go. An independent directors' committee decides that, not Monday.
THE COMPARISON WITH 2000
→ October 19, 1987, the real Black Monday: The Dow loses 22.6 percent in one day
→ March 2000 to October 2002: The Nasdaq falls by around 78 percent
→ Today: The Nasdaq is 10.9 percent below its record of October 6, the S&P 500 around 6 percent
That's a correction. Not a dot-com crash.
What still won't let me go about the comparison: In 2000, the crash didn't come in one day either. It came over months in which every recovery looked like the end.
I'VE HEARD THIS BEFORE
On October 18, I wrote here that CT is announcing a crash Monday. 39 years after 1987, the same date, the same panic. The Nasdaq gained 1.1 percent that Monday.
@benjamincowen has been describing the pattern for weeks: Thursday and Friday the market falls, over the weekend the bears call Black Monday, from Monday to Wednesday it goes up, then it starts all over again.
Then there's the garbage. @CryptoNobler, a crypto account with crash alerts on a weekly basis, claims that Kevin Warsh has ordered a Fed emergency injection of 3.65 billion for today to prevent the crash. I can't find any evidence for that.
WHAT REALLY WORRIES ME
#Bitcoin is at 75,333 dollars, five red weeks in a row. Bitcoin is currently moving with tech stocks, not against them.
I'm not doing anything today because of a Monday that everyone expects. I'm watching two things.
Tomorrow at 2:30 p.m., US consumer prices come out. For December, according to the betting markets, a rate hike is already two-thirds priced in. A hot number makes that almost a certainty.
And the Democrats. After their victory, the market fears stricter rules for building data centers. That doesn't hit a single day, it hits the whole plan on which the AI valuations rest.
THE TURKEY
Taleb's most famous image is a turkey. It gets fed every day, for 1,000 days. Every day confirms to it that humans like it. It's most certain of that on the day before Thanksgiving.
A Black Swan for the turkey is not one for the butcher.
The AI stocks were fed for three years, every quarter with even bigger budgets for data centers.
In 17 days is Thanksgiving.
#NvidiaInvestigatesAfterHuang’sAffairApology #BitcoinFiveWeeklyLosses #AIChipSlumpNasdaq #CPITestsDecemberRateOutlook #AnthropicRejectsIPODelayValuationinQuestion