Having successfully called the market's retreat in the fall of 2015, Universa's Mark Spitznagel is not taking a victory lap as he warns Bloomberg TV that "the crash has only just begun."
Investors are facing the most binary "let's make a deal" market in history in Spitznagel's view: choose Door #1 to bet on Keynesianism, central planners, and monetary interventionism; or Door #2 to bet on free markets and natural price discovery.
"There is massive cognitive dissonance here," Spitznagel explains as history teaches us that door #2 is the right choice... but it's not possible to do that today as investors have been coerced to choose door #1, but when door #1 is slammed open "we will see that dreaded black swan monster."
That is what is going on right now:
"Investors want to go with The Fed when it's working - like David Zervos... the problem is, when do you know that it is not working?"
"At some point this stops working..."
"the market is going through a resolution process, transitioning from the cognitive dissonance of Door #1 to the harsh reality of Door #2... if everyone were to change doors at the same time, that is a market crash... it can't be done in a non-messy way."
Must watch reality check behind the smoke and mirrors we call markets... (we note Mark's excellent analogy starting at around 3:10)