Credit Stress Forming
Yes, I'm still bearish into Friday OpEx and then I really hope we bounce!! I'm getting more and more concerned about economic growth SLOWING, yields continuing to rise as risk premium is demanded by Treasury/Bond buyers, wage inflation/prices staying sticky as companies have more difficulty passing on higher prices, but mostly I'm looking now for
1) Credit Stress forming and
2) FX Distress seeping into equities as BONDS are still not safe (for anything more than a bounce on occasion) and STOCKS are absolutely rolling over and with good reason: Higher DOLLAR AND YIELDS with tight monetary and loose fiscal policies is a recipe for sovereign debt crisis - a much BIGGER problem than credit crisis.
We will see signs of this prominently when USD stops going up - likely around $110 and falls quickly. That is the time to own precious metals and THINGS over paper.
We will see signs of this prominently when 10Y in particular but all yields in the curve move higher despite slowing economic growth.That is the time that credit distress WITH currency distress globally really picks up and earnings contract from much higher yields AND falling dollar.
The market just doesn't know it yet.
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