STILL NOT SAFE
My Recession Call Podcast. This Past Week - That Worked! More Bearish Charts! Goldman Knew. Time to Talk BOJ Rate Hike & VIX Risk.
Weekend Listening!
Reminder: Hans and I met Wednesday after the close. Here is the recording:
Macro-To-Micro Options Power Hour / Jan 8, 2025 Trading A Market In Repair
And
Thursday I was interviewed by Jason Burack - who picked the podcast title not me!
US Recession Risk In 2nd Half of 2025 Is Very High, Trump Will Cause Stagflation
I did say that I made my call on his show back in JUNE 2024 that recession risk would be pulled forward END of 2025 - but I said then and again in this podcast, "regardless of who won the election".
Anyway, he put in the TRUMP-part for better click-through rate I guess. Whatevah. His house; his rules. I got most of my point across I hope.
This Past Week - That Worked!
The 10Y2Y US Treasury yield curve steepened to a positive 42 bps - its highest reading since May 2022. The yield curve has "bear steepened," meaning the 10-year yield has risen faster than the 2-year yield, as I warned client it would Dec 12th - quickly approaching my +45 'price target' before I suspect some kind of flattening/intervention.
Friday, jobs were hot, which pulled forward not only Fed pause (which I already expected for Jan FOMC), but the strong payroll print combined with UMICH sentiment survey pulled forward inflation risks and removal of future Fed rate cuts. The result: perceived good economic news on falling unemployment rate to 4.1% - even though hiring has notably slowed and full-time jobs have been shredded in size this year - triggered higher yields and dollar that triggered selling in equities.
Oh, and the spiking crude move added insult to injury.
Luckily, I had all of that laid out for clients well in advance.
As posted under #trading-room-notes Friday - where you can go to Review Next Week Price Targets:
Clearly, my internal intermarket analysis - from “DEC 27TH, 2024 - UNDERCURRENT OF WEAKNESS PERSISTS” to “JAN 8TH - WHY I DON'T TRUST THIS MARKET” were good warnings as was my “DEC 12TH - YIELDS ABOUT TO BREAK HIGHER” to my “JAN 6TH - MARKETS IN REPAIR” where I warned premarket Monday: “above 4.7%, equities lose their "goldilocks" zone.”
USD pushed above my 109.30 resistance (110.78 overshoot).
The 10Y yield even tagged my stated PT of 4.79%, which is exactly what I expected to cause more equity disturbance. Above, even if briefly, will usher in more selling unless Plunge Protection Team softens them down.
The 10Y2Y yield curve bear steepened closer to my +45 (+42 hit so far)
Crude oil pushed into 77.80 PT (with 78/79 overshoot)
Bonds dumped, as I warned and Equities got hit, on cue.
The trifecta of higher dollar, yields and oil, as I have been calling, on a “waterfall” breadth destruction under the surface - STILL, which started December 2nd at 11AM as tracked daily for you and is why I said Wed: “I DON’T TRUST THIS MARKET AS FAR AS I CAN THROW IT.”
INTERMARKET REVIEW JAN 8: WHY I DON'T TRUST THIS MARKET (My 5 most bearish charts)
Net selling was slow to get going this morning, but I had “no green shoots” and as such why I gave lower short PTs for you to press short. In fact, we closed poorly - across my indicators, so unless the PPT wants to appear, expect weakness next week.