When markets turn, they consistently look for reasons to sustain themselves. At some point, those reasons become irrational and they correct. This morning, the market will open a lot lower than it closed on Friday. The reason? Bond markets.
Here is a chart of $TLT which is the ETF that replicates the Treasury market.
Going lower means higher interest rates. If you want to trade interest rates a different way, check out The Small Exchange. They constructed a contract targeted to the retail trade that goes up if interest rates go up.
Anyway, back in the 1980s there was a group called the “bond vigilantes”. They were consistently bearish bonds and brought a lot of discipline to other markets. After all, the largest market is the FOREX market, followed by the debt markets. The stock market is the smallest of the three.
Debt markets underpin the FOREX and stock market.
It’s hard to put into words how f’ed the situation is right now.
I know many in the cryptomarkets are scratching their heads right now. Guess what? In a risk-off market, no one wants to speculate on your crypto, I don’t care how great it will be ten or twenty years from now. People have to eat. Bitcoin has only started its decline. Warren Buffett is laughing at Peter Thiel right now.
What do I see when I read the news and look for leadership?
Treasury Secretary Janet Yellen wants an international minimum corporate tax.
The inflation train keeps on rolling
Europe and the US agree to wean themselves off Russian oil, but won’t explore for new sources
The Fed’s happy talk after their meeting had no credibility once analyzed by the market.
Last week the labor market reported that productivity was down 7.5% and labor costs up 11.7%.
Instead, leaders in the US right now are all about abortion and stifling free speech. Thanks for that. Anyone that voted for Biden ought to be re-examining their core beliefs right now.
I know traders looking around for “deals” right now. It’s too early. Any deal will get run over by the freight train going south. 3200 on the S+P 500 is where you can start to think about buying them.
But, we don’t have mean tweets and a President that doesn’t look good to elites. Turns out that when he said if Biden was elected we’d lose a lot of money in the stock market, he was right.