The Scariest Chart For The Market

Interest-rates going up "for the right reason" is bullish, right?

Each time interest rates have surged up to their long-term trendline, a 'crisis' has occurred...

h/t @MarkArbeter

But this time is different right? Because rates are "going up for the right reason."

Hhmm, the reaction in markets each time the yield on the 10-Year Treasury yield reaches its trendline is ominous...

So the question is - have interest rates 'ever' gone up for the right reason?

Or is this narrative just one more bullshit line from a desperate industry of asset-gatherers and commission-takers?

It does make one wonder what the relationship between US government 'interest costs' and global money flow really is. Does an engineered equity tumble spark safe-haven-buying and ease the pain as deficits and debt loads soar. It would certainly help as $300bn additional budget deals are passed, The Fed has left the game, and China is threatening to be a seller not a buyer...


MK ULTRA Alpha Fri, 02/09/2018 - 12:17 Permalink

Correct, it's more reallocation of assets, than the loss scenario myth. Most of the sell off in equities was from a position of capital gain. Some investors were deeply invested in exotic questionable financial instruments lost heavily, but this wasn't the broader market. We now see the broader market taking profits and using this opportunity to reallocate capital for long term investment. Profit taking and risk avoidance are the reasons for secondary sell off.

Where will this capital be reinvested? And will there be more reallocation? And at what point do we see real sell off losses other than the much reported exotic risk investment funds losses?

Overall this wasn't a crash, and it seems more an orderly reallocation based upon a new risk assessment.

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junction 1stepcloser Fri, 02/09/2018 - 11:25 Permalink

The scariest chart will be the chart this afternoon showing what happens to the Dow when the Plunge Protection Team throws in the towel.  The Dow will go into free fall.  As the dimwit experts like Jim Cramer stare on in shock before mouthing meaningless platitudes.  Oh what fun it is as the NWO steals your IRA investment portfolio.

In reply to by 1stepcloser

Bastiat junction Fri, 02/09/2018 - 11:35 Permalink

Someone's fighting like hell to extend the 3rd (and last) shoulder on the head and shoulders which started forming on the 6th  (US30, Hourly candles).  I wouldn't buy this thing with someone else's money!  If it breaks, next stop is down another 200 pts then after that down and another 300pts.  Pure old fashioned chart stuff.  Market Nostalgia but what the hell, worked yesterday.

. . . and it cracks!

In reply to by junction

Unprepared Fri, 02/09/2018 - 11:18 Permalink

I don't know. I have a feeling we are still due for a few head fakes with probably new records once the current round of liquidation is over. I mean, I'd like this to be the most epic one yet.

taketheredpill Fri, 02/09/2018 - 11:26 Permalink

If 10 year doesn't break out (I use 1989 to 2018 Daily) then bad news.

It will break out later, but only after stocks collapse and Fed comes to the rescue AGAIN.

After this bubble breaks the Fed will try to blow the LAST BUBBLE when it MONETIZES EVERYTHING.

So Commodity price weakness, falling prices for actual Real stuff, should be a longer-term buying opportunity.


Hillarys Server Fri, 02/09/2018 - 11:36 Permalink

Poetic description, sounds almost Biblical.

"Asset-gatherers and commission-takers ... whose proper abode is hell fire ..."

The 10 year Treasury long term trend line seems to work but I don't understand the causality behind it.

The line doesn't exist in reality, it's just a line.

So what does an equity crash at 10% and 8% and 6% and 4% have to do with the current 2.8% or whatever it is now? What does the long term trend have to do with now?

ktown Hillarys Server Fri, 02/09/2018 - 12:20 Permalink

Projection? Its auction drama! There is a large unknown story about a couple who traded up into a bigger house because interest rate vol. Was so low? We haven't even started blaming minorities or neighbors for the adjustable rate mortgage debacle? Jiffy pop? It wasn't the 17 quarter point increases that got us last time, it was the many more coming down the pike projection commentary's? get's them every time!

In reply to by Hillarys Server

tahoebumsmith Fri, 02/09/2018 - 12:02 Permalink

All you need to show is the 100's of Trillions in global unsustainable debts and the Quadrillions of derivatives backing the whole shit show to understand we have hit peak debt. All good Ponzis eventually come to a screeching halt when the debts out weigh the flows,

Sizzurp Fri, 02/09/2018 - 12:16 Permalink

The fed realizes we are screwed so the only question is do they fall on their sword now or later.  If they continue to let rates rise we turn into Greece. If they fire up the QE machine, we turn into Japan. Pick your poison.  The Japan model is the path of least resistance and so that's where they will go. 

OneSilverDollar Fri, 02/09/2018 - 12:58 Permalink

Oil is down. Dxy is up. EM are going down. There is a flight to safety. Paper-gold is going down. 2018 is not the beginning of growth, I bet it´s the beginning of a recession (30+ month?). Many people don´t trust the Usd, but when you are scared, cash is king. To have gold up, the system needs to fail: this is not going to happen for now, it´s just a matter of sending fiat to the right place. Lack of trust is growing, we are going to see less consumer spending, and ultimately the Fed needs to CUT the rate. Bets on higher rate is crowded and unbalanced: a squeeze would make tons of cash for the other side. Short EM, Short Oil, Short EM Oil companies with huge debt in USD. BZQ is fun.

Buy and hold is bullshit, the main rule is avoid losses. Dont try to time the market they are going to tell you: but if you don´t have an idea about where is going the market, what the f..k are you doing there? Take your losses if you have some, write it in your xl sheet, and give the shitbag to somebody else. Come back with an new idea that you trust, and don´t trust yourself too much: if it goes the wrong way, cut quickly.