I didn't think the weakness in Europe would tank the US market since they melted down last summer while the US market melted up. However, this time around they managed to cause a rate inversion by pumping US Treasury bonds.
Not only does an inversion signal a recession (within 2 years), but it can cause one because banks won't be lending money. When banks stop lending money then crap like Wayfair go bankrupt, along with a whole bunch of money losing companies that the market has been pumping.
The US market is hard to short because fundamentals mean nothing to this market. The lack of liquidity also means a huge bounce when it goes up. Foreign markets may be easier to short. They follow fundamentals, plus Europe is the most likely to go into a recession, China trade deal or not.
Won't be going long on anything except day trades from here on out.
Not only does an inversion signal a recession (within 2 years), but it can cause one because banks won't be lending money. When banks stop lending money then crap like Wayfair go bankrupt, along with a whole bunch of money losing companies that the market has been pumping.
The US market is hard to short because fundamentals mean nothing to this market. The lack of liquidity also means a huge bounce when it goes up. Foreign markets may be easier to short. They follow fundamentals, plus Europe is the most likely to go into a recession, China trade deal or not.
Won't be going long on anything except day trades from here on out.
Comment:
Just noticed that we are resting on the trendline drawn from the Dec bottom to the dip a couple of weeks ago. If the market goes down next week, we break that line and it probably gets nasty. Though I expect a back test.
Comment:
Whipsaw day, 10yr bonds seem to have topped out. No indication which way the market will go....