(1) Every other time this happened it ended badly for the global economy via recession. A
(2) A Fed that lags and finances the Whitehouse will only add fuel to the flames... "it's different this time".
(3) The longer the delay in USD devaluation from Fed, the worst the blow is going to be in Equity markets. Assuming USD does not devalue materially into 2020 its repo will grow and continue expanding the , one way or another eventually this is going to look like Fed has been financing the WhiteHouse and then the game is up.
Protectionism is a serious error. There is no yellow brick road to success with protectionism, and it is no surprise the US via media manipulation have the masses deluded. This is a necessary component to the makeup of the next ; but it must be in balance, any overshoots or undershoots will destroy the effectiveness in manipulation.
Central Banks have been buying 20% of Gold supplies, expressing a view on global risk at rates we have not seen since the Nixon era when mortgage rates were surpassed by wages and no surprises this is also happening again now! Those with a background in fixed income will know alarm bells are ringing louder than usual in bond markets with wages ticking higher than mortgage rates. This is not sustainable and when danger threatens and the crowd does not smell it, don't stand like a sheep, rather run like a deer.
Now that Pandora's Box has been opened, it is equally important to understand the consequences and have a pulse to guide us on how to proceed:
Utilities starting to form a top:
Consumer Staples in the decade long chart:
For those with a background in waves you will know this is a typical example of a 5 wave count. This is time to start paying attention for any signs of a meaningful top forming. We know that once this final wave is completed a corrective chapter will begin. This chapter down is only a third of the pages compared with the rally and we can 'read' through it quickly.
Rotation in full swing:
Cyclicals vs Defensives:
Tracking Unemployment closely:
Vol sitting on the launch pad
Use this chart to good advantage, time to start paying close attention for early signs of a turn. As usual thanks for keeping the support coming with likes and we can open the conversation in the comments for all to share ideas and questions.