JonasBenjaminFriedrich

Why it is still too early for a Market Crash

I am short term bearish for the US Markets but I expect a last 5-Wave Impuls Move on the upside in the longer term (look at the SP500 Big Picture Analysis).
We are currently seeing an inversion of the US 10 Year Yield and the 2 Year Yield this is a recession signal but remember after this signal we get on average another 22 Months until a bigger correction and another 12% run to the upside in the Markets, this would match well with the EW Counts which also shows me one last Impuls to the upside. We can further see that the inversion level (red line, 0 line) has just been touched there is still plenty of room for the FED to manouver, typically a crash szenario playes out when we have been under the red line (inversion territory) for quite a while and when we start to get out of the inversion territory.
I agree with your analysis. I also do not believe a stock market crash is in the near future. However, I do believe we are on the verge of a correction to the December 2018 lows. Contrary to what some believe, I do not believe central banks can save this market due to an inherent lack of leverage in interest rates. Simplistically put, the Fed can only print money and lower interest rates. With the market still relatively as high as it is and talks of another 25bps in September and probably another 25bps further before 2020, that will put the interest rate around 1.5% before a recession even happens ultimately leaving minimal leverage to stimulate an eventual contracting economy.

The problem I see is that you will see falling yields - and they will fall VERY quickly - 1.000 for the 10 year and 1.75 for the 30 year will happen very fast and trigger algo sell-offs in the general market and scare the general public. People can argue whether the inversion is "a true indicator" or not; however, the fact that it COULD be is all that matters as that in itself will psychologically lead to a contraction regardless.

In the end you will see yields fall to record lows (triggering an algo sell-off), go below 1.000 10yr and 1.5 30yr (triggering further algo sell-offs), then again below 1 (triggering algo sell-offs again), and finally approaching 0 or even negative (triggering even more sell-offs) and wrecking havoc on the banking system.

In the long-run I see treasuries rising and us entering a stagflationary recession with Gold/Silver absolutely surging to historic and parabolic highs. In the end, the USD (and currencies around the world) will be obliterated to try to save the stock market in the next 2 or so years.

I have been saying for the past 12 months that while 2010-2019 will be known as the decade of cheap money and astronomically soaring (and ridiculous) valuations, late 2019-2025+ will be known as the epic return of metallics.
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