I don't think VIX is coming back to new lows, and soon we will see the real market crash which will push VIX to 150 or above.
I am convinced that three things will happen together (nearly tick-for-tick on the chart): - the crash in Treasuries - the crash in Stocks - the biggest short squeeze in DXY in history.
Watch TLT drop to 70..80, SPX break below 1800, GBP fall to 1.10 in the final w5 of an ending wedge and EURGBP crash to 0.78 at the same time.
All I can't believe is a crash happens while Fed is pumping that much. I've been thinking about any possible cause but I can't find any.
AndyM
⋅
@piscitear, The only cause is the Treasury market itself. It is an illusion that Fed controls the rates. The 10Y yield bottomed at 0.5% last year, it's now at 1.2%, and Fed is incapable to push it lower. I think a "market event" is coming soon to Treasuries, the 10Y will be pushed to 3% or more, and this is where the crash will come from. Consider the dividend yield of AAPL for instance. Friday close it was at 0.61%. When the 10Y paper was at 0.5% last year that was still fair. If 10Y shoots above 2%, then AAPL will need to be at least three times cheaper to remain attractive. This is very non-linear of course. There are different growth expectations w.r.t. the value of the instrument, but I think very soon we will see a market-wide repricing of all assets after the yield shock hits everyone's brain.
One-World
⋅
@AndyM, true I've noticed that, too, and a stock pullback, happened in the past after 10Y became steep. it's yet a bit incredible that Fed won't have any control because they must have seen it, too. Powell one said that they have plenty of cards....who knows, lol Anyways really appreciate the charts!!
AndyM
⋅
@piscitear,
Akhmatbek
⋅
Do you think all this will happen in 2021?
What can you say about the dollar?
AndyM
⋅
@Akhmatbek, this will happen in H1 2021. Should be a really violent move: very likely to be finished before March is over.
ProfitHarvest
⋅
@AndyM, always interesting to get such confident new confirms of a crash to late March lows and massive VIX spike this close to the event when this scenario has already been getting increasingly probable in the data for months now.
Treasury market finally deals the death blow to TINA? Thanks for the theory!
Now what could that ‘market event’ be... maybe the DXY short squeeze itself?
@nuggetrouble has pointed out that dollar demand is outstripping supply and posited a similar scenario...
logica
⋅
DXY and TLT have been almost in lock-step the since the GFC...what makes you think they will go opposite each other?