As we kickoff what promises to be another wild day of trading, no one is paying attention to this chart but it spells major trouble for global markets.
July 18 (King World News) – Here is a portion of what Peter Boockvar wrote today as the world awaits the next round of monetary madness: Ahead of day two of Fed Chair Powell’s trip to the Hill, the 2 yr yield is at 2.61%, a fresh 10 yr high and yesterday the 3 month T-Bill closed with a 2 handle for the first time June 2008. For those that want to hold it, cash finally pays something.
Investors got more bulled up this week with the continued strength in stocks. Investors Intelligence said Bulls rose to 55.3 from 52.4 last week and vs 47.1 in the week prior and with Bears staying unchanged at just 18.5, the spread between the two rose to a 5 week high at 36.8. Those expecting a Correction fell to 26.2, the least amount since late January. Bottom line, from purely a sentiment/contrarian perspective, the bull boat has gotten much more crowded again and as for those expecting a correction, we know what happened in late January…
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Peter Boockvar continues: …Price pressures still remain (in the UK) as PPI was up 10.2% y/o/y and only a fraction of that was passed on as output prices were up just 3.1% y/o/y. Both were about as expected. I don’t think this in anyway stops the BoE from hiking rates in two weeks but gilt yields are down. With a benchmark rate of just .50%, the BoE needs to raise the rate closer to where inflation is. An ex BoE member Andrew Sentance today said it well:
“The case for higher interest rates does not rest on short term indicators. It is based upon the need to restore some balance and normality to monetary policy after the long period of extremely low borrowing costs.”
In the final revision to June CPI from the eurozone, the headline gain of 2% held as is but the core rate was trimmed by a tenth to a rise of .9%. The euro is down but was lower before this release. The ECB will continue with their plan to trim again by 50% its asset purchases come October 1st.
King World News note: Higher interest rates and increased QT in the months ahead is a recipe for a major reversal in global stock markets, especially with a 36.8% spread between bulls and bears at Investors Intelligence.
***KWN has now released the powerful audio interview with James Turk and you can listen to it immediately by CLICKING HERE OR ON THE IMAGE BELOW.
ALSO JUST RELEASED: MAJOR ALERT: Special Report On Today’s Selloff In The Gold Market CLICK HERE TO READ.
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