We Remain on Crash Warning

October 4, 2022By Craig Hemke

We began September on Crash Watch but ended the month on Crash Warning. Though much has changed since October began, the warning remains until further notice.

If you missed last week’s post with the “upgrade” from Watch to Warning, here’s the link. That article also includes links to all four posts we’ve written since April regarding the dangers inherent to a crash in the stonk market.

• Crash Watch Becomes Crash Warning

And again, to be clear, this warning applies to the U.S. and global equity markets. The move to a Warning last week was related to the worsening condition of the UK bond markets as well as several TBTF Banks. As these concerns began to be recognized late last week, the Bank of England appeared to pivot with the announcement of a renewed, but limited, QE program designed to stabilize their gilt markets.

• Analysis: Under water – How the Bank of England threw markets a lifeline

This then prompted the idea of a “global central bank pivot” to spread across all markets, and you can see this in the sharp drop in the U.S. dollar index over the past five days:

But here’s the thing: nothing has changed. At least, not yet. The reprieve for the UK gilt market is temporary, and the situation at Credit Suisse and Deutsche Bank remains tenuous. Most importantly, the Fed is continuing in their attempt to “manage aggregate demand” by forcing lower U.S. equity prices. See below:

So it should be clear that what you’ve witnessed over the past few days is not The Pivot. Instead, you’ve simply gotten a hint and a prelude of what’s to come when The Pivot finally arrives.

As we’ve maintained all through 2022 and wrote about in our annual forecast back in January, a stonk market crash will drive The Pivot, and the Fed has yet to fully engineer that outcome……More Here

Click here for reuse options!
Copyright 2022 Hiram's 1555 Blog