Jan 1, 2019
- market is currently in a natural rally of a down trend
- continue to sell the rally and start to build shorts near resistance level
- major driven themes
- U.S. - China trade war
- potential relief in Jan due to rising political pressure from market selloffs
- improvement from trade discussion will temporarily lift market to perhaps resistance level
- but mid-to-long-term trade tension continue to have negative impact on the market
- failure in negotiation or breakout of trade war will tank the market
- flattening and inverting yield curves
- historically inversion leads recession for 12 - 24 months
- historically market continues to rise for 12+% after first inversion
- historically curve shifts downward after inversion -> long treasuries
- this time might be different
- hard hit for banks and REITs
- more pressure for Fed to change course of tightening policy
- concerning corporate debt
- almost fattened 2x since 2008
- many EBITDA unable to meet interest payments
- credit spread widens when equity tanks and collaterals shrink
- emerging trend contributing to next crisis
- weakening USD
- emerging trend, almost firm
- may cause repricing for precious metals, oils and commodities
- weakening CAD
- softening housing
- weakening oil
- interest differential
- watch for oversold and/or bottoming
- U.S. - China trade war