Prop Long/Short Model
Caution
The chart we are about to post is something that we do not share often, but we will post it here today. We have been cautiously following the markets over the last month and a half and it gives us great concern at the moment. The yield curves in the US Treasury land have seen volatility spike and when this happens, you can bet some major players are battling the global central banks and their QE policies. We continue to hear inflation and that bond yields will continue to rise. We threw water on that fire in our last post a bit as we view inflation much akin to standing in a bucket and trying to lift oneself. Futile comes to mind and in a debt based world flooded with non intrinsic value, well let’s just call most of the asset value for what it really is, fake value.
The one thing many investors fail to understand is that asset prices can rise and give the appearance of capital appreciation, but in reality, unless you monetize your gains, you have nothing. So with that said, monetization is the real key and unfortunately not everyone can sell and they certainly cannot do it all at the same time.
Which leads us to today. The US and global bond markets have seen yields rise, yet equities keep pretending to play peek a boo I don’t see you. Well we think that is about to come to an abrupt end. No we aren’t changing the inflation subject, rather we are focusing on this prop chart we have watched and compiled thousands of data points for:
Let’s just say we’ve seen this story before and the recent bond battle tells us there are some very massive underlying problems, ones which the global central banks can only mask for so long. Well this box we have highlighted will lead to a downward spike in equities, FX, Energies and possibly spill over into metals and most likely the US bond markets and the US dollar would benefit in this regime…yea all of which is counterintuitive to the clamoring inflationistas and death to the dollar chanters. Yea we know this is bold, but take it for what it is a warning shot once again.
Could we rally and could our long/short model continue the linear path, sure, but considering the vol in bond land, the battle has just begun and all that funny money cloaked in Covid will come to roost and truly expose the fragility of the real modern monetary mechanics, one much like the ethos that the equality for everyone crew strives to achieve when they hand out participation trophies…sorry, that just doesn’t cut the mustard. The real world has real winners and real losers and nothing can change that, certainly not burying your head in cognitive dissonance or playing like a 4 year old who closes ones eyes and says you can’t see me!
Anyway here are today’s settles:
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