LIBOR – SHIBOR vs. USDCNY

Tavi Costa Current Views

Libor vs. Shibor spread spiking again and now at its highest level since the GFC! You think the Fed is turning dovish? The PBOC has taken it to a whole new level. At the current policy rate differential, USDCNY should be well above 7 already.

Russell 3000 To Silver Ratio Now Near Record Levels!

Crescat Capital Current Views

Russell 3000 to silver ratio now near record levels! Double top formation after a retest of peak tech bubble levels? Stunning how historically depressed a “high beta” safe haven asset is this late in the cycle. New Crescat video out: https://www.youtube.com/watch?v=zoDePDL2etE&t=2s

Bear Market Rally Looks Done

Crescat Capital Current Views

GDPNow (YoY) is signaling the worst US economic environment since 2015, the year of the China currency mini-devaluation, oil crash, and EM meltdown. The US stock market is levitating while many economic indicators are turning down. Bear market rally looks done.

US Household Gross Assets to Disposable Income

Crescat Capital Current Views

Just one way to visualize today’s asset bubbles only beginning to burst. MMT: The idea that such imbalances can be permanently sustained through money printing without business cycle downturns or inflation. An absurd idea. Not modern at all. Poised to fail as throughout history.

US Twin Deficits / GDP vs. S&P 500

Tavi Costa Current Views

Massive alligator mouth divergence between US twin deficits and stocks. The government budget and current account imbalance is now close to 8% of GDP! Eventually this is going to matter and should be negative for stocks.

Watch What The Credit Market Is Telling Us

Tavi Costa Current Views

36% of the US yield curve is now inverted across 30-year to overnight rates! It is just as high as it was at the start of the tech and housing busts. This is not another 2016 soft landing scenario. Watch what the credit market is telling us.

Gold-To-S&P 500 History

Tavi Costa Current Views

3 and 5-year yields just dipped below Fed funds rate for the first time since the global financial crisis and the tech bust. In 2000, that coincided with the market top. 2006 was at the beginning of the housing bust. The gold-to-S&P 500 ratio ripped up both times.

Another Key Indicator Signaling Recession Ahead

Tavi Costa Current Views

Another key indicator signaling recession ahead: The correlation between utilities and treasuries has just turned negative again. It’s a battle of safe-havens that sounds an alarm when credit and equity markets diverge. Are we dipping into the bloody pool again?

Australian Bonds

Tavi Costa Current Views

Australia now offering 10-yr sovereign bonds at a lower yield than Fed funds overnight rate. Just happens to be the case that last two times these rates got inverted we were at the very end of an Asian economic cycle and right at the peak of the US tech bubble.

Will $NFLX Ever Be Able To Monetize?

Crescat Capital Current Views

A major disconnect: The more cash $NFLX was projected to burn, the more its stock price went up for four years. Now, the company is raising prices, but costs are going up too. Will it ever be able to monetize or is this just a QE bubble stock destined to deflate?

This Is Not A Picture Of A Healthy Global Economy

Crescat Capital Current Views

Over 80% of all non-financial stocks in Canada lost money on a free cash flow basis in the last 12 months! Australia, US and Asian countries aren’t too far behind. This is not a picture of a healthy global economy.

S&P 500 vs. Utilities Correlation

Tavi Costa Current Views

S&P 500 vs. utilities correlation rising after reaching its most negative level since the start of the tech bust & GFC! It’s how bear markets manifest: First, the S&P 500 gets wobbly but utilities rise. Then, S&P 500 crashes and utilities relent. Look for utes selloff next.

Critical Macro Moves Happening Again Today

Tavi Costa Current Views

Critical macro moves happening again today: Gold up; Chinese yuan down. $XAUCNH up. Further confirmation that the record positive correlation between gold & yuan is unsustainable. When emerging market credit bubbles burst, gold prices rise in local terms.

Gold To Oil Ratio

Tavi Costa Current Views

Gold to oil ratio continues to break out with authority. Watch for this ratio. As I said in Nov. 20, previous breakouts coincided with equity market declines. It sends a contradictory signal to this recent melt-up in the S&P 500.

Flashing Signal Of Recession Ahead

Tavi Costa Current Views

Flashing signal of recession ahead: Today’s global yield curve inversion looks just as concerning as the ones that preceded the last two market crashes! We now have 11 economies with 30-year yields lower than the fed funds rate. South Korea just joined the pack last month.

Today’s Move In Oil Is A Real Sign Of Weakness

Tavi Costa Current Views

Today’s move in oil is a real sign of weakness. It’s like Oct. 2008 when markets completely ignored OPEC’s 1.5mbd supply cut and prices continued to collapse. Remember: in 2016, the 1.2mbd production cut sent oil prices up over 15% for the next 2 days. Not this time.