Volatility is starting to pick up across markets as various banks around the world come under attack.
The sick man of Europe, Credit Suisse, was the latest shoe to drop — and then another US bank, First Republic, has just been saved by a group of major banks.
It’s not every day you wake up wondering whether another bank is about to go under.
But central banks are working feverishly to placate markets by bailing out depositors and lending billions to shore up liquidity.
Where things go from here is anyone’s guess.
If you have observed markets for longer than five seconds, you should know that major reversals usually occur when the central bankers change their tune.
If the situation gets bad enough, it sparks them into action, and then another wave of liquidity floods the markets and lifts all boats.
But this time is a bit different.
Inflation has been out of control, and there’s no guarantee it’s completely under control again.
If they lower their guard to respond to fears of more trouble in the banking sector, they may ignite animal spirits at exactly the wrong time.
My observations of various markets over the last few weeks is that the big money has been hitting the sell button and bringing some money back home into safe government securities.
When you see the US dollar rising, gold rising, and the Japanese yen rising, with bond yields plummeting, you can be fairly certain a flight to safety is under way.
Perhaps they know more than we do and there are more shoes to drop.
With cross market volatility rising so rapidly, you can be sure that plenty of funds will be forced to lower their exposure.
I have been steadily increasing my warnings about the prospect of a large sell-off for more than a month and also said the banks looked like a short a week before the Silicon Valley bank went under.
If you have been enjoying my ‘Closing Bell’ videos and can see how well my trading model can predict market moves, please check out this presentation about my trading service, Retirement Trader.
In today’s ‘Closing Bell’ video, I show you a live trade in Retirement Trader and explain in detail the reasoning for entering the trade and how we manage the trade while it is live.
I also update you on the moves in the ASX 200 and S&P 500 over the past week and show you the major levels above and below the market you need to keep your eye on.
Regards,
 |
Murray Dawes,
Editor, Money Weekend
