It’s getting danged close.
I have my own “Hindenburg signal,” which is the holy trifecta of US stocks, bonds, and the dollar all falling at once.
Such a signal would indicate that really big players, like sovereigns, were exiting the US dollar and dollar-based holdings.
Selling stocks we all get. More sellers than buyers and the prices go down.
Bonds and the dollar work the same, but with an international twist. For example, if China suddenly thought, “We don’t want US dollars or US Treasury debt anymore,” then here’s what would happen.
First, they’d have to sell their Treasury holdings. So, the price of bonds would fall.
But now they have a fistful of dollars. So, they sell those too. So, we’d see the dollar AND Treasury bonds selling off at the same time.
But what would you buy? Oil if you could store it. Ditto for copper. But gold is the only and most obvious monetary swap position, so we’d expect gold to move up at the same time.
Here’s this morning’s future snapshot from 8:00 a.m. What do you see?
In blue, bonds and the dollar are both red. Gold is green.
Just for fun, circled in red we see the Japanese yen rising sharply, indicating the possibility that the yen carry trade is busy unwinding (people borrowed in yen and sold them, now they are reversing that trade, so they are buying yen, hence the yen goes up).
The only reason I am not ALERTing over this potential Hindenburg signal is because we’re clearly in a liquidity crisis. That can cause all manner of discordant price signals because the selling is forced and the price movements are a summation of the prior leverage and magnitude of all the pair trades.
But I am drawing ever closer as I read the tea leaves.
The official interventions are getting more and more obvious.
by permiegirl