The Problem is not Interest Rates

Market Pause

As the market players take a pause and try to establish a bottom in stocks the talk moves to why we have just seen a bit of a sell off.

The Fed and interest rates are the easy answer for all the establishment bulls.

The more real answers are the two Trump policies, Tax Reassignment from Corporations to the Government thereby increasing deficits quickly and The Tariff game.

So this will be a little pause that refreshes for a week or so and then the market will have to get back to the basics.

Things to Monitor

The Yield Curve is Key to everything that happens for the next 3 months.  We think there is a high probability that the 30-2Y curve will see the 30 go negative to the 2 year as panic unfolds before the Fed can respond. What is important here is that the flattening will occur by the 30 yr dropping in yield, not the two year yield rising. This will occur as the most brutal of bear markets will unfold, the market will be chasing its tail.

 

See 30-2 chart here:

And the F-3 Fracture Chart looks to break down out of the head and shoulders bottom that the market players hope will occur. The recent attempt to bring about an upside move out of the formation has totally unraveled and we now the red line being tested. (updated through 9:30 AM today)

 

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