Mnuchin’s Folly – It is really happening

We are watching the spread between the 20 Year Bond ETF and the High Risk-High Yield Bond ETF. The long term trend of moving to the low risk bond was interrupted on April 9 when Mnuchin and the Treasury hatched the idea of buying bonds of zombie companies in order to support the whole range of financial markets, including stocks. The success of this zombie endeavor peaked on June 5th. Now the short term 50 day moving average is going back to join the 200 day average and is making a quiet breakout towards the low risk side of the equation.

This means stocks are headed lower.