{"id":173221,"date":"2020-07-06T13:33:21","date_gmt":"2020-07-06T17:33:21","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=173221"},"modified":"2020-07-06T12:40:32","modified_gmt":"2020-07-06T16:40:32","slug":"the-big-short-2-world-pushes-credit-investments-into-risk-again-part-i","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2020\/07\/the-big-short-2-world-pushes-credit-investments-into-risk-again-part-i\/","title":{"rendered":"The Big Short #2 \u2013 World Pushes Credit\/Investments Into Risk Again, Part I"},"content":{"rendered":"
July 6, 2020<\/div>
\r\n<\/div><\/div>

By TheTechnicalTraders<\/u><\/a>\u00a0<\/strong><\/p>\n

– One thing is very certain right now \u2013 we live in very interesting times.\u00a0 As the world rushes head-first into the 21st<\/sup> Century, it appears one of the most pressing issues before all of us is to navigate the risks and opportunities that continue to stack up ahead of us.\u00a0 Within the first 20 years of this century, the global markets have experienced many shifts and big price rotations.\u00a0 Emerging markets, Oil, Technology, Bio-Tech, Miners, Metals, Currencies, Cryptos \u2013 we can look at all of these on a longer-term basis and see a boom cycle and a moderate bust cycle event.<\/p>\n

The current trends suggest global investors are pouring capital into the US technology stocks which is what is driving the NASDAQ to new all-time highs.\u00a0 We published this article in late June suggesting a parabolic top pattern may be setting up in the global markets \u2013 which may be very similar to the DOT COM peak in 1999~2000 explained here<\/strong><\/a>.<\/p>\n

Our researchers believe the global shift away from risk and into hot sectors are driving capital investments into a frenzy right now.\u00a0 It reminds us of the frenzy in the US in the late 1990s when housing, technology stocks, and credit expansion rolled into a frothing expansion phase \u2013 then burst suddenly in 1999.\u00a0 There were plenty of signs in 1997 and 1998 that the frenzy buying was a huge risk \u2013 but traders and consumers simply ignored the risks and kept buying.<\/p>\n

Similarly, this same type of bubble mentality happened in 2017 with Bitcoin.\u00a0 In less than 24 months, Bitcoin rallied from $370 in early 2016 to $19,666 near the end of 2017 \u2013 a massive 8000%+ rally.\u00a0 The similarities of the Bitcoin rally and the rally of the US stock market in the late 1990s is the mentality of the investors throughout these bubbles \u2013 the \u201cno fear\u201d mentality that it will keep going higher and higher.\u00a0 The same type of mentality appears to be happening in the US stock markets right now and the data suggests something vastly different is really taking place.<\/p>\n

Unlike what happened throughout recent history, the globe has recently experienced a massive disruption event \u2013 the COVID-19 virus.\u00a0 This disruption has displaced economic output and consumer earnings on a massive scale \u2013 and we are just starting to learn how disruptive these economic factors may be.\u00a0 One item we believe is severely under-estimated is \u201cconsumer earning capabilities\u201d.\u00a0 The number of jobless in America has risen to well over 35 million (over 10% of the population). If the COVID-19 virus continues to disrupt consumer\u2019s ability to earn income and engage in the economy over the next 6+ months or longer, there is a very real possibility that the V-shaped recovery everyone believes is happening will simply not happen at all.<\/p>

\r\n
\r\n

Free Reports:<\/p><\/div>\r\n

\r\n

<\/a>\r\n\t Get Our Free Metatrader 4 Indicators<\/u><\/b><\/a> - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter<\/p>

\r\n
\r\n
\r\n

<\/a>\r\n\t Get our Weekly Commitment of Traders Reports<\/u><\/b><\/a> - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.<\/p>

\r\n<\/div>\r\n

\r\n
<\/div>\n
\n
\"\"<\/a><\/figure>\n<\/div>\n

One of the most ominous signs of a broader consumer and commercial contraction happening in the US markets is the skyrocketing delinquency rates for commercial real estate. Trepp recently published new data suggesting the commercial real estate market is experiencing a massive increase in delinquencies<\/a> of 30+ days which may lead to a wave of high-value defaults.\u00a0 Other research suggests US Banks may face $48+ Billion in commercial real estate loan losses<\/a>.<\/p>\n

\n
\"\"<\/a><\/figure>\n<\/div>\n

The Q2:2020 earning estimates have decreased by such a large amount that all investors should prepare for a shocking series of data over the next 30+ days.\u00a0 Nike surprised everyone with a nearly $800 million loss for their Q4 ending May 31, 2020.\u00a0 We just read that PizzaHut parent, NPC, filed for bankruptcy<\/a> recently.\u00a0 This recent Bloomberg article<\/a> suggests a massive wave of US corporate bankruptcies could continue throughout 2020 and well into 2021 and extended economic pressures erode the foundations and operations of hundreds or thousands of US businesses ().<\/p>\n

\n
\"\"<\/a><\/figure>\n<\/div>\n

What is happening in the US markets right now is that foreign and US investors are piling into this deep price rotation expecting the US Fed to do whatever is necessary to support the markets throughout the COVID-19 virus event.\u00a0 We believe the risks for investors have never been higher as the global markets teeter on the edge of a partial recovery while the COVID-19 virus surges again throughout the US.<\/p>\n

We\u2019ve kept our clients actively protected from the risks within the markets and continue to advise them on how to identify profitable trades within the current market trends.<\/p>\n

In the next part of this article, we\u2019ll explore more data facets related to the Q2:2020 and the future expectations of the US and global markets. Our biggest concern is the destructive capabilities of the general consumer.\u00a0 At some point, we have to understand the consumer drives 85% of the US GDP and future expectations.\u00a0 If this event destroys the consumer, then it will destroy future expectations.<\/p>\n

Keep in mind, we do not trade or invest on fundamentals or economic cycles because we know they can lead or lag stock prices by several months at times. Our focus as technical traders is to follow the price trend and trade accordingly. Stay tuned for part II.<\/p>\n

Get our\u00a0Active ETF Swing Trade Signals<\/strong><\/a>\u00a0or if you have any type of retirement account and are looking for signals when to own equities, bonds, or cash, be sure to become a member of my\u00a0Passive Long-Term ETF Investing Signals<\/a><\/strong>\u00a0which we are about to issue a new signal for subscribers.<\/p>\n

Chris Vermeulen
\nChief Market Strategies
\nFounder of Technical Traders Ltd.<\/p>\n

NOTICE: Our free research does not constitute a trade recommendation or solicitation for our readers to take any action regarding this research.\u00a0 It is provided for educational purposes only.\u00a0 Our research team produces these research articles to share information with our followers\/readers in an effort to try to keep you well informed.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

By TheTechnicalTraders\u00a0 – One thing is very certain right now \u2013 we live in very interesting times.\u00a0 As the world rushes head-first into the 21st Century, it appears one of the most pressing issues before all of us is to navigate the risks and opportunities that continue to stack up ahead of us.\u00a0 Within the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-173221","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/173221","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=173221"}],"version-history":[{"count":1,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/173221\/revisions"}],"predecessor-version":[{"id":173225,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/173221\/revisions\/173225"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=173221"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=173221"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=173221"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}