Two things to think about as the new week begins. The German DAX put in a very rare technical formation as the futures made all-time highs last week and closed below the previous week’s LOWS by almost 0.75%. We have seen this formation in the S&Ps and Nasdaq 100 this year, which resulted in some momentary weakness in the stock markets. Every pundit on CNBC and Bloomberg has pushed the European equities as the better choice for developed market investors but this new signal raises a caution flag. So caution it is until we see if the market can follow through.
Second, Thursday and Friday’s selloff in bonds, equities and precious metals caused me to wonder if some RISK PARITY positions were beginning to be unwound. This may be just some large funds testing the markets’ ability to provide enough liquidity to support a liquidation in the massive positions. BONDS had trouble rallying even as European and Japanese equities dropped. Just something to watch. The Peter Boockvar and Yra Harris discussion from the Financial Repression Authority is worth a read. The transcript has some mistakes but the discussion is worthwhile. Enjoy.