Closing Thoughts for the Week

We have yet to see a capitulation and probably need that to happen before we see a firm bottom in place. I think Treasury yields are higher than they should be given macro conditions and represent some intriguing value once we get on the other side of this thing. I’m not sure the jobs, inflation and retail sales reports we’ve seen over the past week or so really change the market narrative much.

It wasn’t the huge rally that I thought it might have been, but it was a rally nonetheless. Market bulls should still be encouraged by how last week looked. Over the past century, almost every extended risk asset recovery hasn’t started until the Fed has made a dovish pivot.

The U.K. pension market came THIS close to getting wiped out after surging gilt yields triggered margin calls and a near collapse. The real risk in the short-term isn’t necessarily an economic downturn, it’s a fundamental systemic breakdown. There are rumblings that a major investment bank is on the brink of collapse. A government intervention could be the catalyst for a short-term melt-up rally.