Back to the Oct/Nov lows today, and it doesn't look like they will hold, in which case the next stop will be the Feb-April lows, which is key support. The key areas to watch will be 2550-2575 for the S+P and 23,500 for the DJIA.
Not liking the looks of this, but it's still too early to throw in the towel, not until the Feb-April lows fail.
Looking at some key macro factors -
1) Trade war - we've had signs of progress on the trade war with China (agreeing to lower of tariffs on US autos and soybeans), though the arrest of the Chinese CEO in Canada hasn't helped.
2) Fed tightening - some less hawkish verbiage from Powell recently, but tightening and QT continues, and Europe is ending QE. The punch bowl has been removed.
3) Anti-Trump saga - this should get even worse in 2019, providing a toxic backdrop to everything else.
4) Rising dollar - continues, worsening the debt situation in emerging markets.
5) Corporate debt bomb - is lurking out there, which will have to be rolled over at higher % rates. And like the subprime mortgages, this debt has been sliced/diced ('securitized') with a mountain of derivatives piled on top. A recipe for disaster.
6) Slowing global growth - this is ominous, and we're due for a recession at some point anyway. As Rickards says, it's probably already baked in.
7) Fed and ECB balance sheets are tapped out (20% and 40% of GDP respectively), which severely limits what they can do during a financial crisis. Unlike 2008, the Fed can't ride to the rescue this time. There are more Derivatives lurking out there too, compared to 2008. And as Rickards points out, the 'too big to jail' banks are even bigger than they were in 2008.
8) A big crisis will likely require the SDR solution, which likely means 'Ice-9' (asset freeze) for an extended period of months.
