Cycle Trading

[No-Quarter]

I tend to agree we are in for a recession, but first one more run up. Quantitive tightening begins June 1st.

The below quote from here - https://www.reuters.com/business/feds-qt-plan-then-now-2022-04-06/

I added the bold to the text for emphasis.

FASTER RAMP-UP
In the last cycle, it took a full year for the Fed to reach that maximum reduction rate of $50 billion a month. It started with $10 billion a month ($6 billion Treasuries/$4 billion MBS) and increased that by $10 billion a quarter until it reached its maximum rate in the fall of 2018.

This time, it will go from zero to $95 billion in the space of three months, with only one initial step before moving to the maximum reduction pace. On June 1, it will start the process at $47.5 billion a month for the first three months, divided as $30 billion of Treasuries and $17.5 billion of MBS. It will increase to the full $95 billion three months later.

I am looking for the continued rate hikes, and initial QT starting in June, to move the market higher. Then when Wile E Coyote clonks his head on the purple line, something else big breaks, and the market heads south.



https://stockcharts.com/h-sc/ui?s=%24UST10Y&p=W&yr=20&mn=0&dy=0&id=p75227327950

https://stockcharts.com/h-sc/ui?s=%21PRIME&p=D&yr=20&mn=0&dy=0&id=p25834343112

The below quote pulled from here - https://www.zerohedge.com/markets/who-will-be-recessions-lehman-wall-streets-most-accurate-analyst-says-3600-new-bull-case?utm_source=&utm_medium=email&utm_campaign=676

Or another way of putting all this is who will be this recession's deflation-triggering Lehman?

Credit events: Hartnett still thinks $18tn of negatively-yielding debt to $2tn in 9 months means high risk of liquidation & deleveraging & default; And indeed, the leveraged loan market is cracking, with systemic risk from bond/stock/real estate deleveraging in risk parity (RPAR), private equity (PSP) high, PE exposure to syndicated loans high, sovereign wealth funds, credit events in speculative tech, shadow banking, US consumer buy now, pay later models, European credit/banks/housing, Emerging Markets, zombie corporations, and so on... and yet the Fed has not even begun QT...

GLTY