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The market and economy are always fundamentally on a dual track driven by money. Currently, Treasury debt driven money creation has stretched this dynamic, pushing P/E valuations to an extreme 31x, and the ratios of stock prices to money measures to unprecedented extremes as well.
This surge, enabled by the highly leveraged Treasury/futures basis trade, has created structural market fragility where the massive leverage will lead to either a final blow-off rally toward S&P 500 xxxx or trigger a violent, systemic crash. Or both. There’s also a muddle through scenario. We must train our eyes on the likely canaries in the coal mine to signal when to take action to protect from, or take advantage of, a crash.
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I track weekly real time cash flow data from the Fed and Treasury that foretell the next moves in stocks and bonds.
It’s the same data the big trading desks watch — but you see it here without the Wall Street spin and with my 58 years of market perspective seen in clear cutting-edge proprietary charts and analysis available nowhere else. Not even from the Wall Street giants.
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