The Lord’s Prayer
Our Father, who art in heaven, hallowed be thy name. Thy Kingdom come, Thy Will be done, on earth as it is in heaven. Give us this day our daily bread and forgive us our trespasses, as we forgive those who trespass against us. And lead us not into temptation, but deliver us from evil. Amen
12:17 pm
BKX is testing its neckline again as banks begin to recognize their exposure to private credit. Investors have begun to liquidate their private credit funds before the gates slam shut, trapping them in an illiquid quagmire. Meanwhile , banks that have made financing available now realize that their exposure may be greater than anticipated. The party is over and what’s left is in shambles. That is now added to the questionable CRE loans.
ZeroHedge observes, “Yet another canary in the ever growing coalmine that is private credit appeared this morning as Deustche Bank’s annual report flagged a significant €26 billion ($30 billion) exposure to private credit, an asset class that’s grappling with fund redemptions, scrutiny of underwriting standards and the impact of AI on some borrowers such as software makers.”
8:10 M
Good Morning!
SPX futures declined to 6702.00 this morning thus far. Today the Cycles Model suggests a panic decline may be underway. The neckline of the Head & Shoulders formation at 6710.00 has been crossed again, allowing the formation to resume its course. The crisis in private credit and their lending institutions would make the front page of the news if blown up oil tankers weren’t so photogenic. The current Master Cycle still has at least a week to go and a lot of damage may be done in a very short time.
A much subdued options chain shows Max Pain at 6780.00. Long gamma emerges above 6800.00 while short gamma lurks beneath 6750.00.The dealers did a yeoman’s job of paying out the least possible over the last month of high velocity moves.
ZeroHedge reports, “US futures are sharply lower, as oil briefly surges back over $100 while markets start to accept the view that the Iran war will not end this week, and possibly any time soon.”
The premarket VIX rose to 26.00 this morning and threatens to go higher. The original Head & Shoulders neckline awaits at 28.25 for the activation signal. However, the back-and-forth gyrations in the VIX may have formed a second, more potent Head & Shoulders formation that meets an ideal structural layout. Should the VIX break out quickly, the second formation may prevail. Oil volatility may be at the heart of this phenomenon.
The March 18 options chain shows Max pain at 21.50. Short gamma lingers between 15.00 and 21.00. Long gamma begins at 22.00 and ratchets up beyond 100.00.
The US 10-year Bond Yield futures have risen to 42.42 this morning, threatening to breach the upper trendline of a massive triangle formation at 42.50. It has already surpassed the 200-day Moving Average at 41.07, confirming the buy signal. The Cycles Model warns of increasing volatility over the weekend, suggesting problems in the Middle East aren’t going away. In addition, TNX may be ramping higher until the end of May.
ZeroHedge reports, “After yesterday’s mediocre 3Y auction, today we had the highlight of the week’s coupon issuance when the Treasury sold $39BN in benchmark 10Y paper. And amid a painful selloff that pushed 10Y yields above 4.20%, the auction wasn’t too bad all things considered.”
USD rose to 98.53 this morning as it approaches the Cycle Top resistance at 100.11. The Cycles Model suggests another week of rally that may puncture that resistance. This may raise the discomfort level of the dollar shorts who would love to see the USD decline again. Instead of buying the coming dip, they should sell the pullback to preserve capital.
TheEpochTimes observes, “For decades, the U.S. dollar has been the foundation of the global financial system. It dominates trade settlement, anchors central-bank reserves, and underpins international financial networks such as SWIFT. That status has given Washington enormous economic and geopolitical leverage.”
Bitcoin continues its consolidation, but the sideways moves have brought it back into overbought territory. The Cycles Model suggests next week may be more active for bitcoin as gravity (illiquidity) takes over. A decline beneath Intermediate support at 68125.00 may trigger a new sell signal.
Silver has declined beneath the 52-day Moving Average at 85.55 today, giving a sell signal. The next visible support lies at 56.79, but may give way to a deeper low near 45.00, with 35.00 as an outer limit.