02Mar10:53 amEST

It's the Rate of Rates That'll Give You the Blues

Eric Johnston and Katie Stockton, two of the sharper people on Wall Street these days, have been fairly steadily bearish on risk assets amid rising rates this cycle. But even they recently came out in CNBC interviews and seemed to be apprehensive about the idea of rates going much higher from here. 

But that's just it: The risk continues to be, as per my prior post here, that even the sharp side is underestimating the monthly chart bull flag breakout currently underway for rates on the 10-Year Note. 

You will note that the CRM monster earnings pop has had a muted effect on tech, as the SNOW TSLA selloffs seem to be more concerning for tech investors this morning despite CRM helping the Dow a bit. 

Ultimately, it is worth remembering going forward that if the pace of the movement higher in rates on the 10-Year picks up, that is when we could genuinely see major market dislocations, i.e. things "start breaking." A stronger Dollar looks to dovetail with higher rates while high yield corporate bonds begin to signal distress in the system. 

Naturally, you might say I am just talking my book. After all, my largest trading position with Members continues to be long TBT, which is double-short TLT (below, which is the ETF for Treasuries). As TLT goes down, rates go up. So, long TBT is, in effect, a bet on higher rates. 

But ask yourself this: How many market players right now are not only positioned but mentally and emotionally prepared for the chart below to fall off a cliff quickly to new lows? Because if you take an objective look at the setup that is what the highest risk is here. 

It's the rate of rates that'll get you, especially when the market does not think it is probable, or something even possible due to government debt--They also said the housing market could not crash back in 2006. 

It's Pretty; It's So Pretty It's Tough to Conquer Even A...


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