The Yield Curve is Telling Us A Lot!

Hello All:

We might think that based on recent news that the U.S. economy (and therefore the global economy) is going to have major problems because of the possibility of a U.S. Federal government shutdown.  However, we all know, if you have been following me, that inverted yield curves ALWAYS lead to recessions and crisis formed in the markets (banks, equities and otherwise).  If anybody tells you different, they are simply lying.  Most importantly, moreover, is that it is not just simply the existence of yield curve inversion DOES NOT causes a crisis.  If we have been paying attention for the last 1 year 3 months, the inverted yield curve did indeed create a lot of speculation, but it did not create a crisis in the markets, especially when the Fed was able to create QE when SVB went down earlier in 2023.  But let us look at what has happened in the last few weeks to the 10 year vs. 2 year Treasury spread (from negative 77 to negative 45 in 9 days):

The yield curve has actually been steepening (LESS INVERSE).  This is the time, in my opinion, when things start to break.  Low and behold:  We will possibly have a Government Shutdown on Sunday, October 1st, 2023 at 12:01 AM Eastern time.  This is a crisis of confidence and one of the reasons that the yield curve is steepening and why Congressional leaders up until have failed to pass anything to avoid a government shutdown.  The bill failed TODAY on 9/29/23 so a similar proposal on 9/30/23 will likely fail as well.  McCarthy is at a loss on what to do now.  Not only are we possibly shutdown on Sunday middnight, but we might be shutdown for 2-4 weeks according to the latest U.S. Congress intel.  For comparison purposes, the U.S. gap is approximately $ 25 TRILLION per year. Government spending is generally $ 6 TRILLION (more than 25 %).  SO A QUARTER OF OUR ECONOMY SHUTS DOWN (SPEAKING OUT LOUD).  Let's look at the historical trend:

The percentage of U.S. government spending of total GDP is massively and historically very large, even though it is definitely lower than the 2020 COVID crisis.  Still, however, it is higher than it has been for the last 70 years (YES, 70 YEARS).  Incredible, and nobody is saying bleep about depending too much on government spending for the U.S. economy to survive.  The problem is this U.S. economy is TRULY TOO DEPENDENT ON GOVERNMENT SPENDING.

What we saw this week in the market is that NOT ONLY stocks BUT ALSO bonds are falling apart.  Most importantly, SILVER RALLIED A DOLLAR AND THEN CRASHED.  That tells you the jig is up because Silver usually does not lie but the equities markets usually do.  

Look at the technicals and tell me I am crazy for thinking that something bad is going to happen this weekend.  Then, look at the news feed and see how no progress has been made.  The trick is to be prepared before this bad event/ crisis happens.  We have been prepared with positions for several weeks SHORT SILVER, SHORT YM and shorting any commodities that looked attractive.  We feel bearish Bonds for now until such time that an intervention happens by the Fed.  Look us up to get more information on what this upcoming crisis is NO SURPRISE TO US. 

With the US dollar ready to blast higher, we will see METALS melt down (as we already see).  We will see equities markets come under pressure and we will see commodities in general fall hard.  Right now, we love being short Silver and the equities markets.  We will add other positions similar to this as the USD surges higher.

NOTE:  WE HAVE A GREAT PROMOTIONAL OFFER LISTED BELOW.  REACH OUT TO ME AND GET FOOT IN THE DOOR WITH OUR SERVICE.

The tide is changing and if you are not ready, you will be lost.  AND you will suffer losses.

Reach out to me if you need help in planning the next 6-12 months.  We have tools available to hedge your portfolio as well as trading tools for those

that want to speculate in what will be a tremendous opportunities in the next 1-3 months.  Things will immensely change.  BE READY!

I am offering a 12:1 TRIAL FOR our Market Signal Service.  A total of $ 475 will get you 12 months of weekly Market Comments (and Updates)

and email/ text MARKET SIGNALS.  Go to our SUBSCRIPTION LINK to learn more.

Best Regards

Edgard Cabanillas

President - Alpine Trading LLC

www.alpine-trading.net

TEL:  949-357-4948

Email:  edgard@alpine-trading.net

*** RISK DISCLAIMER: PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. TRADING 

COMMODITIES FUTURES AND OPTIONS IS SPECULATIVE, INVOLVES RISK OF LOSS AND IS NOT SUITABLE FOR ALL INVESTORS