Stocks are on borrowed time. 

Credit leads stocks and the credit markets have already signaled the next leg down is coming.

While the S&P 500 made a final thrust higher, the High Yield: Investment Grade ratio broke down.

GPC2419.png

Similarly the TIP:TLT ratio which serves as a gauge for inflation vs. deflation, was rejected at overhead resistance. This tells us that the next round of deflation is coming.

GPC24192.png

Meanwhile, corporations are lowering forward guidance at an alarming rate. Caterpillar, Amazon, Apple, Samsung, LG, Fed Ex, Johnson & Johnson, Nautilus, Tesla, Tailored Brands, Signet Jewelers, Delta, Skyworks, Macy’s, Kohl’s, and American Airlines have all  lowered forward guidance in the last month.

By the way, the estimates that many of these companies are missing were LOWERED just 30 days ago… so things have worsened since then!

What does management at these companies see that we don’t?

The BIG PICTURE.

GPC2119.png

A Crash is coming…

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