Morning Note: Huge Risk When These Two Converge

Asian equities followed the U.S.’s lead from yesterday, with all but 3 of the 16 markets we track closing higher. Europe’s trading mostly in the green this morning (15 of 19 markets up), while U.S. equity futures are pointing a 200-pt decline in the Dow, and .4%, .15% and .26% dips for the S&P, the Nasdaq Comp and the Russell 2000 respectively.

The VIX (SP500 volatility) is up .5%, at 32.38. As I illustrated in our latest video, a VIX above 20 combined with a high-yields spread above 5% (at 6% presently) spells huge risk for equities; or at least it has 100% of the time historically.


Here’s that busy graph. Shaded areas capture such periods, white line is the S&P 500:



The dollar’s flat this morning. Gold’s down $4, silver’s off .14%, copper’s up .5%, oil’s down .3% and the ag complex, save for OJ and oats, is trading lower…


Our weekly macro update will be out later this morning.


Happy Friday!
Marty

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