Is a September Hike off the Table? With Dale Pinkert

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2:44Is a September rate hike off the table? Hi, everyone. Welcome to the Real Vision Daily Briefing. with me today is Dale Pinkert, trading coach at TradeGateHub. Hi, Dale. It's great to see you. Good to be back. Always a highlight, Maggie. Good to see you. Well, coming into today, it looked like the inflation data was going to be the big story, what we're going to be talking about. And CPI came in pretty much as expected on a monthly basis, a tick lower on the year over year. And that initially did help stocks rally and treasury yields move lower, but we had an auction of 30-year bonds that did not go well in the afternoon.

3:23They sold at the highest yield since 2011, and much of it went to primary dealers, not investors, which is interpreted as a sign of weak demand. And that put upward pressure on treasury yields. Looks like stocks are going to hang on in the green, but well off their highs. What do you make of the market action today, Dale? Well, I brought a TLT chart, Maggie. They want to pop it up there. I talked about that there was a confirmed low on the weekly TLT chart back in October. And the best TLT did was basically work over a bond crash, work off the oversold nature of it by just moving sideways. And I was willing to give them a chance to turn good over 104 and they were rejected.

4:06And then we had this new funding package. So, you know, markets rarely bottom when a low is confirmed by momentum like it is here with the RSI. So I think new lows are destiny. I think you'll have to get used to hearing more about poor auctions. And I think there's a possibility for a target under 90, maybe around 88, 86. Next stop for TLT, higher yield. Yeah, exactly. We're talking, when you're talking about lower, you're talking about price, Yields move inversely, so higher price. So what do you think? I don't want to simplify it by saying how bad could this be, but what do you think that upward march of yields looks like?

4:52I mean, do they creep higher? Is this because we've got a lot of Treasury has to issue a lot. Yeah, I think the waterfall from here. Yeah, exactly. So, you know, it could look pretty ugly, get from point A to point B in an impulsive manner as Elliott Wave would categorize it because it doesn't mess around. And so, you know, this could be a bit of a shock with what's happening. You know, I've said people have been wrong-footed about rates looking for the pivot and they're going to be disappointed. I think your lead was, will the Fed hike rates again in September? Of course they will. Okay. You think so?

5:36Because the market took down those odds after CPI today. Sure they did. And the market's looking at stats. And, you know, I want to share with you and your viewers that I think there's a bigger agenda than just economic data. That's kind of the kabuki dance that all analysts are doing. And I think that what's happening with our banks, let me ask you, Maggie, Do you feel as comfortable with big deposits in your bank? We used to be able to just - I don't have any big deposits. All right. Well, I knew you were going to say that it was a setup line. Okay, anything. People used to feel comfortable with their life savings there.

6:17They didn't have to think about, well, maybe I should transfer it because there might be a failure. I've never believed this was over. I believe in a way it's being engineered by the Fed. Okay. Otherwise, why did they focus on two economic areas that had structural shortages like labor and like housing? And once they have the inflation numbers going their way, now it's growth. Was that their mandate when they started tightening or was it inflation? So the biggest story out there, Maggie, and no one talks about it, and I just have to, is really the biggest monetary story of the last half a century or longer, is the coming of the CBDC.

7:05And you know what? Americans are not going to just want to go to another system. Central bank digital currency. That's right. You know, reporters used to ask the Fed, well, the dollar's weak. What do you think of the dollar? And whatever the Fed official was, Greenspan, whoever it was, that's not our purview. That's a treasury. Well, this eliminates the treasury. The Fed becomes a treasury with the CBDC. And Americans aren't that, maybe people all over the world really don't like to make changes unless there's enough fear and uncertainty that it looks like it could be a fix or a solution. So this banking crisis is far from over.

7:54If you thought things, and this is, you know, I said this before Fitch, before Moody's, and people are going, well, Fitch, Moody's, that's old news. They're way behind the times. So if they're behind the times, the bank's positions on duration is not getting better with bonds cratering again. Yes. I mean, it's a major problem. So the other problem, of course, aside you mentioned confidence, but the issue has been what, you know, Bianco and many term the bank walk, which is why would you have it sitting in a savings account when you can have a short term T-bill or money market that's yielding a lot more.

8:36So wouldn't the Fed raising rates just worsen the banking system? Or are you saying that that's their intention? By their design, so there'll be less banks and they have a few allies working the deal with them, like JP Morgan, where they're gobbling them up at bargain basement prices when there's failures. So, yes, I think that this is by design so that people lose confidence in our banking system and the CBDC eventually rides to the rescue. because maybe at that stage the dollar's in a lot of trouble or we're going to have banking problems and bank holidays and CBDCs are going to be the solution and people are going to have a lot of fear and they'll be willing, just like after 9-11, we'll give up our rights if you keep us safe.

9:34Right? Wow. The Patriot Act, right? This is a very, do you think the Fed is, capable of that sort of planning? I mean, we think they can't even engineer a soft landing. And if you talk to most people, they think they've sort of, you know, they're pretty ineffectual at monetary policy. You think they'll be able to pull off something, which sounds a bit conspiratorial, Dale? Yeah, I guess it does, Maggie. I'm interested in it. I'm not criticizing it. I know it does sound that way. But I don't think you have to be a genius to tighten the economy into oblivion. Paul knows what the balance sheets were before he started tightening because they were all buying duration based upon, you know, the Fed said you'll be okay, we'll be okay with that.

10:23And they took all that duration risk. So he knows that they were vulnerable. and and also wasn't the uh theory that once something breaks they would stop well didn't something break in march and have they stopped well that's the debate right because some people think well it didn't it didn't run through the whole system they were able to ring fence it so therefore maybe it was seen as manageable and not actually breaking something well there are There are more failures recently. Yeah. Well, they're more on downgrade. Well, failures in California, a big bank in California. So, you know, I think that there's going to be more failures.

11:07And, you know, you could even see from the charts, it's not just the regional banks. I brought Citicorp with, which is a money center bank. Yeah, let's put that up. What are we looking at there? And the charts don't look any better on the money center bank. And a pretty smart guy named Jamie Diamond said that he thinks the Fed should take another look at their models. So we've had this huge market rally, May, June, July. And what did Citicorp do? Nothing. On the verge of breaking down. It wouldn't take much for it to see last October's lows. And, you know, the regionals look worse. And there are some that have better patterns, maybe wells, but Jamie Dimon's worried about what the regulators might be doing.

11:58In an interview, he brought it up that it could be a problem for banks, what the regulators want to do with capital requirements, et cetera. So I think the system is being pressed to the edge. And I think that we're going to see really one of the worst banking problems that we've seen in my lifetime. I mean, bigger than the S &L crisis in the 80s and probably as big or bigger than the great financial crisis. Hey, everyone. We're going to take a quick break right now to hear a word from our partners. We'll be right back with more of the day's top analysis on the Real Vision Daily Briefing.

12:44And sort of in departure with maybe the group think out there, if that were to happen, because when people mention that, they think that will usher in break cuts from the Fed, but you don't. I think that, yeah, once we've broken the system, of course, and the dollar will be the, what do you call it, sacrificial lamb. So they will. But we're not there yet. You know, I still think the dollar has room to run. Last time I was here with Ash, it was at the bottom of the dollar at about 99 and a half. If you put the dollar chart up there, I told viewers that if you weren't like me that liked to try and catch a falling knife, all you had to do was wait for the market to negate the breakdown that it had.

13:40So here comes the chart. So you see that big, thick line down there. And the little red dot is when I was on and made the bullish dollar call. and I said, you know, if you don't want to, I was suspecting at that time there was going to be a false breakdown. People were talking 85 in the dollar index. I said, wait until it closes back above there. That'd be a breakdown failure. Buy it. And if you did that, you had no drawdown. You kind of had a weak number today and the market's just too bearish a dollar here, Maggie. Interesting. Yeah, it's still too bearish. And, you know, I think maybe 108 ought to cleanse some of the bearishness in the dollar.

14:25So I'm still buying breaks in the dollar. So, and this is a short-term view you have, right? What's the time price? Fall. Fall. Fall. Maybe year-end, probably the fall. So I think, you know, that some of this prices, and I think part of it is going to be risk off people going to the dollar. You know, you could look at the DAX, it's peaked. Last time someone said, Dale, what would you do with the Nikkei? Nikkei's peaked. European markets actually peaked before us, and they led the way up. So we're peaking now, in my view. Last time on, I said 4 ,600 is the Bears' last stand. Well, they made a stand.

15:16And a lot of people will be buying breaks all the way down because it was one hell of a rally. And so every break is going to be a buying opportunity. And when I was on with Ash as well, if you bring up either the Apple or NVIDIA chart, I said that I said to short NVIDIA it was near 380 and one of the reasons was it wasn't making new highs with the rest of the market and you know what leads you on the way up will lead you on the way down a month ago I said I'm looking for a gap fill so that's still quite a ways from where we are. I think that gap is filled at 320, 280. If you bring up the Apple chart, you know, I was premature in Apple early in the summer, late spring.

16:13I was shorting it at 170 and then again in the mid 180s and it didn't feel good at 197. But look how Apple on its earnings It's gapped the 50-day moving average. That's a pretty powerful signal. I would say, you know, a lot of people talk about, well, it'll fill the gap. Not for a year or two. So, you know, I wouldn't be trading this looking for a gap fill on Apple. Last three days after a$20 break, all it could do is hold. So I think the market is not in at least a break to 4 ,200 in the S &Ps, I think is reasonable. That's where the battleground may be. That's where the big move started from when everything started going parabolic.

17:08So bonds will be part of that story. A higher dollar will be part of that story. Yeah. So let's someone commenting that you sound pretty bearish now. So let's unpack each of those because we kind of went through all those charts. So let's do the dollar because we had Vincent on yesterday. And for those of you who didn't join us through the second half, we talked a lot about the dollar and international. And he was sort of talking in a much longer time frame. I want to really make that distinction because Dale is talking next three months, maybe through the end of the year here, thinking the dollar is moving higher.

17:48Vincent's taking a much longer look at this sort of, you know, I would even say over the course of the next decade. So probably within moves within that. But sounding just think feeling like it's sort of the end of the dollars run. Let's have a listen and then we'll talk on the other side. okay i think we had this very strong dollar cycle uh and and now because of the mechanism i was describing because of you know rising twin deficits uh because of um kind of nationalism when it comes to currency reserves and and people no longer feeling so comfortable investing in u.s treasuries i think we we have a tenure of of of a weaker dollar of a weakening dollar, which will be a rising tide for the rest of the world.

18:41And again, that was in the back half of the program. If you want access to all of our content, scan the QR code or hit the link in the chat and jump on the anniversary trial that we are offering right now. So, Dale, do you worry longer term? Do you see the dollar moving around, but in a channel that's moving lower? Or do you not ascribe to the fact that, you know, facing the sort of the deficits and international investors perhaps repatriating money, losing appetite, you know, that the dollar is kind of in this new stage where it's going to move lower? No, I agree with him. But the art of the business is not an if, it's a when.

19:22Yeah. So if I said, you know, within the next year, I think this is going to happen. I'm sure giving, you know, people that are following me a lot of time to go broke. Okay. And myself. So I agree with him. In fact, I agree with him strongly, but I think it happens from higher levels. I think the dollar could be, you know, long-term targets could be in the 50s. Because I think the dollar will be the sacrificial lamb for trying to reinvigorate the economy. Okay, because if the dollar is going down, everything is going up in at least nominal terms. So it could make things look okay, but they're not real returns.

20:12There, say, for example, maybe the market recovers 30 % when the dollar does this because the dollar is down 30%. Okay, so I agree with him. I just said, I just believe now there's just too many people believing it. They're, they're too heavily positioned on the short side of the dollar. Most people aren't bearish of stock market, which is fine with me. I don't want to have company at this point. You know, everyone's saying it's just going to be a correction. That's fine with me too. And people will buy breaks. I see 4 ,200 pounds, 3 ,800 pounds, 3 ,000. And it's over. Wow, you have a target. You think the S &P can get to 3 ,000?

21:03Yeah, by the year-end, first quarter. Wow, that suggests we are in for some seriously turbulent waters. Yeah, I think that we're going to see spikes in the VIX. I think that we're going to have a little bit of a financial crisis. How can you not have a financial crisis with problems and outflows from the bank and liquidity problems that do not get any better with rates still going up? You're just pressuring things that were already under pressure. Right. So higher rates leading to a banking crisis is what you think the catalyst will be for that. Yeah. Yeah. Sovereign. Except, I mean, you could look at something like, and a lot of people can't explain it to me, the default spreads haven't blown out yet.

21:52But if you look at HYG, which is junk, it looks like a different, completely different chart. It's constructive compared to sovereigns, which TLT are a proxy of. Even compared to AAA corporate, LQD. Hey, junk, people have more confidence in junk being repaid than they do in grade A investment corporates and U.S. sovereigns. That's got to be a statement in itself. We're going to take another quick break to hear a word from our partners. We'll be right back with more of the day's top analysis on the Real Vision Daily Briefing.

22:42yeah which is hard to imagine because listen if you look at the charts in treasuries and and uh high-grade corporates you got to have a problem in junk too i'm not sure well i said right now it's fine yeah we paid for it yeah it could be uh you know the last domino to fall but they've uh junk's been performing while sovereigns have been getting hammered so something's out you're probably right junk will eventually catch up when people realize the no recession we may not have a typical recession we're only going to have a financial crisis so uh boy i would have i would have rolled up with a beverage here if i i knew we're in for this dal but i i love it i i love the the sort of honesty and straight it'll be over you know i mean the majority of the pain and liquidation will be over by the first quarter next year.

23:41And so it's so important right now that people have a war chest and they build it up so that if I'm right and everything gets cheap, including gold, maybe trading under 1800 and silver. The last time I was here, if you have the silver chart, put that up, please. you know the silver squeeze guys were they had their pom-poms out okay here we go 200 silver we're on our yippee-i-yo kaya and that little red circle is where i said sell silver i still think you'll see 20 and it's part of a liquidity event or a credit event that's going to take everything down. So silver, I think we'll see the 20 handle.

24:28Gold, we may even see a trade under the 1800 handle. And then I'm a buyer. And that may be when the dollar rally is over by the fall. So Colin, I think that answers your question about gold and Dow's timing on that. I want to, Trillian X asking about the bear steepening. When will the 10-year break above five? I just want to I just want to read you something. End of the year. End of the year? Yeah, it'll go to five. So there might be a pullback on a risk off. You know, you might get yield to drop for, you know, a few weeks during a big risk. If we had a crash day or something like that, people will go to the notes.

25:11But I don't think this cycle ends. I think we will see four, nine, five percent. Wow. So you agree with Vincent, who yesterday, I just want to recap something he said because I was looking over it. And he said, on the long end, I still think this is delusional. I think we can go to five very easily. And I actually think we get there, we could get there in a couple of days. I don't know when it's going to hit. But when it hits, it's going to feel like the guilt market, which we know is like same kind of thing. Yeah, we were on. We were on together during that crisis. That's when the pound bottomed.

25:48Right. I made another dollar call down there. So you feel like things are, liquidity and market conditions are bad enough that if you were to see some kind of crisis, it may get to five by the end of the year, but you're not ruling out the possibility we could see a rapid spike there if there is some sort of shock. I'm not ruling out if there's a shock and we have a, you know, like a 10 % down day in the market that people won't run to treasuries and that they'll get a pop. But I think their ultimate destination is TLT under 90, 88, 86, and the 10-year 4.9, 5%. And that will be driven by the fact that the Fed's going to keep rates higher for longer or keep raising, and or that the auctions are going poorly.

26:39And so rates will stay high regardless. Yeah, supply. We've talked about this. supply. Rates can go up without economic strength because there's too much supply and no demand. And, you know, they could also justify it by, have you seen any unions go on strike? They've all won contracts with nice raises. Yeah, I heard the most Googled search the other day was jobs at UPS. Okay. On the teamster, you know, the preliminary agreement with the teamsters. You know, he could rationalize continuing to tighten because he's worried about a wage price spiral. That's a terminology brought out of the 70s. He could, you know, bring that back out there.

27:27John asking, Dale, what about the BRICS currency on top of the CBDC worries? I assume that reduces demand for U.S. Treasuries. Yeah, you know, I'm really not familiar. I've asked people that I've talked to what they know about it, and is it going to be a trading instrument, and I'm still in the dark about this currency. You're not the only one. I think there are a lot of hopes and dreams, but the actual realities of a rollout, I think some of those details remain. My hope is the Chinese-only launcher currency on August 22nd. Only, as opposed to? Anything else? Hmm. What time, John asking what time - Have I cheered you up today?

28:14You too. Information is power. Information is power, Dale. And we like to look under rocks and consider all possibilities so that we're ready. I came from under a rock, so. John asking what timeline do you have for a banking crisis to happen? Are you worried about this being imminent or could this kind of bubble along? And we never know. The problem with these events is that we don't have a lot of notice about for them. Yeah. I think it happens slowly and then all of a sudden. I think we're already in the slowly part. I think it could happen this fall, winter. Yeah. When we least expect it, John, is probably.

28:59Another question. Could you see SPY retraced to the 2007 top 1600? The breakout from that range was never retested. God, I'm not that bearish. Thank goodness. But, you know, I've thought about that. So, you know, John, you know, I've thought about that double top. You're right. That was a big deal. Never came close, not during COVID or anything. So, you know, I'm kind of looking for a retrace to the pre-COVID highs. So, I mean, that won't be the end of the world. Hmm. CBDCs will be, though. In my opinion, our freedoms. Somebody also commenting in the chat that they are not sure the Fed could pull something like that off.

29:45So we shall see. Pull what off? So like orchestrating, you know, participating in orchestrating a break of the system that would create enough willingness to make the switch. Kind of pull one over on the general, on the American. Well, I don't know why they don't believe it because they did it in 08. You know, it was contained. They were tightening. They started easing too late. They did it in 2000. They did it in 1937. So they make. They're smart guys. Yeah, they make policy blunders, but this would be an indication that this is intentional, right? That this isn't intentional. Right. Yeah. Okay.

30:26Dale, so - I'm giving them more credit than being smart. Yeah. Yeah. They're smart guys. And by the way, you're not the only one who said sometimes we are sort of underestimating them. So you are bearish treasuries, you're bearish stocks, particularly it sounds like tech stocks. Are there any equities that you're constructive on or is it across the board or are you most worried about that? Even oil. Oil's peaking up here today. Everyone's got very excited about this breakout in oil over the, I don't know, 75 level. We got up to 80. I think we'll pull back to 75 if that doesn't hold. I think oil could, you know, go to 60, 55.