SEP 20, 2016
The TradeSnoop Guy's are giving us Warning in the Markets, Watch This!
Several of our key risk indicators are flashing warning signals for the stock market. Most notably, US Libor-OIS, Chinese HIBOR and the TED spread. The TED spread is a measure of counterparty risk in the financial system and has now spiked the highest reading since January 2012.
The activity in Chinese money markets continues to astound and point to domestic liquidity issues. Unsecured offshore lending as measured by HIBOR has all but dried up with the overnight rate shooting up to 23.7%. That is the highest level for HIBOR since January 12 of this year.
These are the same warning signs that appeared last summer and this winter before significant equity drawdowns.