Juggling Dynamite

A lot of shorts getting covered today across most risk assets and yields and this has driven yet another dramatic rebound day. These are expected given the rapid price declines between Feb 19 and March 23.

On March 31st, my partner Cory Venable highlighted 2625 to 2725 as a rebound test for the S&P 500 (pink band below).  At 2661 this afternoon, we are nicely into the zone.

For Canada’s TSX, resistance is the 13750 to 14250 area (pink band below in Cory’s chart).  At 13505 this afternoon, further headroom remains.  It should be noted that these are daily charts.  The weekly and monthly downtrends remain unaltered by these bounces.

Coronavirus is a catalyst for the overdue implosion of Canada’s world-famous debt and real estate bubble.

Debt, Frozen Real Estate, Cancelled HELOCs, and a Guaranteed Recession with Ben Rabidoux – He has many new predictions, including: Lenders will, very soon, lower HELOC borrowing availability, and likely convert HELOCs to regular loans requiring payments of interest and principal each month. He also predicts that residential rents will fall by 10%, and perhaps more in many markets. Many investors in second mortgages will be wiped out. Population growth will slow dramatically, and that, combined with a 95% reduction in Airbnb bookings will reduce house prices (but not immediately, because the real estate market is essentially frozen, with less buying and selling).​ Here is a direct video link.

Highly levered and priced for perfection is always a train wreck waiting to happen.  This podcast gives a taste of the debt dominoes that coronavirus has set in motion.