Prepare for Explosion

Last week Trump escalated the Iran war. This week, Trump has escalated the trade war, starting with Canada, but soon to include every other country. Bulls are complacently buying the dip, which means that now ALL of the risk from the past year is getting bought with both hands.

My advice - prepare for explosion.

In my last blog post, I said that I sometimes blog to clarify my thoughts. Sometimes I have no idea why I bother blogging at all, when risk is obviously off the charts.

This is one of those times.

Since my last blog post, the AI momentum trade made a low and has staged a multi-day bounce to a lower high. The pattern that we are seeing is deja vu of the 2025 trade war, just prior to the major trade war escalation that Trump called "Liberation Day". Then as now, there was a big short covering rally right before the market imploded. This time around, complacency is much higher.

And risk is much higher as well.

On a longer-term chart we see that the July 2024 AI crash pattern is also repeating. This crash is ALREADY well underway, but the BIG crash in 2024 came at the end of July.

So far this time around we have seen no reversal of the RISK ON Yen carry trade and no VIX spike.

The middle of summer next week coincides with peak Tech earnings and seasonally the lowest liquidity of the year. Combine that risk with the record amount of ongoing stock and bond issuance that Wall Street keeps dumping onto an ALREADY imploding market.

Add an escalating war with Iran AND an escalating trade war.

And prepare for explosion.