Dale Pinkert: "Looks Like We Could Have A Bond Market Crash"

Dale Pinkert joined us yesterday on Talking Markets to walk us through a wild day for markets. TL;DR, Dale is waiting for the market action today before he makes many moves. “I came in pretty light into a Fed day,” he said. “As a trader, why hope that you get the reaction you want out of these major events? Why not just react to the reaction instead of trying to predict it like a carnival barker?”

During yesterday’s volatile market action, Dale felt like a “yahoo riding a bucking bronco” (and had the shirt to prove it). After the Fed announced it would be holding rates steady (with 3 dissents), stocks puked into the close and investors sold bonds, sending 30-year yields to 2007 levels.

“I would say it’s close to disorderly,” Dale said of the market action.

Dale’s been looking for 6,900 in the S&P, and said it had a “big failure” into the close (above). It wasn’t just the S&P, either - there were breakdowns across the board, including in silver and gold.

The rout continues in semis, with Micron (which Dale said 150 bucks ago was in a “failing rally”), Sandisk, and others continuing to fall.

Meanwhile, Meta fell yesterday on earnings, while Microsoft rose on earnings in aftermarket trading:

“Compared to everything else, Microsoft doesn’t look terrible,” Dale said. “But I don’t think that this liquidation in the market is over. I think we could have a real sharp rally, but when when they raid the bar, they take all the girls, including Microsoft. So I’m not comfortable being long much, except oil.”

And Apple “looks like a top.”

“Book it, Dano,” Dale said. “If it has good earnings, I’d sell into it. I think there’s going to be a pretty big break because people are buying Apple like it’s a safe haven.”

Yields rose yesterday pretty much across the board, but “TLT really got hammered,” Dale said. “We’re at new lows.”

Elsewhere, Dale thinks yields in the 10-year have further to climb, mentioning 5.13% as a possibility he’s looking at, which is about 45bps higher than where we are now.

❗”Looks like we could have a bond market crash, a confidence crisis,” he said. “The new Fed chairman is not instilling confidence… He disappointed the bond market [by not hiking rates] and so the vigilantes came in.”

Dale thinks “they’re going to have to implement yield curve control, meaning you just peg the 10-year at something like 4.5% if inflation keeps climbing,” he said. “The implications of that: it’s inflationary, it’s debasing the currency. The dollar will be the sacrificial lamb in yield curve control.”

“After [Wednesday], I really need to see more action before I’m compelled to take positions,” Dale said. “But if I’m a believer in what happened [yesterday], then the dollar is peaked for a correction at least. We could have a pretty good break, maybe back to 99, though it’s going to take closes under 99 to break the uptrend. Otherwise, I think the dollar is going to be a buy around 99.5, and that we’ll still get another run, maybe up towards 103.”

Elsewhere, Dollar/Yen also “looks ready to correct,” he said. “I wouldn’t be playing the long side of the yen right now. The pullback could be pretty deep, we could see 160 again.”

“It’s good that it’s stayed ‘eerily stable’ in all of this, but I still think that for it to advance, you’ll need of see some of the pressure come off risk,” Dale said. “I’m not impressed with it. I thought it might have enough juice to get to 70k, but the way risk is falling apart, I think taking out the lows of 57k is more likely.”

• Wheat: “I view this pullback as a break to buy. I don’t think we’re just going to fail.”

• Corn and beans: The pullback here is “due to a relief rally and some precipitation expected.” Corn has more constructive chart than corn, but maybe the beans drag corn down, Dale said. He added that corn would have to take the lows out before he considered his bullishness wrong.

Thank you David Z. Morris, RF, and everyone else who tuned in live…!

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Important: This article is for informational purposes only and should not be considered investment advice. Consult with a qualified financial advisor to assess your risk tolerance, investment goals, and overall financial plan.