The credit bubble is bursting

The process of a dollar currency and credit collapse, initially evidenced in the stock market, is now underway. As this article will go on to make clear, there is now no escape.

The chart of the S&P 500 Index below shows how this broad-based index has lost its bullish momentum. With the 55-day moving average having turned down, the index below the 200-day MA, and having been turned down failed to rally above it is enough to get technical analysts calling an end to the equity bull market.

More importantly, the first quarter of 2025, a period of time when portfolio managers review their allocation is likely to trigger significant shifts from momentum to value, from high risk to low risk, and from equities to bonds.

The one sector which investors in western financial markets have missed is precious metals, which have outperformed everything as the table below shows:

Investment management thinking

Now, imagine that you are an investment manager faced with worried clients questioning the exposure you have taken on his behalf: Tesla down 32% since your 31 December report and Nvidia down 19% to mention a few. What will be going through your head, considering the outlook for Q2?

Here are a few of the problems you face: