S&P 500: when to short?

After the 2008 financial crisis, seemingly far from the point of view of investors, the volume of bad debts has again began to grow across the whole spectrum of the financial sector. The share of junk assets grew like a snowball, which is swiftly rolling down a steep mountain. A huge amount of liquidity was poured into the financial market by the Fed and it was the Fed who managed not only after several years to stop the balance growth of toxic assets in banks and corporations, but after 2010 managed to rectify the situation and forced it to develop in the opposite direction. The printing press did its job and in the first quarter of 2017 the US corporations showed their maximum profit historically, which amounted to more than 1.8 trillion. Dollars. The volume of bad debts returned to pre-crisis levels. At present, the situation develops in such a way that the Fed does not opt for an aggressive increase in the base rate, thereby supporting a weak dollar rate, and it, in turn, supports the profits of global US companies, through increasing sales volumes.


The ability of US corporations to service their debts and refinance at low interest rates also contributes to the fact that corporations are afforded a breath of fresh air and an increase in profits. It begs a simple conclusion: all who have shorted the S & P index for the last few years feel unease, most likely, as locally, the index is in an uptrend. As a result, significant economic events, which will be able to bring down the growing global trend, are not yet expected.



From economic statistics, today we are awaiting the release of the indicator of consumer confidence from the Conference Board, which is based on a survey of households. It reflects the level of confidence of households in the current state of the economy and allows assessing the development of the situation in the future. If the index value exceeds expectations, then most likely, we will see an increase in the dollar index. However, even in such a situation, the growth of the dollar against the major currencies will be insignificant, and the dollar's movement will be limited to a few tens of points.


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