José Luis Cava: “The risk of a crack in the markets is very likely”

Like every day, we analyze current events in the markets with José Luis Cava, independent analyst.

This week has been that of the central banks, the ECB, the FED, the Swiss National Bank,… With the 50 basis point rise in interest rates by the Swiss National Bank, can we say that the central bankers are willing to break markets?

Regarding the latest actions of the central banks, Cava assures that “the central bankers of the whole world are breaking the markets”. He explains that there are three events that herald this rupture.

In the first place, it shows us the estimation of the growth of the US GDP according to the Atlanta Federal Reserve. “Expect close to zero growth in the third quarter.”

Secondly, Cava shows us how risk premiums are soaring. “It makes it very likely that a credit event will occur.”

And finally, the Central Bank of Japan continues to maintain its decision not to raise interest rates and its policy that the 10-year interest rate is 0.25. “Reason why the yen has fallen sharply again.”

“We are therefore observing that the tensions in the credit markets, in the money markets are very strong”. In the words of Cava, we must consider that a credit event can occur and think that “we are facing a black swan”.

All this makes it difficult for the markets to reach a bottom, at most there will be a rebound in the short term.


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