Let me remind you that the result of that research says that in case of the normalization of the yield curve the price of minerals drop fast to its marginal cost of extraction.
For gold above $300 a fall of 76% with an overshoot as, of course, the gold that is stored outside the ground has, by definition a cost of extraction = $0.
For oil that marginal cost of extraction is below $20 and probably closer to $10, which means an immediate fall of 74%.
Those percentage don't take into account the rise of the price of these minerals from now till Sept 7th.
These figures are bare minimums as with demand and cost going down the marginal cost of extractions will necessarily go down too.
Stock Market:
By mechanically increasing the Yield of US Treasury Notes from 2.419% to 3.500% and before any economic positive feedback the fall of the SP500 will be ... 31% !!!
The first step will be at around 719 not far from the famous previous low of 666. What we Need to Watch:
Apart from the fall of long dated Treasuries a sharp decrease in short term Treasuries Yields (With a term below 2 years that could possibly become negatives.)
We have also to look closely on both the Ted Spread as banks will come to realize that trading with each other is not that safe after all and the infamous Credit Default Swaps. Expect an sharp increase of the insurance premium from now on.
Finally and apart from the normal flux of macro economic figures (especially unemployment data):
We must watch the auction of 10 Years US Treasury Notes on September 8th,which I expect bad, and especially the auction of 30 Years US Treasury Bonds on September 9th,which I expect to be dismal.
Friday Sept 10th,after the close, the number of failed banks as published by the FDIC.
The Hindenburg Omen:
This is a buzz on Wall Street now:
