Citi's Dirk Willer on How You Know When the Bubble Is Over

Bearish

• $CREDIT— Credit spreads are extremely tight and would provide good protection if the US labor market deteriorates more than expected, making this an attractive hedge

  • “If The US has a bigger problem than we are thinking and and the labor market falls through a trapdoor and then credit will protect you really well. So credit is something to look at.”

    Dirk·33:06Hear it
• $NASDAQ— Markets that enter bubble territory (2 standard deviations above trend) typically give back most of their in-bubble gains eventually, based on quantitative backtesting

  • “The difference is that if you buy it when it enters a bubble, you will give it back eventually, most of it. Most of the in-bubble gains will be given back.”

    Dirk·23:51Hear it
• $NVDA— If three of the top seven market leaders fall below their 200-day moving average, it signals a dangerous breakdown in the bubble framework

  • “If three of the top seven break down, meaning they fall below the 200 moving average, that's a really dangerous sign.”

    Dirk·25:37Hear it

Not investment advice.