Inflationary spike and now financial crisis?

This is a continuation of my topic about general depression start from 4Q25 beginning 2026. While I couldn’t predict Iran’s war and collapse of oil supply, I could predict “THE EVENT” without predicting what’ll be behind it. I also can predict this/these EVENT(s) will force global economy into meltdown.

As I said many times you should not try to predict events, because that’s impossible, but can predict they will happen. Depends on the setup they can be bad to meltdown global economy or they might be good to lift up global economy.

As oil spikes getting out from bearish setup, now market approaching to level where suddenly this inflationary spike will morph into pure financial crisis. What will be THE EVENT? I have no idea and for sure I won’t predict it (I still bet it’ll be HKD peg collapse – but will be surprised if that guess will succeed).

Here’s the logic I’d like to show you why I think in very short period of time we’ll enter massive financial crisis and deflation.

SPX returns below 1929-2000 trend

So far this chart did not obey cycle charts, but it looks like in reality it obeys with just a small level of a bull trap. Trend set by two peaks 1929 and 2000 also hit 2024. My idea about US03MY (M)MA50 break so far placed almost perfect top here :

SPX/GOLD

So far doors are closed and locked for any recovery. During 2008 we see how just before an epic credit meltdown caused by inflationary spike this ratio was going up post blue (3M)MA200 break. Everything is baked and cooked. 5th time in 100Ys post 1931, 1937, 1973, 1Q2008 and 4Q2025.

Because cycle during 2008 was not closed correctly this is IMO a continuation of economic depression transition just to close secular disinflationary cycle for good.

Now it’s really hard to judge WHEN this cycle has come to an end. SPX/GOLD points for 2000 – that was the highest peak since 1980 – the start of secular disinflationary cycle. You’ll see plenty of deep macro data that peaked in 2000 like velocity of money or labor force participation rate. There’re way more just giving you 2 examples from my memory.

But because stock market was juiced to higher level than 2000, despite way lower SPX/GOLD bounce than 2000 it’s still fair to use 2018 (DJI/GOLD peak) and 2021 (SPX/GOLD peak) as peak of the cycle, despite the fact that 2011 bounce is just economic/cyclical dead cat bounce. That was a “time buy” at the “way bigger cost”.

US02Y – the road to financial crisis using inflationary spike

It always so far works this way. You see during 2020 how it worked. Break below red (M)MA50 later couple months of retest and financial crisis. This is exactly the same setup now. I bet this 4.00% will be rejected.

Spike of inflation in disinflationary cycle will always lead to deflationary collapse :

OIL

Have in mind that once US02Y retests (M)MA50 the same moment oil hits multiple level of resistance around 120$. If financial crisis hits oil will … crash.

I know there’re bets about 200$ oil, but so far I don’t favor any side of the oil, but there’s a magical dependency between US02Y retesting (M)MA50 and same time oil retesting key resistance level.

History shows once US02Y crashes = oil crashes with it, so does it mean this 120$ level oil spike and raise from 3.30% to 4.00% US02Y caused financial crisis? That’s possible. During 2008 it needed raise from 1.30% to 3.00%, but 2026 <> 2008 where the economy is way more leveraged and way more fragile.

10Y/3M spread

Once 10Y/3M uninverts and jump > +60bps permanently it’s game over for the stock market. Some time ago I said I believe this time the break will be permanent as SPX/GOLD broke (3M)MA200 in 4Q25 and US03MY broke (M)MA50 in 4Q25 too

And we’re now +73bps.

Another bet is the $$$, which will be raising the whole way up until we reach > 300bps. During 2022 we managed to rescue the cycle, but quick move up to SPX/GOLD chart and you’ll see that blue (3M)MA200 was not broken during that time giving us a hint – cycle might get a recovery.

10y/3m also tells you since 2009 once 10y/3m jumped > 300bps we have not entered ANY true technical bear market, because 10y/3m has not arrived > 300bps (and SPX has not broken red (M)MA50 from the first chart), we live all the time in bull market corrections regime, but now it might be different.

The $$$ power comes from YUAN and FXI weakness

The power of the $$$ is the weakness of the Yuan.

You see the last possible DXY bottom level called : 96-96.5

So far it holds and coming back to trend opening path towards 2 peak levels 120 or 160. 10y/3m > 1000+ days of inversion still pointing for 160 level (previous record belonged to 1929 – 700 days). I know it sounds crazy so far.

Calling weak $$$ because of Trump’s policies or because of deficits only tell people have no idea how it works or how to interpret the facts.

We can’t look on $$$ without Yuan. I’m still trying to figure out what level/MA will kick in once DXY finds its last possible bottom level around this 96-96.5

In January 2026, 2 days after my article about another Great Depression coming in 2026, I posted final call for Yuan.

This is the final call for the Yuan

3 months later – not much changed, $$$ still reversing, Yuan still trying to find its peak (or USDCNH finds its bottom). So far on (M) view like above we see yellow (M)MA100 -> typical border of a bull/bear trap – this time bear trap. On 3M we see violet (3M)MA20, still 2 days left to close (M) candles for March 2026.

But just like SPX comes back below 1929-2000 trend, FXI (we need to have everything in $$$ to compare) placed a peak of its bear market rally and now keeps tanking giving us a sign that future Yuan weakness will arrive.