Malcolm Graham
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Malcolm Graham in Analytics & more!,

This could be ‘the scariest chart in the financial markets right now’

The Korean missile crisis is sharing the spotlight today with retailers and darlings-turned-duds Snap and Blue Apron, as those companies reveal their earnings.

That’s after Disney’s latest update ended up doing more damage to the Dow yesterday than any North Korean angst.

Investors could be taking comfort in the muted reaction so far to the U.S.-N.K. tensions, seeing the market’s shrug of its shoulders as a sign that a “Cuban Missile Crisis-type showdown might not be the most likely outcome,” says CFRA’s Sam Stovall.

Others are grouchier about how traders have responded. The “reaction to the first meaningful nuclear threat in nearly three decades is simply another sign of the complacency in the market,” argues JonesTrading’s Michael O’Rourke.

In a similar vein, trader Tiho Brkan warns that complacency among investors is continuing as warnings mount. He frets about small caps underperforming, chip stocks stalling, bad breadth and more.

“The majority of risky assets look as if they are priced for perfection in the short to medium term,” and “possibly even for the longer term,” Brkan says in a post at his Atlas Investor blog, for our call of the day. He says he is anticipating a correction, though he concedes the market has in the past ignored red flags and kept marching higher.

Brkan is particularly keyed up about what he sees as warnings signals from the bond market.

“The scariest chart in the financial markets right now is European high yield (junk bonds) relative to the yield of U.S. Treasuries,” he writes, offering the chart below.