Short

SPY - The Crash - Part 9

Updated

: Strong Sell

Initiated: November, 2019

Immediate Target: $2,256.00

Facing the Financial and Economic Blow-Out

The financial systems have become based on the financialization and securitization of consumer spending and consumer debt.

If you stay at a hotel, your room payment goes through a whole series of companies or financial vehicles you’ve never heard of, some of which exist entirely to take a cut of that payment.

The same is true when you buy food, pay your utility bills, or buy a car. Your rent or mortgage payments, your car loan payments, are securitized and split up among scores of financial operations. Fifty years ago, financial speculation began to be far more profitable than investing in capital goods to produce anything, especially to produce it here in America. And your nation has become dependent on cheaper global value-added chains for the produced devices and goods it once produced.

Now what happens if we have to impose major quarantine in one economy after another—to save lives, which will most probably have to be done. Some of these so-called global supply chains will quickly become empty; it will be temporary, but it will disrupt every globalized national economy. As in China, production can come back. But consumption will be massively lost—demand will be quarantined—and will come back much more slowly.

Mass quarantine has now come to Italy, one of the G7 leading industrial economies. In the hope of containing an outbreak of Covid-19 in Lombardy, the region around Milan, and Veneto, around Venice, over 55,000 in the so-called Red Zone have been told not to leave the area for at least two weeks.

As this reality breaks through the illusions fed by central bank money-printing, the stock markets have fallen from record highs, taking massive plunges more rapidly than at any other time except the summer of 1929. Leading the collapse are consumer goods stocks, auto stocks, stocks of banks, and stocks of insurance companies. The plunge in bank and insurance company stocks points to the fact that U.S. Treasury interest rates are falling so fast that the immense mass of $600-700 trillion in derivatives contracts—which are overwhelmingly bets on interest rates—could blow big holes in these banks and their counterparties, the insurance companies.

Even bankers’ economic think-tanks and finance officials in Europe are suddenly talking about a Lehman Brothers moment in front of us. With a $30 trillion worldwide corporate debt bubble, not simply a historic high but an all-time high relative to GDP, there will be masses of corporate bankruptcies and a financial and economic breakdown—unless we act, and get the appropriate action from world leaders to create a new world credit system.

High Wave Count: Primary Wave 3

Micro-Wave Count:

Will update.

FMW

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coronavirus.jhu.edu/map.html

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Wall Street Still Wants the Fed to Step In and Fix ‘Frozen’ Short-Term Credit Markets

Short-term corporate debt markets are “frozen,” and Wall Street strategists have called for U.S. central bankers to intervene.

The Federal Reserve used most of its monetary-policy toolkit in a comprehensive stimulus effort Sunday, cutting rates to a range of 0% to 0.25% and unveiling $700 billion of Treasury and mortgage bond purchases to combat the potential economic fallout from the coronavirus pandemic.

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Here’s what is causing the commercial-paper crunch: Companies know they will need cash to keep operating while Americans halt travel, work remotely, and cancel plans to avoid spreading the virus, and they know that will require cash. They just don’t know exactly how much those adaptations will affect their cash flow, or how much other companies’ layoffs or furloughs will hurt the income of their customers.

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One way companies such as Boeing (ticker: BA) and Hilton Worldwide Holdings (HLT) are preparing for potential liquidity needs is by drawing on their CREDIT lines with banks. Investors worried last week that a cash grab could stress banks’ balance sheets, and those fears helped fuel moderate declines in bank bonds last week. (The ICE BofA U.S. Banking Corporate Index lost 5.6%.)

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But the reason most companies turn to bank credit lines in the first place is that they find it too expensive or difficult to borrow in commercial paper markets, wrote Bank of America’s strategists.

The strategists say it has become more difficult for companies (other than banks) to issue short-term debt to raise cash. As uncertainty grows around the outlook for companies’ cash flow, investors are demanding higher interest rates on commercial paper, or are just staying out of the market altogether.

There is another important reason institutional investors are reluctant to lend: They don’t know themselves how much cash they will need to **fulfill withdrawal requests** from their customers.

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Money-market funds—specifically the nearly $800 billion of “prime” funds that invest in commercial paper—have to take extra care with their cash. That is because they are required to impose fees and have the option to temporarily suspend withdrawals if their CASH levels fall to less than 30% of the fund’s net asset value.

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If cash levels do start to fall, investors may race to withdraw their money while they still can,** starting a run ** on those funds until (or after) a withdrawal “gate” is put in place. Money-market funds are allowed to suspend redemptions for only up to 10 business days every three months.

The Fed almost certainly wants to avoid any run on money-market funds, since that would make it even more difficult for companies to borrow in a “frozen” commercial-paper market, as Bank of America points out. In fact, many large multinational companies invest a significant portion of their cash reserves in money-market funds, and may need to withdraw cash themselves.

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the batteryof actions the Fed is taking to relieve the pressure within the Treasury market may not offset the cracks spreading through corporate debt markets. A commercial-paper facility is one step that authorities could take to help mend them.

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barrons.com/articles/wells-fargo-ceo-charles-scharf-bought-stock-right-before-mondays-plunge-51584446423

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Officially called the Primary Dealer Credit Facility, or PMDF, the program will supply key dealers of securities on Wall Street for at least the next six months of up to 90 day loans at ultralow cost to jumpstart trading again and boost liquidity across financial markets.

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“The facility is aimed at unclogging the financial system and giving an outlet for dealers to clear their inventory,” said Gregory Faranello, head of U.S. rates at AmeriVet Securities, in an interview. “There’s a logjam in the marketplace.”

This is one of the Fed’s 13 (3) emergency lending programs revived since the financial crisis that more directly aims to support the real economy, not only banks, other than its commercial paper funding facility, which was deployed earlier in the day.

Faranello said the wide range of collateral was key to unclogging the balance sheets of primary dealers, who may be struggling to ***off-load certain securities*** like corporate bonds from their inventory, particularly in a jittery market where expectations are running high for more defaults in the energy sector and for “fallen angels,” or corporations that see their coveted investment-grade credit ratings cut to speculative-grade, or junk-territory.

The hope is that after receiving the funds from the Fed’s PDCF program, the dealer could, in turn, buy more securities, although it ***specifically bars those tied to exchange-traded funds, mutual funds and certain other equities from being pledged***.

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***This “extremely cheap funding” could be used by dealers to soak up assets that have also “cheapened significantly in the risk asset rout of the past few weeks,” said Simons.***

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marketwatch.com/story/heres-how-the-feds-latest-credit-facility-could-finally-calm-rattled-markets-2020-03-17

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Dollar Funding Is Freezing Up, and the Fed Knows It

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Bloomberg Opinion) -- Demand for U.S. dollars is so high that now there’s a squeeze in credit markets. And the Federal Reserve knows it.

Big corporations from beer brewer Anheuser-Busch InBev SA to Boeing Co. are drawing down billions from their credit lines. Fearful of margin calls and flash crashes, lenders are piling on reserves. Adding to the hair-raising market volatility, banks that typically provide short-term dollar loans are stepping back.

To ease the strain in dollar borrowing, the Fed took action Tuesday, restarting a commercial paper funding facility for U.S. corporates. It also allowed banks and broker-dealers that trade directly with the Fed to borrow cash secured against some stocks and higher-rated bonds.

But that doesn’t do much to ease funding tightness overseas. For evidence, look no further than currency swaps, which measure how expensive it is to borrow in dollars. If a Japanese bank wants to offer a dollar loan to a client, the bank, pocketful of yen deposits, would typically lend its yen in exchange for an American bank’s dollars using currency swaps. This practice is common across Asian markets — and the costs are soaring.

Since the global financial crisis, foreign banks’ dollar lending has ballooned to $12 trillion from $10 trillion, the International Monetary Fund estimates. Lenders abroad like this business because dollar assets tend to offer higher returns and companies prefer to borrow in the currency.

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finance.yahoo.com/news/dollar-funding-freezing-fed-knows-013133113.html

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Still no where close to a bottom...

$2,256.50 will be broke.

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Criteria to bottom:

1. We must admit the current Monetary System is broke
2. We must implement a new sound credit system (Crypto)
3. The New System must be largely decentralized (We currently have a centralized system which benefits few)
4. The trillions in financial derivatives must be liquidated and bankruptcies must occur
5. True commodity price discovery

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Hourly Chart Update:

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Estimate -18% in the next 11 Days...

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Need to watch the dollar here.

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Extending Primary Wave 3 triggered

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11:40 a.m.: Stocks were down on Monday morning as Treasuries rose. Early in the morning, the Federal Reserve promised it would buy UNLIMITED AMOUNTS of Treasury and mortgage bonds, and unveiled lending facilities to support stressed consumer debt and corporate credit markets. But where monetary interventions are numerous, the fiscal side has been lacking thus far. Congressional lawmakers are still working to come to an agreement on a potentially multi-trillion dollar fiscal stimulus bill.

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Investors are dumping the safest of assets in favor of cash, which has forced the Federal Reserve and many of its peers into coordinated action to bolster dollar swap lines.

"Central banks just have to keep providing liquidity since nobody knows the extent of ***dollar funding shortage***," said Mr Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo.

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The Central Bank Scramble:

Australia's central bank said Monday it would spend as much as A$4 billion ($3.4 billion) on government debt, sending 10-year yields down as much as 25 basis points.

The RBA and BOJ also continue to pour in funds through repurchase operations.

The RBA pumped in more than A$40 billion so far this month through repurchase agreements, pushing liquidity in the system to records. As a result, the spread between repo rates and overnight index swaps has compressed to the tightest levels of the year.

The Bank of Thailand said Sunday it is stepping in to arrest slumps in fixed-income mutual funds and corporate bonds.

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The yield on New Zealand's 10-year bonds plunged as much as 54 basis points.

The Reserve Bank said it would purchase up to NZ$30 billion ($24.7 billion) of sovereign bonds over the next 12 months. The program will begin this week with NZ$500 million of purchases.

Japan's benchmark 10-year yield was down 2.5 basis points at 0.05 per cent after the BOJ offered to take in 800 billion yen of three-to-10 year securities in an unscheduled operation on Monday. That was in addition to scheduled buying worth about 150 billion yen in longer maturities.

"Central banks around the world see the provision of funds as more effective right now than cutting rates," said Mr Shuichi Ohsaki, chief rates strategist at Bank of America Merrill Lynch in Tokyo.

"The BOJ on its part is conducting funding operations to ensure yields will not rise."

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straitstimes.com/business/economy/central-banks-at-full-throttle-buying-bonds-to-control-markets

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“We’ve moved from risk off to a phase where major players are competing with each other for the safety of holding dollars in cash,” Ishizuki, FX strategist at Daiwa Securities, told CNBC.

“There are still a lot of investors who need to sell riskier assets, and they want to hold their money in dollars,” he added.

U.S. Treasury Secretary Steve Mnuchin said that Congress is close to finalising a stimulus package of up to $4 trillion on Sunday, including a direct cash payment of $3,000 to families.

The Federal Reserve also expanded its currency swap lines to a further nine countries on Thursday.

The AUD/USD pair lost 0.44% to 0.5773 as the ASX 200 entered bear territory. Lawmakers met for a special sitting in the morning to pass an additional A$6 billion ($3.45 billion) package to avert recession and save jobs.

The NZD/USD pair was down by 0.82% to 0.5660 as the dollar reaches a near-11 year high against the Kiwi counterpart. The country is racing towards a shutdown beginning tomorrow to combat the spread of COVID-19 in the country.

The USD/JPY pair was down 0.78% to 109.94, weakening from levels below 108 seen last week, as Japan returned from a national holiday on Friday.

Meanwhile, the GBP/USD pair jumped almost 2% late last week following the news that the U.K proposed emergency legislation to contain the pandemic on Friday. The pair last traded at 1.1692 today, up 0.44%.

The USD/CNY pair flattened to a 0.01% gain of 7.0960.

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finance.yahoo.com/news/forex-u-dollar-falls-covid-015900911.html

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FibMarketWatch.com - Jan. 30th 2019 - Global Fiat Currency - Strong Sell

fibmarketwatch.com/2019/01/global-fiat-currency-strong-sell/

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fredblog.stlouisfed.org/2020/03/fourth-large-scale-asset-purchases-program-a-new-hope/?utm_source=series_page&utm_medium=related_content&utm_term=related_resources&utm_campaign=fredblog

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NEGATIVE RATES, QUANTITATIVE EASING, FORWARD GUIDANCE

The narrow question facing the Fed is simple. A recession will come. Interest rates will hit zero again. Now what? (As I write, the Covid-19 virus is spreading, and the economy is screeching to a halt. The event may have already happened by the time you read these words.)

Should the Fed prepare to set interest rates substantially below zero? You pay the bank to hold your money, and they pay you to take out a mortgage? Should the Fed prepare for even more massive Treasury bond purchases, increasing the supply of reserves by additional trillions? Should the Fed add purchases of mortgages, stocks, and corporate bonds, as the Bank of Japan and European Central Bank have done? Should it prepare for aggressive direct lending, or directly try to prop up asset prices? Should it prepare an arsenal of speeches, or announce new, and binding, inflation targets and interest rate rules, hoping to stimulate today by promises of or commitments to future actions?

In my opinion, no.

Substantially negative interest rates would require big structural changes to our banking and financial systems. Someone has to reprogram every computer to accept a minus sign! We have to get rid of cash and solve the consequent delicate balance of privacy versus law and tax enforcement in a fully cashless world. We have to change lots of accounting and tax payment conventions that allow people to pre-pay without penalty. It's a big and disruptive job.

Evidence and logic on asset purchases—quantitative easing (QE)—tell us that they had no prolonged effect. Long-term rates have been on a downward trend since the 1980s. In a graph,2 you cannot see any sign of QE.

Remember what QE is. If the Fed just gave people money, that might make them spend. But the Fed exchanges money for bonds. And when money and bonds pay the same interest, they are perfect substitutes. More interest-bearing reserves and fewer bonds is only a slight readjustment of the maturity structure of government debt. If the Fed takes a $20 bill and gives you two 5s and a $10 in return, how does that make you spend more? It doesn't. If the Fed takes your red M&Ms and gives you green M&Ms in return, how does that help your diet? It doesn't.

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Moreover, the Treasury was selling faster than the Fed was buying, to fund massive deficits.3 Overall people held more, not less, Treasury debt and more long-maturity Treasury debt. And we have seen vast changes in the maturity structure of the debt over history with no visible effect on interest rates.4 The notion that people have a fixed desire for specific maturities of government debt fits neither experience nor simple economic logic.

The economics literature concludes that QE was at best a signal—if the Fed is going to do something this wild, the Fed must think the problem is really bad and interest rates are likely to be low for a long time.5

Now, by the same token, if QE doesn't really change anything, it isn't doing any harm. But don't count on massive Fed purchases of Treasury securities to stop the next recession.

Buying mortgages, bonds, and stocks might have some effect on those prices. (At least for a while. Demand and supply curves for assets are flatter then you think, especially after a month or two.) But this kind of direct intervention in asset markets has enormous risks. Does the Fed really want to get involved with propping up the stock market? Or deciding which business should get cheap credit and which should not?

My judgment reflects a deeper issue that we should state and debate. In my view, negative interest rates and asset purchases are not hugely stimulative. So there are no great benefits to balance against the costs.

If you think a 2 percent negative overnight rate and another trillion dollars of Treasury purchases is all it would have taken for the agonizing 8-year recovery from the Great Recession to happen in 1 or 2 years, then the case is much stronger. But if these actions stimulate, then it was a crime for the Fed not to do far more.

I don't think that's true, and I don't think the Fed does either. If that were true the Fed would have done more. If that were true, Japan and Europe, who did go negative and bought more assets than we did, would have grown like gangbusters. They did not. But face the logic: Either the Fed had a powerful tool but failed to use it, or it had a mostly symbolic tool that we should not count on to do much next time.6

Why did the Fed choose a finite quantity of QE, leaving us in an eternal debate about whether it did or did not lower interest rates? Why did the Fed not just say, "We want the 10-year Treasury rate to be 2 percent. (Or 1 percent. Or 0 percent). We will buy bonds until that price is achieved. Nay, we will buy any quantity of bonds at a 1 percent yield and set the darn price." I think the answer is obvious: The Fed was worried about just how many bonds it would have to buy, or that it could not change market rates even by buying all the bonds. Then the powerlessness of QE would have been revealed. Better to keep the smoke and mirrors going.

"Forward guidance" is the idea that even though the interest rate is stuck at zero today, the Fed can stimulate the economy by giving speeches about what it will do in the future. Once the recession ends, the Fed will keep interest rates low for a substantial period of time, or the Fed will allow inflation above target for a few years. This change in expectations is supposed to boost the economy today.

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The Fed's main job is not to screw up—not to cause a recession, not to cause or worsen a financial panic. That the Fed did not repeat the mistakes of 1929-1933, and many since then, is praiseworthy.

But money is oil in the economic car, not gas. Once the car is full of oil, adding more oil does not help. Monetary and financial frictions are inequality constraints. Once an inequality constraint is slack, pouring more on the slack side does no good.

We face a similar situation as I write. The long-awaited slowdown seems to be happening as the economy slows down due to a spreading disease. The Fed has cut the overnight rate. But is demand side stimulus of any use? Should people look at low rates, borrow some money, and go on a cruise? Will they? No. Neither low overnight rates, nor Treasury purchases, nor promises about interest rates after the virus has passed will raise output now. Supply, public health, and avoiding a cascade of failures in businesses that must stay shut down for a while so the economy can restart easily are the challenges for policy.

A counterargument I hear from many people at the Fed amounts to this: Sure, we know negative rates, QE, and forward guidance don't do much. But we have to be seen to do something in hard times. We have to keep up the appearance that we're in charge. It's a symbolic, political PR move.

I think there is a good deal of truth to this analysis of the Fed's actions, but questionable courage and wisdom. It would indeed have been politically difficult for the Fed to state the facts—this recession is going on far too long but there is nothing we can do about it. But I also think that being honest about central banks' limited ability to fix everything would be good for central banks, and for our politics and economic policy. Stimulus has limits.

***"Structural adjustment," fixing broken microeconomics, needs greater emphasis. And sooner or later they will pull aside the curtain. Having pretended to be so powerful will come back to haunt central banks. ***

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Good read: research.stlouisfed.org/publications/review/2020/03/20/strategic-review-and-beyond-rethinking-monetary-policy-and-independence

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Paper Tiger:

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I'm counting around 6-10 Trillion dollars being pumped into markets just in the US...

(Bloomberg) -- The Federal Reserve has taken unprecedented steps to lessen the impact of the coronavirus pandemic on global financial markets and the U.S. economy.

Beginning with an emergency interest-rate cut announced March 3, the Fed has run through its 2008-09 crisis playbook and leapt into uncharted territory.

The steps include massive bond purchases, a slew of emergency facilities to bolster credit markets, actions with foreign central banks to ease the supply of dollars world wide and programs for lending directly to American businesses.

Here is a summary of those steps:

Rate Cuts

After a half-point cut on March 3, the Federal Open Market Committee held another unscheduled meeting on March 15 and lowered the target range for the benchmark federal funds rate to 0-0.25% -- matching the near-zero rates of the financial crisis. They also pledged to keep rates there until the economy is “on track to achieve its maximum employment and price stability goals.”

Bank Regulations

Starting March 9, the Fed began giving banks new guidance and new rules designed to free them to lend more to businesses and households. These eventually included lower capital and liquidity requirements, an elimination of reserve requirements and clearance to modify loan terms without consequence.

Repo Expansion

In three steps starting March 9, the New York Fed began offering additional liquidity to short-term funding markets. They are currently offering $1 trillion a day in overnight repurchase agreements and plan approximately $4 trillion in term repo during the cycle that ends April 13.

Quantitative Easing (QE)

On March 12 the central bank returned to broad Treasury bond purchases, using $60 billion a month that was previously directed to Treasury bills to help boost bank reserves. Purchases were aggressively expanded on March 15 to at least $500 billion in Treasuries and $200 billion in mortgage-backed securities.

Then on March 23 the Federal Open Market Committee declared QE unlimited, agreeing to purchase assets “in the amounts needed to support the smooth functioning of markets.” They also added commercial MBS to the buying list.

Swap Lines

The Fed has expanded the agreements it has with foreign central banks that allow it to exchange currencies, in this case pumping U.S. dollars out across the world to ease access to the world’s most important currency.

On March 15 and March 20, the Fed enhanced existing swap lines with five major central banks, including the ECB, BOJ and BOE, and on March 19 it created new, temporary swap lines with nine additional central banks, including those in Brazil, South Korea, Mexico and Sweden.

Commercial Paper Funding Facility (CPFF)

Fed announces an emergency facility on March 17 to purchase short-term company IOUs directly from U.S. corporate and municipal issuers. The total of eligible securities exceeds $1 trillion. The program is backstopped with $10 billion from the Treasury.

Primary Dealer Credit Facility (PDCF)

Operational on March 20, this emergency facility buys a wide range of securities, including investment-grade corporate debt, municipal debt, and mortgage- and asset-backed securities from primary dealers -- the big banks and broker-dealers licensed to transact with the Fed.

Money Market Fund Liquidity Facility (MMFLF)

Up and running on March 23, this emergency facility finances the purchase of of high-quality assets from U.S. money market mutual funds, including government debt, commercial paper and municipal debt. Eligible securities are estimated at $600 billion to $700 billion, according to Fed officials, backstopped with $10 billion from the Treasury.

Primary Market Corporate Credit Facility (PMCCF)

Announced March 23, this emergency facility will buy investment-grade corporate debt directly from U.S. issuers. Fed gives no size total program. Backstopped with $10 billion from the Treasury.

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Secondary Market Corporate Credit Facility (SMCCF)

Announced March 23, this emergency facility will purchase investment-grade corporate debt from U.S. issuers in the secondary market, and in ETFs that invest in that debt. Fed gives no size total program. Backstopped with $10 billion from the Treasury.

Term Asset-Backed Securities Loan Facility (TALF)

Announced March 23, this emergency facility will use $100 billion to purchase securities backed by credits to consumers and small businesses, including credit-card receivables, student loans, auto loans and leases, equipment loans and some small business loans. Backstopped with $10 billion from the Treasury.

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The Fed is buying roughly 5x more MBS (Derivatives) than 2008...

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finance.yahoo.com/news/fed-unbound-u-central-bank-161746186.html

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Weekly:

EMA 21

EMA 33

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The Fed is going to buy ETFs. What does it mean?

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In large part, the Fed is using ETFs to accomplish this goal because it’s harder to buy individual bonds than stock positions. “ETFs offer the benefits of impacting thousands of bonds in one trade,” Rosenbluth told MarketWatch.

As a second step, Rosenbluth and others think the Fed’s tiptoe may help calm parts of the ETF ecosphere, which has been rattled by record outflows, not just the bond market. For one example, as previously reported, the big investment-grade corporate-bond fund iShares iBoxx $ Investment Grade Corporate Bond ETF LQD, -0.351%, closed on one particularly volatile day about 5% lower than the stated value of its holdings. That means anyone who tried to sell LQD on Thursday received about 95% of what they might have expected. A powerful market stabilizer like the central bank may help buffer strains like those.

On Monday, after the Fed’s announcement, LQD had gained about 6% and a competitor, Vanguard's Intermediate-Term Corporate Bond Fund VCIT, 0.026%, was about 5% higher.

But Dave Nadig, chief investment officer and research director for ETF Flows, noted in a blog post Monday morning that the Fed’s purchases won’t help with the challenges facing bond ETFs right now. ETF issuers rely on third-party bond pricing services to help them determine pricing for bonds, which don’t trade frequently under normal circumstances, let alone in a crisis. Those services, often seen as imperfect despite being the best option available, help inform the price of the fund itself.

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More to the point, as Blitz notes, “How we got here is ten years of successive liquidity pumped into the market, forcing money into risk assets, building up the economy through financial asset inflation because the real side of the economy didn’t come along to the same extent. The Fed created this monster so it has to be on the other side of it now.”

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marketwatch.com/story/the-fed-is-going-to-buy-etfs-what-does-it-mean-2020-03-23

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1933
June 05
FDR takes United States off gold standard

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On June 5, 1933, the United States went off the gold standard, a monetary system in which currency is backed by gold, when Congress enacted a joint resolution nullifying the right of creditors to demand payment in gold. The United States had been on a gold standard since 1879, except for an embargo on gold exports during World War I, but bank failures during the Great Depression of the 1930s frightened the public into hoarding gold, making the policy untenable.

Soon after taking office in March 1933, Roosevelt declared a nationwide bank moratorium in order to prevent a run on the banks by consumers lacking confidence in the economy. He also forbade banks to pay out gold or to export it. According to Keynesian economic theory, one of the best ways to fight off an economic downturn is to inflate the money supply. And increasing the amount of gold held by the Federal Reserve would in turn increase its power to inflate the money supply. Facing similar pressures, Britain had dropped the gold standard in 1931, and Roosevelt had taken note.

On April 5, 1933, Roosevelt ordered all gold coins and gold certificates in denominations of more than $100 turned in for other money. It required all persons to deliver all gold coin, gold bullion and gold certificates owned by them to the Federal Reserve by May 1 for the set price of $20.67 per ounce. By May 10, the government had taken in $300 million of gold coin and $470 million of gold certificates. Two months later, a joint resolution of Congress abrogated the gold clauses in many public and private obligations that required the debtor to repay the creditor in gold dollars of the same weight and fineness as those borrowed. In 1934, the government price of gold was increased to $35 per ounce, effectively increasing the gold on the Federal Reserve’s balance sheets by 69 percent. This increase in assets allowed the Federal Reserve to further inflate the money supply.

The government held the $35 per ounce price until August 15, 1971, when President Richard Nixon announced that the United States would no longer convert dollars to gold at a fixed value, thus completely abandoning the gold standard. In 1974, President Gerald Ford signed legislation that permitted Americans again to own gold bullion.

Citation Information
Article Title
FDR takes United States off gold standard

Author
History.com Editors

Website Name
HISTORY

URL
history.com/this-day-in-history/fdr-takes-united-states-off-gold-standard

Access Date
March 26, 2020

Publisher
A&E Television Networks

Last Updated
July 28, 2019

Original Published Date
November 24, 2009

BY HISTORY.COM EDITORS

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Modern Monetary Theory or Modern Money Theory (MMT) or Modern Monetary Theory and Practice (MMTP) is a heterodox macroeconomic theory and practice that describes the practical uses of fiat currency in a public monopoly from the issuing authority normally the governments central bank. Effects on employment are used as evidence that a currency monopolist is overly restricting the supply of the financial assets needed to pay taxes and satisfy savings desires.[1][2] MMT is an evolution of chartalism and is sometimes referred to as neo-chartalism. Its macroeconomic policy prescriptions have been described as being a version of Abba Lerner's theory of functional finance.

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MMT's main tenets are that a government that issues its own fiat money:

Can pay for goods, services, and financial assets without a need to collect money in the form of taxes or debt issuance in advance of such purchases;
Cannot be forced to default on debt denominated in its own currency;
Is only limited in its money creation and purchases by inflation, which accelerates once the real resources (labour, capital and natural resources) of the economy are utilized at full employment;
Can control demand-pull inflation[5] by taxation and bond issuance, which remove excess money from circulation (although the political will to do so may not always exist);
Does not need to compete with the private sector for scarce savings by issuing bonds.

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Primary Wave 5 Target Area:

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WAR?

The coronavirus crisis could soon become the trigger for the systemic collapse of this system, which is already hopelessly bankrupt with $2 quadrillion in total
financial aggregates. The massive issuance of so-called repo credits by the U.S. Federal Reserve since September 17 of last year, the continued policy of quantitative easing, and the zero and even negative interest rates by the ECB, the Bank of England, the Bank of Japan, and other banks, makes this clear. Within this system, the only choices left are an uncontrollable chain-reaction collapse that could be triggered by any one of many causes, such as the debt crises of emerging market countries, or the collapse of the U.S. corporate bond bubble, or of any major U.S. or European bank, or by a hyper-inflationary blowout. What happened in Germany in 1923 could be repeated in all countries that are part
of this monetary system. The consequences of such a collapse would be chaos, the loss of millions of lives, and possibly war.

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Another 16% down or 30% down?

That is the question.

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Borrowing to pay dividends instead of taking care of workers
Buying back stock instead of looking at strategic alternatives
ETFs ETFs ETFs - How many ETFs closed last week?
MBS
Derivatives

Why?

The Federal Reserve's Policies

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Modern Monetary Theory (Money Printing)...

Ledgers matter...

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The END!

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Could be a big day today...

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Primary Wave 5 has begun...

Above Micro-wave 1 & 2

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Updated Target Area:

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Immediate Timeframe:

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Updated Chart:

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We had a complex correction...

Makes the fall worse...

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Price-Action looked like a Fed Pump...

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Watch for the 33 EMA crossing the 50 EMA (Weekly)

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How many trillions of dollars did the Fed pump into this market BEFORE COVID-19?

How many trillions of dollars is the Fed continue to pump into the market buying ETFs and everything under the sun...

The Fed isn't even printing money its digitally creating money here...

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*continuing

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Blue = M1 (Money Stock)

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Crypto Market Cap V. SP500 V. M1

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High Wave Timeframe:

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Market Should be stabilizing around June.

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Market Time Frame:

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Wave 5 usually ends between Fib Time Markers 5 & 8

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Wave 5 Extensions can go past Fib Time Marker 8

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wsj.com/articles/fed-preparing-to-purchase-new-small-business-payroll-loans-11586194588

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WASHINGTON—The Federal Reserve said Monday it would create a new program to finance loans that banks and other lenders make through the government’s emergency small-business lending program.

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Federal Reserve Doing ‘Whatever It Takes’ to Keep Economy Afloat Amid Coronavirus
Central bankers worried low-income workers would be among the most susceptible to coronavirus-related economic upheaval

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Fed may nibble at junk bond market, says UBS

The Federal Reserve could dip its toes in the market for sub-investment grade corporate bonds, or junk debt, according to credit analysts at UBS.

They argue the U.S. central bank is naturally reluctant to start opening up the users of its alphabet soup of emergency lending programs to indebted corporations rated below investment grade, due to worries about buying bonds from issuers which already had their fair share of financial issues before the COVID-19 pandemic and could therefore see a surge of defaults during the expected economic downturn.

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Founder of world’s largest hedge fund doubles down on ‘cash is trash’ argument, warning of debt-fueled inflation

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“I believe that increasingly there will be questions by bondholders who are receiving negative real and nominal interest rates, while there is a lot of printing of money, about whether the debt assets they are holding are good storeholds of wealth. I believe that cash, which is non-interest-bearing money, will not be the safest asset to hold.”
— Ray Dalio

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marketwatch.com/story/founder-of-worlds-largest-hedge-fund-doubles-down-on-cash-is-trash-argument-warning-of-debt-fueled-inflation-2020-04-08?mod=MW_article_top_stories

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Here is THE PROBLEM

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DXY V. SP500

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Now add M1 (Money Stock)

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It's over...

Just a matter of timing now...

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Printing/Digitally Creating Money is becoming less and less effective...

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And the Private Fed knows it...

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DXY V. M1

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Get your positions ready!

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Sell off to begin soon...

<24 Hours

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Lots of Complex Correction here...

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Above: 5 Min Wave Count

This is the same market manipulation that's been going on heavily since 2018.

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A handful of stocks are holding up the entire stock market here due to ETFs

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Netflix and Amazon will be the tell...

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When American colonists launched their revolution against Britain, they quickly encountered a second but invisible enemy that threatened to wipe out the new Continental Army: highly contagious smallpox.

But luckily for the young nation, the army’s commander was familiar with this formidable foe. George Washington’s embrace of science-based medical treatments—despite stiff opposition from the Continental Congress—prevented a potentially disastrous defeat, and made him the country’s first public health advocate.

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nationalgeographic.com/history/2020/04/george-washington-beat-smallpox-epidemic-with-controversial-inoculations/

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Washington’s encounter with the virus proved fortunate for the new nation. In 1775, smallpox arrived in Boston, carried by troops sent from Britain, Canada, and Germany to stamp out the growing rebellion. Many of these soldiers had been exposed and were therefore immune, but the vast majority of American colonists were not.

In the aftermath of the battles of Lexington and Concord, Washington’s Continental Army had set up camp across the Charles River from the stricken city. To the dismay of many patriots seeking refuge from the British, the general prohibited anyone from Boston from entering the military zone. “Every precaution must be used to prevent its spreading,” he sternly warned one of his subordinates about the virus. To John Hancock, the president of the Continental Congress, Washington vowed to “continue the utmost Vigilance against this most dangerous enemy.”

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Time-Frame:

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Reminder: Watch for the Weekly 33 EMA crossing the 50 EMA...

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