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SPY - The Crash - Part 8

Updated

SP500 : SHORT

All-Time Chart: Grand Super-Cycle Over?

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.

larouchepub.com/other/2020/4710-facing_the_economic_blowout.html

restaurantbusinessonline.com/financing/restaurant-bankruptcies-are-increasing-more-could-be-way

The Ending Diagonal:

The Level:

The Test:

Monthly:

REPO:

The Hedge:

The Dollar:

High Yield Debt:

The Perfect Storm.

Will Update.

-FMW

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Micro-Wave Count:

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Minor Wave 1 (Hourly):

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Daily Chart:

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Target Area: $2592-$2256
Timeframe: 42 Days

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Immediate Target:

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$2984.25-$2923.75

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Micro-Wave Sequence Update:

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Immediate Target Area Hit: $2984.25

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Ginossim, The mechanism that keeps banks operational. Overnight lending. A repurchase agreement (repo) is a form of short-term borrowing for dealers in government securities. In the case of a repo, a dealer sells government securities to investors, usually on an overnight basis, and buys them back the following day at a slightly higher price.

If REPO freezes the banks can't function properly.

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REPO: thestreet.com/topic/46942/repo.html

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ACCOUNTING STANDARDS UPDATES—EFFECTIVE DATES
fasb.org/jsp/FASB/Page/SectionPage&cid=1218220137102

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During the first three quarters of 2019, 1,160 CEOs left their positions, according to the staffing firm Challenger, Gray, & Christmas.
This figure exceeds the number of CEOs who departed during the same nine-month span at the height of the 2008 recession (which saw 1,132 CEO departures).
The tech sector has seen the second-highest number of CEO departures, with 154 executives in that industry leaving their positions.
In the first week of December, four CEOs announced their resignations: Susan Desmond-Hellmann at the Bill & Melinda Gates Foundation, Oscar Munoz at United Airlines, Larry Page at Alphabet, and Mark Okerstrom at Expedia.
The latest departure is Boeing CEO Dennis Muilenburg, who resigns amid fallout from two plane crashes that occurred under his tenure.

Disney CEO - Out
Salesforce Executive - Out

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More than 1,000 CEOs stepped down during the first three quarters of 2019, according to a report published by the staffing firm Challenger, Gray, & Christmas — 1,160 executives, to be exact.

Departures in the first nine months of this year exceeded the number of CEOs who stepped down during the first three quarters of 2008 (1,132), which was the height of the Great Recession. This is also the year with the highest CEO turnover in the first three quarters that Challenger, Gray, & Christmas has seen since the firm began tracking departures in 2002.

*The tech sector has the second-highest number of CEO departures, at 154, including the high-profile departures of Adam Neumann from WeWork and Kevin Burns from Juul.*

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businessinsider.com/biggest-ceo-departures-wework-juul-ebay-warner-bros-metlife-2019-10

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NEW ACCOUNTING STANDARDS UPCOMING EFFECTIVE DATES FOR PUBLIC AND PRIVATE COMPANIES

In this publication, we’ve summarized the new accounting standards with mandatory[1] effective dates in the first quarter of 2020 for public entities, as well as new standards that take effect in annual 2019 financial statements for nonpublic entities. Those effective dates reflect the FASB’s recent decision to defer certain major standards. We have also included links to BDO’s guidance on each pronouncement.

In the next filing season, calendar year-end public entities will prepare their annual 2019 financial statements, followed closely by their March 31, 2020 first quarter reports. The 2019 annual filings will disclose the anticipated effects that the FASB’s new standards will have on the financial statements when they are adopted under SAB 74.[2] Most notably, the current expected credit losses[3] (CECL) standard will be adopted by SEC filers, excluding smaller reporting companies, in the first quarter of 2020.[4] Any standards issued after the date of this publication are unlikely to impact first quarter financial statements but should be considered in preparing SAB 74 disclosures.

On a similar timeline, calendar year-end nonpublic entities will prepare their annual 2019 financial statements reflecting standards that took effect in 2019. For many nonpublic entities, the new revenue standard[5] will represent a significant change and may involve substantial effort.

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bdo.com/getattachment/d5ad2cf3-19e7-40b3-96c7-f9ebafdca9a6/attachment.aspx?ASSR_ASU_Final-(1).pdf

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SP500 V. TOTAL - TOTAL MARKET CAP OF CRYPTO

The Hedge. The New Monetary System. An Immutable Ledger.

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Micro-Wave Update:

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Key Level 2923.75 Broke...

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Minor Wave Count:

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$2893.75 is the next level to watch...

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When that breaks look to $2843...

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1 Minute Wave Count:

New Wave Sequence should be beginning if $2997 holds...

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Above: 5 Second Count

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Correction just finished...

Expect to see hard selling into close...

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Micro-Wave Count:
-Ran out of time for the 5th Micro-Wave Sequence to begin...

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5th Micro-Wave Target Area:

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Immediate Target: $2896-$2841

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Hourly Chart Update:

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SP500 V. TOTAL CRYPTO

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Primary Wave Count:

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143 Year Grand Super Cycle:

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Wave Rule - 2/3 Impulse Waves near Equality
-Wave 3: 2452.20%
-Wave 5: 2447.36%

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Wave Rule: Irregular Corrections manifest after Wave Sequences with Double Extensions

Irregular Correction: B Wave exceeds Terminal 5th Wave

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The Double Extension:
-Wave 3
-Wave 5

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All-Time Fib Channel: Monthly

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Monetary Policy in the Great Depression: What the Fed Did, and Why

The unemployment rate went from under 4 percent in 1929 to 25 percent in 1933. Real GNP did not recover to its 1929 level until 1937. The unemployment rate did not fall below 10 percent until World War II.

****During the Depression, proponents of the liquidationist view argued against increasing the money supply since doing so might reignite speculation without promoting an increase in real output. Indeed, many argued that the Federal Reserve had interfered with recovery and prolonged the Depression by pursuing a policy of monetary ease.****

The most important explanations of Federal Reserve behavior during the Depression, however, appear to be the dedication of policymakers to preserving the gold standard and their attachment to policy guides that gave erroneous information about monetary conditions. Benjamin Strong's death robbed the System of an intelligent leader at a crucial time and undoubtedly imparted a contractionary bias to monetary policy during the Depression. It seems
clear, however, that Strong's death did not cause a fundamental change in regime. Strong believed in the gold standard, and he would not likely have done anything to jeopardize gold convertibility of the dollar. There was also little deviation from either the gold sterilization or the countercyclical policy rules that Strong had developed during the 1920s—at least until the fourth quarter of 1931, when maintenance of the gold standard became the overriding goal of policy. Thus, while leadership changes and interest group pressure probably had some effect, monetary policy during the Depression was not fundamentally different from that of previous years. Federal Reserve errors seem largely attributable to the continued use of flawed policies.

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Good Read: fraser.stlouisfed.org/files/docs/meltzer/whemon92.pdf

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Between February 24 and July 27, 1932, the Fed bought $1.1 billion of government securities.

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snipboard.io/7JIzcB.jpg
federalreserve.gov/releases/h3/20200227/h3.pdf

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AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND THE MONETARY BASE (Above)

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Money Stock M2

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snipboard.io/3RCm91.jpg - FRED

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Here we go:
Leaked coronavirus plan to quarantine 16m sparks chaos in Italy
Thousands tried to flee south after decree to confine people until 3 April was revealed

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Italy has been plunged into chaos after details of a plan to quarantine more than 16 million people in the north amid an escalating coronavirus outbreak were leaked to the press, sending thousands into panic as they tried to flee south.

The whole of Lombardy, including its financial capital of Milan, and 14 provinces across the worst-affected northern regions, have been shut down until 3 April as Italy grapples to contain the spread of a virus that has so far killed 233 people and infected 5,883.

Thousands crowded train stations in Lombardy or jumped into their cars after details of a draft decree banning people from leaving or entering the region were revealed by Corriere della Sera late on Saturday afternoon.

On Sunday morning dozens of police officers and medics wearing masks and hazmat suits waited in Salerno, in Campania, for passengers who had boarded overnight trains from Lombardy. The passengers will be registered and obliged to self-quarantine as fears mount over the virus’s spread in the south.

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theguardian.com/world/2020/mar/08/leaked-coronavirus-plan-to-quarantine-16m-sparks-chaos-in-italy

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Immediate Target Hit...

Extension Triggered...

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Hourly Chart Update:

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Next Target Area: $2800-$2756

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Daily Chart Update:

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NY Fed Boosts Repo Operations To Ease Money Market Pressures
Less than two months after announcing a "gradual reduction" in repo operations, the NY Fed will boost the amount of cash it offers to banks as money market pressures increase amid coronavirus fears.

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thestreet.com/investing/ny-fed-boosts-repo-operations-to-ease-money-market-pressures

The Fed recently said it was exiting the REPO Market...

Fed Cred: 0

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$2800 will be a big crack...

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This is just getting started...

A LOT of EXCESS needs to washed out of the Market...

Mass Bankruptcies...

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The Fed has literally pumped this Market for years...

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Banks - Extremely Short

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Energy - Extremely Short

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BAC - Wave Failure

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Chevron - Wave Failure

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SP500 Materials

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SP500 Consumer Discretionary

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Closet Level of Support

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Avoid ETFs

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Did CEOs tell employees to stay home during Ebola?

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What changed?

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Did CEOs tell employees to stay home during H1N1?

What changed?

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Added Fib Time Stamp

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Approx. 18 Minutes

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snipboard.io/AfPeWN.jpg

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Target Area Hit: $2800-$2756

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Fib Time Hit

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$2592 coming up...

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Good Read:
research.stlouisfed.org/publications/economic-synopses/2020/02/28/negative-u-s-interest-rates

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Negative deposit rates have many of the same effects as cuts in positive interest rates: Banks tend to make more and riskier loans or buy longer-term securities, thereby stimulating the economy (Jobst and Lin, 2016; Bech and Malkhozov, 2016; and Arteta et al., 2016).1 Figure 2 shows negative rates have spilled over into corporate and government yields. About $11 trillion of corporate, sovereign, and securitized bonds in 24 currency markets trades at negative yields, comprising about 20 percent of the value in these markets.

The reach of negative rates is limited, however, because commercial banks find it hard to charge negative rates to their retail depositors, who might choose to hold their wealth in cash. Commercial banks have been able to charge negative rates on deposits of other financial institutions or firms to a limited degree, but negative rates still tend to compress the margin between the rates at which banks lend and that at which they borrow, which reduces their profits. The effect on banks and related financial institutions has been a major factor in restraining use of negative interest rates.

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***The effect on banks and related financial institutions has been a major factor in restraining use of negative interest rates.***

Translate: Negative Rates = Major Bank Failures.

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Wave Count Update:

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Above: Micro Wave Count

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We should see Micro Wave 3 now...

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Fiscal Stimulus will have little impact if economies are shut-down...

1. China
2. Italy
3. Germany (Next)?

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Jack Allen-Reynolds, senior Europe economist at Capital Economics, said Italy's economy will contract sharply in the first half of the year even if the restrictions are lifted at the end of April, with GDP declining about 2% for all of 2020.

The hit to GDP will be "much bigger" if the restrictions are extended until the end of June, he added.

***"This does not take account of the impact on the banking sector ... the spillovers from the impact of the virus on other parts of the eurozone, or the potential supply-chain disruption if the virus really takes off in Germany and other key trade partners," he added.***

Europe to suffer, too...

***The country's containment measures are expected to ripple throughout Europe, as the movement of Italian travelers is curbed and manufacturing potentially disrupted.***

The region was already smarting from China's coronavirus shutdown, which hit demand for European goods and disrupted manufacturing supply chains. Measures taken by other European governments to contain the spread of the virus, such as cancellations of public gatherings and sporting events, are expected to dent growth further.

Researchers at Barclays expect the euro area to experience a "short-lived but relatively deep recession" in the first half of this year. They expect growth for the full year to come in at 0.3%, versus the 1% rate expected before the start of the outbreak in China.

The northern part of Italy, where the coronavirus outbreak is worst, accounts for roughly 75% of the country's trade with other EU countries, according to Goldman Sachs. The supply chains of Italian and German automakers are especially well integrated.

"This is going to be a European problem," Manzocchi said.

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cnn.com/2020/03/10/business/italy-lockdown-recession/index.html

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Hourly Chart:

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5 Minute Chart:

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Immediate Target Area: $2730.75-2665.50

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Above: Micro Waves

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This is a global pandemic, the W.H.O. says.

The spread of the coronavirus across more than 100 countries now qualifies as a global pandemic, World Health Organization officials said on Wednesday, confirming what many epidemiologists have been saying for weeks.

Until now, the W.H.O. had avoided using the term to describe the epidemic leapfrogging across the world, for fear of giving the impression that it was unstoppable and countries would give up on trying to contain it. The organization had said earlier in the outbreak that it no longer officially declared when an epidemic reaches pandemic proportions, preferring instead to declare global public health emergencies.

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nytimes.com/2020/03/11/world/coronavirus-news.html

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The Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York has released the repurchase agreement (repo) operational schedule for the upcoming period.

Beginning Thursday, March 12, 2020 and continuing through Monday, April 13, 2020, the Desk will offer at least $175 billion in daily overnight repo operations and at least $45 billion in two-week term repo operations twice per week over this period. In addition, the Desk will also offer three one-month term repo operations, with the first operation occurring on Thursday, March 12, 2020. The amount offered for each of these three operations will be at least $50 billion.

Consistent with the FOMC directive to the Desk, these operations are intended to ensure that the supply of reserves remains ample and to mitigate the risk of money market pressures that could adversely affect policy implementation. They should help support smooth functioning of funding markets as market participants implement business resiliency plans in response to the coronavirus. The Desk will continue to adjust repo operations as needed to foster efficient and effective policy implementation consistent with the FOMC directive.

streetinsider.com/Fed/Fed+Statement+Regarding+Repurchase+Operations/16603430.html

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Immediate Target Hit

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Key Level to watch: $2,665.50

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Here is The Crash...

Credit Lines will be pulled...

Banks will not be able to handle...

The Fed is out of ammo...

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THE PERFECT STORM

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Lets see where the Critical Level is...

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Critical Level: $2,256.50

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Micro Wave Count:

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WHAT IS DIFFERENT?

H1N1?

EBOLA?

SWINE FLU?

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MARKET RESPONSE TO PAST PANDEMICS?

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REMINDER: Monetary System began to fail BEFORE COVID-19...

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October 2019 - REPO Operations began...

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What if the Media reported on daily Influenza Deaths?

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Daily Chart Update:

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According to the latest FluView data, there have been 280,000 hospitalizations for influenza recorded as of February 15, 2020. This figure is consistent with hospitalization rates at this point in time during recent seasons; however, hospitalization rates among children and young adults are considered higher than in recent seasons.

The CDC also indicates that mortality related to pneumonia and influenza has been low during this respiratory virus season. So far, there have been 16,000 flu-related deaths documented during the US influenza season. Of these, there have been 105 influenza-associated deaths among children.

Starting to Track Seasonal Flu vs. COVID 19

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Seasonal Flu Deaths: 16,000

COVID-19: 40

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contagionlive.com/news/us-flu-cases-reach-29-million-have-we-hit-peak-season

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5 Million Cases Worldwide, 650,000 Deaths Annually: The Seasonal Flu Virus is a “Serious Concern”, But the Wuhan Coronavirus Grabs the Headlines

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globalresearch.ca/flu-bigger-concern-wuhan-virus-grabs-headlines/5701932

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More than 120,000 people worldwide are infected with coronavirus and the number of deaths from the outbreak continues to rise. Officials are attempting to contain the outbreak in the US as schools, businesses and public events are closed or canceled.

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wsbtv.com/news/trending/coronavirus-live-updates-us-cases-hit-1267-resulting-38-total-deaths/HF3GT6ZFLRFG3KICDCXRV4MKDU/

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Immediate Target:

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$2,450.50

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Pneumonia of unknown cause reported to WHO China Office
31 December 2019

At the close of 2019, the WHO China Country Office was informed of a pneumonia of unknown cause, detected in the city of Wuhan in Hubei province, China. According to the authorities, some patients were operating dealers or vendors in the Huanan Seafood market.

Staying in close contact with national authorities, WHO began monitoring the situation and requested further information on the laboratory tests performed and the different diagnoses considered.

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who.int/emergencies/diseases/novel-coronavirus-2019/events-as-they-happen

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Get Ready for another Circuit Breaker to be triggered...

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Fed to Inject $1.5 Trillion in Bid to Prevent ‘Unusual Disruptions’ in Markets
Move designed to prevent ominous trading conditions stemming from the coronavirus outbreak

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The Federal Reserve said it would inject more than $1.5 trillion of temporary liquidity into Wall Street on Thursday and Friday to prevent ominous trading conditions from creating a sharper economic contraction.

“These changes are being made to address highly unusual disruptions in Treasury financing markets associated with the coronavirus outbreak,” the New York Fed said in a statement on Thursday

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wsj.com/articles/fed-to-inject-1-5-trillion-in-bid-to-prevent-unusual-disruptions-in-markets-11584033537

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The Fed is simply plugging short-term funding holes...

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This is crisis is just beginning...

What happened to Peak Oil? Fraud?

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$2,256.50 is extremely important...

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In order to bottom:

1. We must admit the current Monetary System is broke
2. We must implement a new sound credit system (Crypto has been being built for the last 15 years)
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

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5. Actual commodity price discovery must occur

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Immediate Target: 2450.50 Hit and Broke...

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Interest Rates are going to zero/negative...

When this happens it will cause massive funding problems...

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Depends on time but we could easily be near or at yesterdays lows by the end of day...

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Fed speeds up purchase of Treasuries to ease market strains

The Federal Reserve signaled on Friday it is accelerating its purchases of US Treasuries, further stepping up its effort to ease strains in the world’s largest and most liquid government debt market.

The New York arm of the central bank said it would buy about 37bn of Treasuries throughout the day — close to half the total it has said it would buy for the whole of March and early April.

“These purchases are intended to address highly unusual disruptions in the market for Treasury securities associated with the coronavirus outbreak,” the New York Fed said in its announcement of the new schedule.

It would buy Treasuries of all maturities throughout the day and said it would continue “as needed to foster smooth Treasury market functioning and efficient and effective policy implementation”.

ft.com/content/617cf978-653b-11ea-b3f3-fe4680ea68b5

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*Keywords: Foster market 'functioning'...

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Trade closed: target reached

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Chart: 15 Minute (Today's Price-Action)

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High Wave Count: Primary Wave 3

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Sub-Wave Count:

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Micro-Wave update:

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$2,256 is still a critical level.

Trade closed: target reached

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The Crash - Part 9 - Coming Soon

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Please follow analysis here (Link):

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FibMarketWatch

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SPY - The Crash - Part 7

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