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UNDERSTANDING THE PERSPECTIVEs OF ECONOMIC COLLAPSE Its very important to UNDERSTANDING THE PERSPECTIVE (PREVIOUS) ECONOMIC COLLAPSE and understand how we can work together to study things and help each other! The first two "2" modern recessions (studied in this graph from 2000/2003 and 2007/2009) where not felt equally around the world. Most of the world's developed economies, fell into a severe, sustained recession and developed economies suffered far less impact. (for the worlds stock markets) it is difficult to estimate the exact loss. The 2020 crash has lost several trillions of dollars of world wealth in the matter of a few short months. The MODERN AMERICAN economy is estimated to loose at least 2 trillion dollars (in government public financial aid that maybe should not be used to inflate the value of the local and currency globally). In the U.S. about 54.5% of all peoples wealth is in the stock market which is largely "controlled" by the NYSE and NASDAQ "club?" (which both have very low quality websites and provide very little "free" real time data or quotes unlike many other foreign indexes and many users rely on google and yahoo for these quotes rather then getting them directly from the indexes which may or may not be valid). The "first global financial collapse" was caused by the ratio of household debt to "personal income" rose from 77% in 1990 to 127% by the end of 2007. This maybe wasn't the only problem. The previous financial collapses in 2000 and 2007 started with the “beginning of bankruptcy of large investment banks mostly in New York City but also around the earth. While the public was lead to believe that these investment banks where investing "wisely" most of this was "simple debt" and irresponsible "algorithmic trading". Its also possible that "algorithms" maybe have been part of the blame for todays "very quick" crash of 2020, since today 80%+ of all "stocks" are traded using HFT (high frequency trading arbitrage and general trading algorithms). The 2020 Economic Collapse will likely result in "finding new work" and a sharp rise in unemployment. A collapse of the tourism industry and "service industries" and general destabilization "consumerism". Hope this helps you! The market typically goes down and then goes up on its way down... even further... and economy work when people are friendly with each other and dont all try to "take" and have low economic pollution.
SP:SPX
by idasuperman
Prepare for financial crisisThe biological crisis has stabilized, but the financial crisis is just beginning. True, the Fed has been injecting huge amounts of money into the financial system via repo and treasury and mortgage bond buying. In just a few weeks we're doing more QE than we did over 8 months back in 2008. That should help prevent outright bank failures, but there's still going to be a lot of pain as mortgages and corporate debt start to default. The canary in the coal mine for a mortgage default crisis is unemployment, and this week we're likely to see initial jobless claims jump from 280,000 last week to some number in the millions. Reports indicate that New York's unemployment office is receiving 200,000-500,000 new claims per day, and California's jumped from 2,000 to 80,000 overnight. Both offices are overwhelmed and their employees are working huge amounts of overtime to keep up with all the new claims. Bad mortgages aren't as big a risk to the economy as they were in 2008, but they're still a pretty big risk. The Trump administration has been lowering lending standards for several years, and the share of mortgages considered "high risk" has been rising rapidly. There's going to be pain in the banking sector. I will enter FAZ ahead of Thursday's ICSA report this week.
AMEX:FAZLong
by ChristopherCarrollSmith
13
For recession winners, look at cash-rich companies with low debtBerkshire Hathaway is famous for sitting on a huge pile of cash. In fact, Morgan Stanley complained just last year that Berkshire hadn't been "aggressive" enough with its cash. Well, now Berkshire's cash pile is looking pretty good as the market heads into a major downturn and buyers have lots of opportunity to snatch up assets on the cheap. In addition to Berkshire, other cash-rich companies with low debt include Alibaba, Baidu, Alphabet, Cisco, and Facebook. These companies have additional tailwinds from the fact that they're heavily involved in ecommerce and the digital space. Facebook use may increase as people spend time at home, and Cisco offers products for remote workers. Expect these giants to initiate share buybacks or mergers and acquisitions as the market finds a bottom later this year.
NYSE:BRK.BLong
by ChristopherCarrollSmith
Carnage coming in oil and gas and banking sectors this weekOPEC+ failing to cut production Friday was bad, but things are about to get oh so much worse. The Saudis announced today that they are increasing production and entering an all-out price war with Russia. We may soon see US oil prices head toward $20 per barrel. There's broad speculation among analysts that Russia is deliberately trying to collapse oil and gas prices in order to trigger a mass default on the huge amount of leveraged debt in the US oil and gas sector. Corporate junk bonds are widely expected to be the subprime mortgages of the next recession. Trump may be able to stave that off this year through bailouts, but not if Russia triggers a crisis before the US government can do anything about it. (Fun fact: Russia has net zero public debt, because Putin lived through the 1990s and is well aware how debt can collapse a political and financial system. Possibly he has been waiting for this opportunity to weaponize US debt.) Also look for collapsing oil prices to cause deflationary pressure in the US dollar, a continued climb in long-term bond prices, and a continued collapse of US stocks (especially banks like JP Morgan with high exposure to leveraged lending).
DLong
by ChristopherCarrollSmith
6
Potential growth of USDTRY as waging war agains Syria1. Wait for breaking parallel channel or resistance line then take long 2. Wait till lower band of parallel channel and then take long Turkey officially declare war against Syria. it could bring chaos to middle east. Russia also is defending Syria. Turkey threatened NATO to support otherwise it would open its borders and free Syrian refugee to flee to EU countries.Turkey did it and refugees had faced a very bad conflict with police of Bulgaria and Greece (EU Gate). Turkey is drowning as more than 45% of GDP made by external loan from international institution like IMF as an example. How could a country be independent while it has 433 Billion USD external load more than 45% of GDP!? President of Turkey Erdugan said we would not get any dollar from IMF as it would violate our foreign independence. After some months it appears Erdugan could not resist foreign pressure and wage war. If both sides of conflict could not reach an agreement that would be death and destruction. Erdugan could not rescue Turkey economy by doing this and corona virus could damage tourism earning so much so bye bye Lira! bye bye foreign real estate investors! USA will use Turkey like a tissue and then throw it away. History will repeat itself.
Long
by amirameri89
1
Will Interest Rates be Spiking?If you follow my work, I have said that stocks will continue to move higher because there is nowhere to go for yield. Central banks have suppressed interest rates where equities are the only place to go. The time to sell stocks will be when interest rates SPIKE. Likely in the double digits. This chart of the ten year US yield, is very important as the 10 year yield essentially is the base for other rates in mortgages, credit and loans etc. You can see that we were at 16% back in the 80's, and we are not about to retest the lows again which was set in 2012,2016 and seems like it will occur this year. Setting up a triple bottom, or a range after a very extended downtrend with multiple swings. Remember, bonds and yield are inverse so when yield drops, bond prices move up. This is still likely to happen. Why? Because in a risk off environment, you run into bonds. Meaning bonds go up, and yields go down. Now think that you are institutional fund or even a pension fund that needs to chase yield. Pension funds were historically into fixed income but have now had to switch to equities to chase yield. Institutions, or other larger funds, that follow asset allocation or rebalancing generally sell stocks when overpriced and move into bonds and vice versa. Well we are in an environment where BOTH stocks and bonds are at highs. Some would say overpriced. What does this mean? It means bonds are not held for yield, but are held for trades. Finding a greater fool who would buy the bond and loss money holding it until the duration of the bond. This is apparent in Europe and Japan where yields are negative. However, bonds still are traded because many think yields will be cut deeper into the negative! In the US and other western nations, many think cuts will go to 0, and perhaps even into the negative. This means bond prices will go up. Again, a trade and not really held for yield. One day it will make no sense to hold bonds for yield...just for trades...which is likely what we are already seeing. Don't believe my analysis? Listen to someone more wealthier and more smarter than me, Ray Dalio. He is warning of a paradigm shift where interest rates must go higher...unless bond markets are killed. So central banks cannot control longer term interest rates, they can actively control short term interest rates. QE was a way for central banks to buy longer term bonds to suppress long term interest rates. Essentially taking away the capitalist free market price mechanism for interest rates. We are in managed debt markets. Europe and Japan can be in negative rates because they killed their bond markets. Because of negative rates it really is the ECB or the BoJ that is at the auctions. This is why many are saying that central banks have run out of tools. They can only do QE forever and can never allow interest rates to ever normalize because it would wreak (rekt) people. This is the confidence crisis that is upcoming. Soon markets will realize that central banks are stuck. That QE, which was a desperate policy to prevent another 1920's-30's like global depression, is now the norm and will continue forever because it did not actually work for the recovery. Central banks need to keep this system propped, meaning rates will be dropping. When I checked the yield curve today, the inversion is coming back. I am expecting a rate cut to happen well before the market expectations of a cut in Fall of 2020. So where do you go in this type of macro environment? Where do you go in a risk off environment? Gold is looking pretty attractive...
TVC:US10Y
by Uncharted-FX
USDJPY and the US 2 YEAR YIELD CORRELATION 'CRACK'Since the YC inversion in August last year (2019), there has been a "crack" in correlation between the US02Y and USDJPY. I expected the YEN to strengthen as the Japanese short the dollar against the YEN to hedge against the rising US Govt bond prices (due to the rate cuts) considering Japan holds a significant amount of US Govt debt. My initial thoughts on this is that the BOJ is focused on keeping the YEN weak to stimulate its export sector which accounts for a significant amount of its trade. At the expense of its debt ballooning ????? I'll be looking into this during the weekend. -Surecapital
by Txnytradesfx
1
Banks look fairly valued, but pose a lot of recession riskAlong with energy, the financial sector is one of the few sectors currently at an attractive valuation. With a P/E of 13.3 and a price-to-book ratio of 1.4, banks are quite reasonably priced. The dividend yield of 1.8% is low compared to bonds or energy, however. What worries me about banks is that I think they have a lot of bad debt on the books that will never get repaid, meaning that their assets are inflated and the price-to-book ratio isn't as good as it looks. This is especially true of the holders of student loans, but we've also seen risky mortgages skyrocket in the last few years. With private debt now far above its 2007 pre-recession levels, any significant downturn in the labor market could trigger a wave of defaults and a crash in both the banking and real estate sectors. So however attractive this sector looks on paper, it poses a lot of recession risk. I'd say add this to your portfolio if it pulls back to the "buy" zone on the reverse RSI, but keep it underweight. Exit if we see a series of bad job reports.
AMEX:RSPFLong
by ChristopherCarrollSmith
LQD ShortLQD just bucked a very important trend line. If investors have indeed lost confidence in corporate debt and we see follow through, then I see this as a bearish signal for stocks too. Typically the bond market is known to be correct over the equity market as large institutions with more knowledge than retail traders deal with bonds directly. To see corporate bonds give up such a well defined, key trend line, is to me a signal to be short not only on LQD but on the markets as a whole. Recently, the ramp up in stock prices was on very low volume and I can count 10 unfilled gaps on the SPY ETF. On the graph, there is one instance where we saw negative divergences but the price corrected in time rather than in price. Here, we could definitely see a correction in price as support now becomes resistance with the trend broken. I am not taking a short position on LQD directly but I do recommend taking short positions on equities through investment vehicles such as SQQQ (-3 QQQ). I am also considering on buying UGLD (x3 gold) and TMF (x3 US treasuries) as a flight to safety emerges into those safe haven assets.
AMEX:LQDShort
by BigMouse777
Bond Market Indicating Risk On Environment?If you follow my work, you know how the Bond market is crucial to my analysis. It is the largest market in the world, and we are heading to a period where central banks really have no ammunition anymore and are using rhetoric to maintain confidence in the system. The history of humanity is cycles of hard money and soft money. It seems we are reaching the end of this soft money cycle. Of course Ray Dalio mentioning how there are many similarities to the 1930's-40's. Today we are hearing about the repo market. How money has to be injected to ensure the system is propped up and interest rates do NOT spike up to double digits. Lot of argument whether is is Quantitative Easing (QE) or not. Remember, the Fed cannot mention QE because it could trigger a confidence crisis. QE was supposed to be a one time desperate policy to prevent another 1930's like great DEPRESSION. If it is mentioned we are on QE again people will realize that central bank policies did not work and we are stuck in 0 to negative interest rates forever with QE infinity. QE was a way to inject money into the system by the Central bank buying up bonds. Repo is when the central bank directly gives money to the banks and receives collateral in return...they say this is US treasures but it could very well be toxic assets. The difference between QE and Repo is really new bonds/debt vs old bonds/debts. It still is about injecting money into the system to more importantly, keep interest rates suppressed. Because of this environment, I have said bonds are a great long term trade because central banks will be cutting to 0. Specifically Canadian bonds because I believe the market has not priced in Canadian rate cuts until this past week. Historically, bonds are not meant to be traded. As the European Fixed Income traders say, we basically buy bonds because we believe we can sell it to a greater fool who will buy it. Bonds brought in reliable income, and a decade ago when you retired with say 1,000,000 dollars, you would buy government bonds yielding 5-8% at the time which would provide you with 50,000-80,000 a year...which is enough to live off when retired. Today you would get 15,000-30,000. When Central Banks started QE and began keeping interest rates low, they caused money to flow to the stock market and real estate as money had to chase yield. Again, if you follow my work, today there is nowhere to go for yield EXCEPT the stock markets and why I think they will continue to go up. So let us look at the bond charts. So I am showing the yields. Remember there is an inverse relationship between bonds and yields. When bonds go up the yield drops and vice versa. On the ten year yield, we have a potential bottoming pattern here. Yields bounced at the important support level of 1.40. I am one who believes the Fed will cut one more time this year...something the market has not priced in yet but could very well be pricing in the closer we get to December. This is what would keep yields dropping lower and bonds moving higher as more people price in more rate cuts. This move in yields currently may be a relief move. We have trended (downtrend) for sometime with multiple waves. We have broken into all time new highs in stocks (again not surprising if you follow my work. Have been saying this would happen because of chasing yield). When people buy stocks and exit bonds, we call this a risk on environment. Whereas when one sells stocks and goes into bonds, we call this risk off. Remember, money managers cannot really be in cash all the time. It has to be working somewhere and most of it goes into bonds during times of uncertainty, volatility and risk etc. The Bond chart is also showing a topping pattern (so remember inverse with yield): Just a crazy environment we are in really but continue to watch the Bond market. I expect in the longer term bonds to go higher because central banks will cut rates even more. We then get to a point, which Ray Dalio calls the paradigm shift, where it will not make sense to buy and hold bonds (currently you can still sell it to a bigger fool).
TVC:TNX
by Uncharted-FX
Argentina Financial Crisis Fears ArisesFears once again loomed all over Argentina in a financial crisis rushing to the fore. And over the weekend, President Mauricio Macri had a stunning rout in the primary elections. At the same time, investors dropped its bonds, stocks, and currency en masse in a selloff. And it left Wall Street thinking that the crisis-prone country will have another default. In addition to that, the upset is widely seen as a preview of the presidential vote in October. And it suddenly opens the doors to the possibility of a more protectionist government will take power come December. Also, it might untangle the hard-won gains that Macri build-up to retrieve international markets’ trust. Then, it intensified worries Alberto Fernandez, his populist rival, and Cristina Fernandez, his running mate, will attempt to renegotiate its debts and agreements with the International Monetary Fund. In the coming year, the foreign-currency billion debt is due. Edwin Gutierrez is the head of emerging-market sovereign debt at Aberdeen Asset Management. And he stated, “The market is starting to price in default” and it “is unwilling to give Fernandez the benefit of the doubt.” Debt Payments of Argentina Meanwhile, looking at the credit-default swaps, it suggests that traders are expecting a 75% likelihood that Argentina will suspend its debt payments for about five years. Last Friday, this chance was only about 49%. Then, its dollar-denominated government bonds wiped out about 25% on average. As a result, it dragged down prices to as low as 55 cents on the dollar. Yields, on the other hand, on shorter-maturity notes surged above 35%. Moreover, in Argentina, the peso tumbled as high as 25%, hitting a new record-low 60 per dollar on Monday. Also, the Merval stock index had the most lost in the intraday trading. On Sunday, Macri expected to trail his rival by just a few points and pummeled the polls, with Fernandez in a 15-point lead.
by Financebroker
2
Long Crypto, Gold, Silver - Short FiatFED has begun a cycle of rate cuts although they don't want us catching that idea. Trump is downright determined to get the FFR back to 0% as quickly as possible, going so far as to demand the FED to cut rates 100bps at yesterday's meeting. Powell made clear that the FED doesn't want to turn this into a "trend of rate cuts" but that they would take appropriate action if trade tensions and global growth continued to weigh on the economy. In a nice, slappy way, Trump delivered the tariff bomb today. FFR futures, which priced another 25bp cut in September at around 50% probability following yesterday's FOMC, shot up to an 84% probability following Trump's announcement. It is clear what the long plan is here: lower rates, weaken the dollar, increase outstanding debt. AKA further the dependence on an exponentially increasing supply of dollars and place spikes on the landing pad of a recession. We are headed toward a global negative interest rate environment - worked for Japan didn't it?! This is setup is bigly huge for assets holding the qualities of money to be revalued. In fact, it is inevitable. Timeline? My money - I mean currency - is on a few years, but ultimately it comes down to when the powers that be want to kick the fiat currency system into a hyperinflationary grave. You be the judge. LONG TERM HYPERBULLISH.
BITSTAMP:BTCUSDLong
by Derivati_Capital
3
The Global Debt Crisis - the End of the Bubble is NearGFDEBTN Monthly FEDERAL GOVERNMENT DEBT: TOTAL PUBLIC DEBT 8:00PM EST At current rate of acceleration, total Federal Government Public Debt will double by April 2023 (4.5 years from today) and then double again by October 2026, just 3.5 years later. By January 2028, total federal government debt will have doubled again in an even shorter time where it will hit a red line - having gone gone fully vertical - doubling every month, week, then day. Obviously this is impossible, and likely there will be major economic consequence before this date. The data does not lie. The world is in serious trouble with the most massive debt bubble to have ever existed. The consequence of this debt bubble is yet to be seen, however, terms such as, “The Great Reset,” amongst others come to mind. It is difficult to fathom the consequence of this bubble, however, we would like to believe that there is a recovery strategy on the horizon. One thing is certain, the path is on track to a 2028 or sooner GLOBAL DEBT MELTDOWN and perhaps the end of modern day finance as we know it. DISCLAIMER This Content is for entertainment purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained on our Posts constitutes a solicitation, recommendation, endorsement, or offer by MarketMotives or any third party service provider to buy or sell any securities or other financial instruments in this or in in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. All Content on this post is speculation, opinion, and entertainment in nature and does not address the circumstances of any particular individual or entity. Nothing in the Site constitutes professional and/or financial advice, nor does any information on the Site constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. Market Motives is not a fiduciary by virtue of any person’s use of or access to this Post or Content. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other Content on this Post before making any decisions based on such information or other Content. In exchange for using the Post, you agree not to hold MarketMotives, its affiliates or any third party service provider liable for any possible claim for damages arising from any decision you make based on information or other Content made available to you through this Post.
FRED:GFDEBTN
by MarketMotives