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Debtbubble

XAUUSD Gold to 4KTimeline is 6 months - 2 years The crash has already started. At some point everyone will start to sell thier treasury bonds, yields will go up proportionally to inflation until the dollar loses it's status as the global currency and dramatic measures are used to stop inflation resulting in stagflation and yield recovery. Else hyper inflation and the dollar is replaced entirely. I see the momentum indicators shifting in various markets. Below is a brief summary of each, relevant indicators/markets. see charts. US1YRBILLS WTI CRUDE SILVERUSD BONKCOIN TSLA
OANDA:XAUUSDLong
by Mikhiavelli
3
Where is the SPX most likely headed in the coming yearsAlthough it's hard to predict what the stock market will do in the future, there is already a clear consensus on what is likely to happen. In this chart, I have plotted most predictions from big investment banks like Goldman Sachs and Morgan Stanley to other investors like Michael Burry. I have also calculated the average of all the predictions and plotted it on the chart. I think the most likely scenario is that we retest the lows of the Corona Virus Crisis, and then we trade sideways from there (illustrated with the red arrows). There is also the probability that we bounce off the 3000 SPX as the consensus estimates and then trade sideways from there (illustrated with blue arrows). The main reason we might trade sideways for the coming years is because of a dilemma the Federal Reserve is currently facing. Having to fight a battle between high inflation caused by quantitative easing done during the Coronavirus Crisis, and fighting said inflation by raising interest rates which will make it harder to maintain its 30 Trillion dollars of debt obligations. Likely changing back and forth till there is a deleveraging of the whole system that will last at least 3 years. And since the markets are strongly correlated to what the fed does, this will be the most likely outcome. Let me know your predictions and see if you agree more with the blue arrows or red arrows.
SP:SPXShort
by Blasik
7
Unleashing the Potential of Defensive Market Sectors for a 10x RIn these unpredictable times, it is crucial to strategize and safeguard our investments against market volatility. While some may shy away from uncertainty, smart traders like yourself recognize the immense opportunities that lie within. By focusing on defensive market sectors, we can position ourselves for success, even in the face of adversity. So, what are these hidden gems, you ask? Let me enlighten you! Our thorough analysis and expert insights have highlighted three subdued ETF sectors that hold tremendous potential for exponential growth. By going long on these stocks, you can seize the opportunity to maximize your returns and secure a bright future for your portfolio.
NYSE:AMRLong
by bryandowningqln
Time to Buy BTC: USA Debt Negotiations and its Impact on BitcoinToday, I want to discuss the USA debt negotiations and their potential impact on Bitcoin. As you may know, the United States is facing a severe debt crisis, and the government is currently negotiating a solution. This has caused much uncertainty in the market, with many investors wondering what the future holds for various assets, including Bitcoin. However, there is good news for us Bitcoin investors. Historically, Bitcoin has performed well during economic uncertainty and political turmoil. As a result, Bitcoin has often been referred to as a " haven" asset, which means it tends to hold its value or even increase in value when other assets are experiencing volatility. So, what does this mean for us? First, it means there is a good chance that Bitcoin will go up after the USA debt negotiations are concluded. As a result, investors may turn to Bitcoin to protect their wealth during uncertain times. Additionally, the fact that Bitcoin is a decentralized currency not tied to any government or financial institution makes it an attractive option for those concerned about the stability of traditional money. As a Bitcoin investor, this is an exciting time for us. We could capitalize on the potential growth of Bitcoin and increase our wealth. So, I encourage you to act and buy Bitcoin now before the price goes up. If you're new to Bitcoin, don't worry! There are many resources available to help you get started. You can find information online, join Bitcoin communities, or even talk to a financial advisor specializing in cryptocurrencies. In conclusion, the USA debt negotiations may positively impact Bitcoin, and as investors, we should take advantage of this opportunity. So, let's buy Bitcoin and watch our wealth grow!
BITSTAMP:BTCUSDLong
by bryandowningqln
Artificial Banks Wane: Bitcoin Ushers in Financial Epoch This chart shows a view of the top 8 banks in the United States and the charts go back to at least 2008 so you may see how artificial the bubble is. As the Federal Reserve continues its interest rate hikes, a cloud of uncertainty looms over the banking sector. This trading strategy anticipates potential instabilities in major banks, which could catalyze a significant migration towards decentralized finance solutions such as Bitcoin. Higher rates could strain over-leveraged banks, leading to a fall in their value, while Bitcoin could rise as an alternative financial refuge. COMBINED TOTAL OF ALL 8 BANKS = 1.5 Trillion 1. JPMorgan Chase & Co. (JPM): $391.88 billion 2. Mastercard Incorporated (MA): $360.32 billion 3. Bank of America Corp. (BAC): $218.28 billion 4. Wells Fargo & Co. (WFC): $151.81 billion 5. Morgan Stanley (MS): $137.6 billion 6. Goldman Sachs Group, Inc. (GS): $106.65 billion 7. Citigroup Inc. (C): $88.48 billion 8. U.S. Bancorp (USB): $46.62 billion The colossal $1.5 trillion valuation of these traditional banking institutions may give an illusion of robustness, yet this façade might not withstand the test of an evolving financial landscape. These banks, laden with their outdated models and susceptibility to Fed's rate hikes , represent a realm of finance that is increasingly becoming unsustainable. I believe a significant portion of the capital currently tied in these institutions is likely to flow into more resilient, decentralized financial systems such as Bitcoin. By doing so, investors may pivot from a seemingly sinking ship to a dynamic and emergent financial framework, embracing the future of finance with open arms.
NYSE:MSShort
by MichaelBsul
Bitcoin the end of the Debt Super CycleWell I hope this analysis isn't correct as it would mean absolute devastation for every market Globally. But it looks like Klaus Schwab is getting his way with the Great Reset. This Analysis is predicated on the idea that Bitcoin has completed a wave 1 at Cycle Degree in November of 2021, meaning we are now in a Cycle Degree wave 2 correction which will correct the entire history of Bitcoin. Assuming the wave 2 at Cycle Degree will be similar to the wave 2 at primary degree, I have copied the price pattern and modified it to fit a longer correction (Blue line). A typical wave 2 in bitcoin's history has traditionally lasted 1/3-1/2 the time of the previous wave 1 with a depth of -93%. If this repeats in a similar way we should expect to see a bottom somewhere between June 2025 and June 2027, with price reaching a target range of $2500-$4500. In the short/medium term this count expects price to have a small capitulation over the next 1-3 months, followed by a counter trend rally over the next 6-12 months. This rally would most likely be catalyzed by the federal reserve pausing interest rates in response to inflation decreasing. However rising asset prices may cause inflation to continue to be stickier than people want. It's also entirely possible that the damage to the underlying economy caused by raising interest rates too high too fast will start to make its impact. If the latter is the case I would expect the Federal Reserve to lower interest rates near 0 again but similar to the GFC of 2008 the damage will already be done and we will see a massive capitulation in all markets before finding a bottom 1-2 years later. I know a lot of people will not enjoy this analysis but this seems to be the most likely scenario unfortunately. If you look at markets across the globe it's clear we were in one of the largest asset bubbles in history and that bubble has popped. Look no further than Shiba Inu Token which exploded over 10,000,000% in one year, with no underlying fundamentals. Good luck everyone and remember not to overleverage yourself as that is the entire reason we are in this situation.
INDEX:BTCUSDShort
by kg_sol
1
Catalysts for The Global Financial Crisis 2.0The current level of euphoria and speculation on Wall Street is likely to go down in history in the same way that the misplaced optimism of speculators in 1929 was immortalized by the tremendous crash and ensuing depression. The current dynamics at play are more similar to that period than most realize. Many potential catalysts for the Global Financial Crisis 2.0 are beginning to rear their heads, including things such as: -The auto loan bubble -The residential & commercial real estate bubble -The private equity and venture capital bubble -The largest losses in the total bond market in generations -Highest level of Federal Debt to GDP in US history and extremely high level of consumer & corporate debt in US history -The most overvalued market based on forward earnings in history (Based on my expectations of S&P 2023 earnings will fall below 140). Peak margins above -13% coming back under 10% will also help to drive this. -The fastest pace of interest rate hikes since Paul Volcker and $90 billion of quantitative tightening per month. -The crypto bubble implosion where many exchanges are likely to fail due to their ponzi-like staking dynamics and unprofitable nature of exchanges like Coinbase. We are starting to see the beginnings of the financial contagion from FTX into other exchanges and coins. This is happening in an industry valued at over $3 trillion at its peak. -The Chinese real estate crisis and recession -The energy crisis which has curtailed over 20% of EU industrial capacity and is sending Europe into a recession. This is leading to increased energy costs around the world. -Looming sovereign debt crises & currency crises for many emerging and certain developed economies. The $1.6 trillion auto loan bubble is reminiscent of the subprime lending bubble. There were incredibly loose lending standards in this auto loan bubble, where people that received federal stimulus checks were able to claim these as income. This entitled them to larger sized loans than they would have otherwise had access too. Many of these loans were made at over 130% loan to value ratio. These loans have been packaged up as bonds and sold off to investors hungry in search for yield in a world of artificially low interest rates, suppressed by the Fed for the better part of 14 years since the Global Financial Crisis. The amount of delinquent auto loans has continued to increase, and the looming crisis represents a huge threat to financial stability. As real wages and employment continue to fall, the amount of delinquent loans will continue to rise. Earnings for the S&P 500 in Q3 have already started to contract more than 5% year over year (excluding energy) and yet many analysts still expect some, to no growth of earnings in 2023. Earnings are likely to collapse over 40% in 2023, pressured by falling consumer demand and falling operating margins. Consumer sentiment registered the worst sentiment among US consumers since the great depression. All of the Fed manufacturing and service data components show comparable data now to data being released in mid 2008 to the spring of 2009, all with continuously negative trends. Capital expenditures have begun decreasing and mass layoffs are just beginning. 37% of US small businesses could not pay their rent in full in October. Many companies will be forced to close their doors permanently and layoff their entire staff. Consumption began to fall rapidly after the Fed began quantitative tightening and ended quantitative easing. The effects finally began hitting company earnings largely in Q3, with much more pain to follow. Meanwhile, many companies continued to hire large amounts of people unaware that consumption would continue to collapse. As asset prices fall further and inflation stays elevated, real wages will continue falling. Student loan payments begin again at the start of 2023, further harming consumer sentiment. Money supply growth began stagnating early in the year in 1929 and the federal government began to tighten spending with the New Deal programs in 1936 before the crash happened in 1937. Bank balance sheets have been flat for 2022 while the central bank balance sheet has been contracting leading to a slight contraction in the money supply. The contracting growth of monetary supply and fast paced increases in interest rates will lead to a large-scale downturn in GDP. On a technical basis, the current market setup looks very similar to 1929, 1937, 1973-1974, 1987, and 2008. All of which had major rallies that topped in late summer / fall before crashing over 30%. All of these crashes took place over the span of less than 3 months, with the majority of the percentage decline occurring over a period of 2-3 weeks. There are dozens of companies that are virtually guaranteed to go bust in this downturn based on an overview of their financials. There have never been so many listed companies that reached valuations in the billions at their peak with no earnings. Many companies at the time of this writing still have valuations of over 6 times sales and many companies such as Coinbase, Uber, and Rivian are still valued at over $10 billion market caps whilst losing hundreds of millions of dollars per quarter. The dozens of zombie companies in the S&P 500 are being forced into rolling their debts at higher interest rates while their earnings fall. This will be the largest debt deleveraging cycle in the US economy since the great depression, because this is the largest accumulation of bad debts since the roaring twenties. It is not long until the credit risk is truly realized by market participants, and interest rates spike throughout the economy. This would include the inter-bank lending rate and junk rated bonds which would lead to a financial crisis. The longer the Fed’s quantitative tightening runs, the more inevitable the financial crisis becomes. The Fed ran the balance sheet down around $600 billion over the course of 2018 into late summer of 2019 before inter-bank lending rates started to spike. This time, the Fed has run the balance sheet down close to $300 billion so far with a plan of reaching over a $600 billion runoff in Q1 of 2023. The hopes for a Fed pivot are misplaced. A Fed pivot on interest rate hikes and even a reversal of the rate hikes cannot re-incentivize people to borrow. When you’re in a contracting credit cycle and business cycle downturn, debt begins to be paid off and defaulted on rather than excessively accumulated. The demand to borrow collapses even if interest rates were lowered by the Fed. Therefore, bear markets and recessions usually don’t end until many months after the Fed has already begun cutting interest rates. This was seen in the Great Recession and the dot com bubble of 2000; where the market didn’t bottom until over 18 months after the Fed began cutting rates.
SP:SPXShort
by Alexander_C_Lambert
2
The Ticking Time Bomb - Debt MarketsIf you ask 90% of people what drives stock prices, most of them will say things like “earnings, PE ratios, forward guidance.” The reality is that none of these things matter today. image.png In today's market, factors such as earnings, PE ratios, and forward guidance play almost NO ROLE in the price action of a company's stock. The number one driver of stock prices is the price action taking place in the debt market. In fact, the stock market as a whole derives its value from action in the debt market – meaning that the stock market is a derivative of the debt market itself.image.png To drive this point home, let's look at what central banks have been doing since the 2008 financial meltdown. They've been artificially suppressing interest rates, and it's worked really well in inflating another huge stock and real estate bubble. Low interest rates that are artificially suppressed by central banks create an environment of risk, as cash is forced into riskier assets such as stocks. This also drives up the price of real estate. In addition, this suppression of rates has robbed savers of trillions of dollars in wealth by keeping savings rates below the actual rate of inflation. The global inflation and freefalling economy today are a direct result of central banks artificially suppressing rates for years following the last major meltdown. Central banks are responsible for the global financial and economic systems, both of which are inextricably connected. Moreover, central banks working in concert are deliberately driving the world right into a financial/economic crisis of truly epic proportions. image.png Central banks have been deliberately and meticulously working to hyperinflate a global debt bubble. Cracks in this bubble are now beginning to show, particularly in the form of rapidly rising global bond yields. This in turn is putting pressure on global stock prices. It is only a matter of time before an extreme sell-off in the debt market occurs.image.png But a stock market crash- even one of this size- is the smallest issue. The real problem is a worldwide financial system shutdown, which means ALL TRANSACTIONS STOP. There would be no cash available from banks, credit cards and ATM cards would be unusable, no lending, everything would come to a halt.image.png Do not be mistaken, central banks are working intentionally towards this inescapable end of the current system(s) only to usher in a new system that they have much more control over where, when and how much of their product Central Bank Currencies ie: ( USD, CAD, AXY, JXY, BXY) you can spend. \
TVC:DXY
by RobinhoodFX
2
SXP ELLIOT WAVE COUNT!!! GREAT DEPRESSION 2.0If u know Elliot wave I’d reccoment testing that count lmfao. Essentially all ratios align perfectly not only through proportions between waves but also through history aligning with these shifts. I provided two retracement which represent the potential pull down of this wave 4 we are most likely in. (The wave 1-3 ratio is 1-2.474 as seen by the blue dotted line). Honestly my strat is just dollar cost average those points. Happy depression everyone :)
SP:SPXLong
by The_Crypto_Astronaut
China's Economy Crisis: What You Need To Know‍China is the world’s second-largest economy. If that doesn’t impress you, consider this: It has grown from a ragtag collection of state-owned firms to the world’s second-largest economy in just 35 years. China is now the world’s largest producer of goods, from smartphones to steel, autos to aircraft carriers. In 2017 alone, China produced almost as much output as the U.S., Japan, Germany, France and Britain combined. However, there are signs that China is heading for a recession. The country’s stock market has crashed twice (in July 2015 and again in January 2016), and Chinese investors have lost a lot of money as a result. There are many reasons that explain why an impending economic crash in China is imminent... China Has a Debt Problem China’s debt-to-GDP ratio (Private Sector) is now over 250%, which is extremely alarming. China’s debt problem is a ticking time bomb that could go off at any moment. As interest rates rise in the U.S., the cost of servicing the debt will become more expensive for Chinese issuers. If China continues to grow its debt at its current pace, it could easily become the next Greece or Argentina, where economic collapse is imminent. The Chinese government has tried to curb the rise in debt by tightening its domestic monetary policy. That caused the country’s stock market to plummet and its currency to depreciate. China’s aggressive money-printing has helped to fuel an emerging debt crisis that could trigger a global economic slowdown. In fact, the Bank for International Settlements (BIS) says that China’s debt-to-GDP ratio has jumped from 150% in 2008 to more than 250% today. The Chinese Yuan Is Dropping Like a Rock China’s controlled currency is starting to depreciate. And that usually occurs before an economic crash. The Chinese yuan (also known as the renminbi) has fallen more than 7.7% against the U.S. dollar since March 2022. The yuan’s decline is partly due to the trade war with the U.S. China’s central bank has been intervening in the markets to prevent the yuan from declining too quickly. That’s caused the dollar to rise against other currencies. It’s also helped to fuel a rise in Treasury yields. A strong U.S. dollar is bad for American exports. But it’s also bad for China, since a strong dollar makes it more difficult for Chinese companies to compete abroad. China’s controlled currency is starting to depreciate. And that usually occurs before an economic crash. CNH1! Manufacturing Is Slowing Down China’s manufacturing PMI has been falling for months. In July 2018, it was 48.3, which is below the 50 mark that separates growth from contraction. A number below 50 is also considered to be “bad”, while a number above 50 is “good”. The PMI reading for July 2019 was 49.7. This may sound like good news for those employed in the U.S. However, it’s not. A slowdown in the manufacturing sector usually leads to a fall in consumer spending and a slowdown in the economy. That’s because reduced consumer spending leads to fewer sales and an excess of inventory or unsold goods. That often leads to a drop in GDP. China is Producing a Lot of Empty Buildings As an economic crash approaches, developers start to build a lot of empty buildings. That’s because people start to slow down their spending and are not prepared to make the necessary financial commitments. China’s ghost cities are the canary in the coal mine. These are cities where 90% of the buildings are either vacant or incomplete. Now, it’s interesting to note that China’s ghost cities were entirely vacant as recently as 2010. At that time, few people would have predicted that China would build an entire city and have no one living in it. China's shadow banking problem is a major concern for the Chinese economy. Shadow banking refers to financial services provided outside of the traditional banking sector. These include weaker institutions such as peer-to-peer lending, pawnshops and informal lending networks. Shadow banking is often used to circumvent government restrictions on the traditional banking system, which can make it harder for the government to monitor and control the overall economy. Shadow banks are also more likely to lend to high-risk borrowers, fueling asset bubbles and economic instability. As a result, shadow banking has become increasingly important in China as the country's economic growth has slowed. Despite its importance, understanding shadow banking in China is difficult due to its complexity and lack of transparency. It is best to keep an eye on developments in this area as they could have a significant impact on the Chinese economy in coming years. China Consumer Confidence Index China Unemployment Rate Conclusion In the final analysis, there are many signs that indicate that a looming economic crash in China is imminent. Indeed, analysts expect that the country could be poised for a major economic slowdown in the near future. If this happens, it will have a negative impact on global economic growth. Investors should be careful about which companies they invest in and may want to avoid companies that are heavily reliant on the Chinese economy.
Editors' picks
NASDAQ:MCHI
by EQTSHARES
102
A Bearish Call On Financial Markets and The Global Economy China/Europe/EM: The UK and the entirety of Europe are in trouble. The UK now experiencing double-digit inflation and to make matters worse they are facing extreme weather and an energy shortage going into the winter. All the while Putin's war is complicating European energy supply and political ties even further. China is experiencing civil unrest, mostly thanks to an ugly property crisis. China also is experiencing lower-than-expected GDP growth. China's economy slowing has large implications given its massive presence in global trade. Emerging markets are struggling partly due to an incredibly strong dollar as well as a tight global food/energy supply. US: The US housing market is in a recession with 6 straight months of declining sales and more importantly a monthly decrease in median home prices for the first time in years (the housing market gets hit first by rising rates… remember 08?). US consumer credit I.e., debt levels, are through the roof. Signaling that the consumer might not be as strong as market commentators are saying. Layoffs are increasing steadily, while inflation is staying high. I am bothered to see the number of peak inflation calls after just ONE MONTH of zero gains in headline inflation. The FED is now in a lose-lose scenario where they can continue to aggressively tighten and bring down this wildly levered up global economy or back out and try to save the issue for a later date. The latter would cause additions to the size of their already immense balance sheet and create an ultra-severe recession later down the line. Either way, the recent rate hikes have not at all been fully felt by markets, and add on the possibility that the FED truly commits to QT, then a few quarters down the line we will start to see a serious weakening of market conditions across the board (equities, bonds, real estate, you name it). Forecast: Risk assets globally are going to get decimated during the next several months of trading, especially low-quality speculative names. Crypto investors should prepare to see some nasty losses, BTC to 9800, and ETH to 575 seem attainable in the medium-term. S&P 500 will NOT make any substantial or sustainable gains over the 4300 mark, 3500 is my next low target. Nasdaq 100, like crypto, is in for a large selloff, next target: 10,200. VIX will rise substantially, and could easily double from current levels. The dollar will stay higher as US rates rally upward, likely well higher than markets currently have priced in. Some commodities will make new highs- nat gas- while others like oil are poised to depreciate modestly but remain historically high. Low/non-profitable, high debt companies- Wingstop and its zombie cohorts - are at high risk of bankruptcy in the coming quarters. Widespread bankruptcies are on the horizon. Things look a little too good to be true right now in financial markets… well that's because they are. On the bright side, this bear market bounce of the past 60ish days has provided a good opportunity to exit risk assets, load up on cash and begin to add on to short positions. As always this is not financial advice. Good luck!
ECONOMICS:USCCR
by Gooby_Trades
3
TLT dangerously close to 2008 supportNASDAQ:TLT not looking to HOT here. The federal reserve has the following 3 options: 1) Stick to 0.50 basis points and continue the slow bleed. ~ This will piss off investors with cash on the sidelines and will most like hit the market harder. 2) Get aggressive and raise 0.75-1 basis point ~ Market may react positively. This would show the federal reserve is "serious" on fighting inflation. 3) Take the foot off the accelerator and step back into the market. Using macro environment as an excuse, for example Russia invasion of Ukraine and China lockdowns. I think it is noteworthy to mention that China has lowered their interest rates and are outperforming US equities. It honestly looks way more attractive and this is something the fed will have to ponder. This is a lose/lose battle because the federal reserve cannot magically print supply.
NASDAQ:TLT
by HispanicHedge
Triple DIV on Daily as well - Take profit/shortHi folks! As those of you who have followed my predictions for a while now are aware of, I have a massive bearish bias these days - while my predictions in the last weeks have yet to become a reality, my stated short positions are still alive and well. This is first and foremost due to the extremely scary macroeconomic state (and thus fragility of the financial markets), but also the fact that we have had massive Bearish Divergence on both RSI, MACD and (most importantly) Volume in almost asset classes. Today, the triple DIV played out in BTCUSD on the daily as well, piling on to my bearishness. My position placed today is Short BTCUSD at 49500, SL 56000, TP 30000 - adding to my short from 46300 with SL 52000 and TP 30000. For the record, I also hold over 30% of my portfolio in VIX futures (@VIXY) due to the mentioned macro picture. The reason is a combination of systemic overvaluation in addition to the fact that liquidity is evaporating from the markets (just check trading volume and decrease in margin debt). I would state that shorting is a risky business, and that just taking profits and/or buy volatility contracts might be a preferable option here. I would never recommend shorting to anyone unless one feels extremely confident in the probability distribution and you know how to manage risks - I just state my position to let you know that I put my money where my mouth is. DYOR. NFA. Never take the word of others as a given - and never take advise from someone who has no skin in the game. I wish you all well.
BITSTAMP:BTCUSDShort
by TheDots
12
The Devil is in the DetailsWhat Happens Next? Economists describe inflation as “too many dollars chasing too few goods.” When you have too many dollars chasing the same thing, the chase will drive the price up. Things will become more expensive. If you look at the following chart of the U.S. Stock Market 1945 to 2021: www.macrotrends.net you will notice the stock market chart from the end of World War 2 1945 to 2021. You can see quite clearly the Tech Bubble of the early 2000 and the subsequent bust, and you can also see the Housing Bubble followed by the Great Financial Crisis of 2007 and 2009. To the right of the chart, you can see the tremendous inflationary money-printing experiment of 2009-2021, literally bursting off the chart, with the stock markets S&P 500 going vertical to today’s all-time highs of 3,932. At the same time, we have an economy that has stalled, unemployment rising, people paid to stay at home, businesses and individuals struggling, or on government life support. How is it possible that the markets are screaming for a record after record high when the real economy, people, business, goods, and services have all suffered tremendously? A Faustian Bargain A Faustian Bargain is a pact with the Devil, whereby an individual or a people trade something moral or spiritual, such as their souls, for some worldly or material benefit, such as knowledge, power, or riches. However, the benefits are temporary, perhaps decades-long, but eventually, you must repay the Devil with your soul. In the wake of the destruction of World War 2, the U.S. emerged as the strongest country in the World. It had amassed most of the World’s Gold, was the most industrially advanced nation, and was the least damaged during the War. More importantly, the U.S. inherited the privilege of becoming the World Reserve Currency, a benefit previously held by the badly damaged and shrinking Empire of Great Britain. The U.S. dollar became the undisputed Heavy Weight Currency of the World, and from now on, it would make the rules. The majority of global trade would now be conducted in the mighty U.S. Dollar… backed by Gold. The privilege allowed the U.S. to become very rich for a while. However, by the late 1960’s, the U.S. had squandered its treasure, having spent most of its Gold. So, in 1971 the U.S. declared an act of bankruptcy and closed the Gold window. The U.S. Dollar became fiat or fake…backed by nothing, except the full faith and credit of the U.S. government. The world went into shock, and chaos erupted. War and violence dominated the more impoverished regions of the World, while stagflation and recessions dominated the Western World. By the late 1970s, inflation in the U.S. was out of control. The Federal Reserve and the Bond Vigilantes drove up interest rates to tame the rampant inflation. The economy was dying, and the U.S. needed a solution; the U.S. would need to give the World a good reason to hold the U.S. Dollar, a reason other than Gold. The U.S. was on its knees and ready to make a bargain to regain its dominance. A deal with the Devil, a Faustian Bargain would do. The deal would allow: The U.S. to defend its title as World Reserve Currency through a combination, oil Market control, financial shenanigans, war, intimidation, sanctions, embargoes, bullying, and most importantly, the ability to expand debt. The Devil would just wait until the debt could expand no more. The Debt Feast The inflation of the 1970’s was crushed by raising interest rates, raising the prime rate in the U.S. to the dizzying height of 21.5% in 1981, but the economy was on its knees Through a combination of Central Bank policy, government approval, deregulation of the financial system, accomplices at the Treasury, shoddy oversight, credit and debt once again began to flow. The monetary base began to explode, and debt began to grow faster than the real economy. The bond market hit its bottom in 1981, and the stock market hit its bottom in 1982. The Devil didn’t lie, good times were here again, and we wouldn’t have to worry about the debt or the payback for decades. Well, decades have passed, and we didn’t have to look back until now. The powers that be, the Federal Reserve, and the Treasury have bailed out the system by issuing more and more debt. As you can see from the chart above, we’ve had two major shocks in the stock market since 1982: the Tech Bubble and the Great Financial Crisis. However, when you look at the details, they’ve had to continuously bail out the system since 1980, and the debt has erupted. We are rapidly approaching $30T, with the forecast for Trillions more. tradingeconomics.com The Powers That Be Have Had To Intervene In Every Crisis We’ve Had Since The 1980s. And Since The Great Financial Crisis Of 2007, We Now Realize That We Can Never Ever Stop Printing Money. It Is Inflate Or Die… Bailouts Since 1980 Black Friday 1987 The S&L Crisis 1990 The Tequila Crisis 1994 The Asian Crisis 1997 The LTCM Crisis 1998 Tech Bubble 2000 Great Financial Crisis 2007 Covid -19 Crisis 2020 Give the Devil his Due Funnily enough, the bottom of the last major stock market crash was on Mar 9, 2009, at 666, the Devil number. It’s been inflate or die ever since. In the aftermath of the Great Financial Crisis, the economy had collapsed. The first domino to fall in the Great Financial Crisis was the housing market; the panic that ensued exposed the game for what it really is. A debt-fueled Ponzi scheme, supported by the powers that be. They have been bailing out Wall Street since the 1980s, and now because of Covid-19 Crisis, another Crisis, they currently have to bail out you and me on Main Street, as well as their interests on Wall Street. They’ve provided a tsunami of debt to flow into the economy, and it has rushed into the financial markets. The bond markets, the stock markets, the housing markets, the corporate debt markets, the crypto-currency markets, and so on, they’ve all exploded to the upside. Investors and traders have surfed this wave of free money backed by debt and driven the markets to all-time highs. The above charts show the tsunami of asset price inflation rises from an Ocean of Debt. We are in awe of the money printing and have been humbled by the retail investor. Their lack of experience and formal education about the stock markets has served them well; they have made themselves small fortunes, fair play. We hope that they have learned enough and that they know when to book profits. Debt/liquidity fueled stock markets and free money backed by debt given to individuals. You combine that with Covid-19 boredom, blissful ignorance, momentum, social media, and you have a speculative frenzy. The tremendous appetite for risk leads us to conclude that investor taste buds have been removed or they are completely unaware that a threat exists. Give the Devil his due; he has drawn us all into the frenzy and set us up to take away our souls and the soul of the U.S… the mighty Dollar. PS: The Original piece with the bells and whistles on the charts can be found here: theimpartiallens.com
TVC:SPX
by rzinho
1
10 Year Yield to Spike above 1%? Currency War Heats Up!My long time followers and readers know two things about the bond/credit markets: 1) They are by far the largest markets in the world even dwarfing the Stock/Equity Markets. 2) If you want to know where the Stock Market is going, look at the 10 Year Bond Yield (TNX). Of course, some argue that things have changed due to central bank money printing propping assets up. 80 Billion per month in fact by the Federal Reserve. This is to ensure that interest rates remain suppressed. Many people do not know how this works. The central bank prints money by buying bonds. It buys the bonds, and then money is credited to banks/dealers etc. New money has now entered the system. Historically, government debt made the majority of pension funds because they were the safest asset. Bonds are (were) held for yield. For example, say you owned decade plus year government debt before 2007, your 1 million would be netting you between 50-80k per year depending on the interest. Post Great Financial Crisis (GFC), that 1 million would bring in less than 30k per year and even lower today. Pension funds need an average of 8% per year. You are not making that in bonds. Pensions have thus had to add more risk, ie: buy stocks. In fact, the average person retiring had to do the same. Since you could not buy bonds for long term yield, this money went into the nest safest asset: real estate. Back in the day, a financial advisor would not tell you to put all your money into stocks when you are close to retirement. Today you really have no choice. Before I discuss the weekly chart for the 10 year yield and what this implies for 2021, a quick lesson on what this chart shows us. This chart indicated the yield on bonds, NOT the price of the bond. Therefore bond yield and bond prices have an inverse relationship. When the price of Bonds drop, the 10 year yield chart moves higher (rates spike), when the price of bonds pop, the 10 year yield moves lower (rates drop). Large funds and those studying to be fund managers are well versed in the asset allocation model. Percentage of portfolio's mainly in bonds and stocks. In the GFC crisis, we heard the term risk off and risk on a lot, and is still used today. A risk off environment is when investors are buying stocks and other riskier assets and dumping bonds and other safety assets. A risk on environment is the opposite: investors sell stocks to buy bonds and other safety assets. The VIX has primarily been used to gauge when there is fear in the market and whether we are in a risk off or risk on environment. Gold and the US Dollar as well. But why not just look at the 10 year yield itself? Back to the weekly chart of the 10 year YIELD. Currently, they are yielding 0.926, but a reversal pattern is forming. If we get a weekly candle close above 1%, we get a breakout, and we can see yields increase to the 1.33% zone. Remember: this move would mean that bonds are SELLING off. This means that money is LEAVING the bond market, and ENTERING the stock/equity markets (and perhaps other markets such as commodities etc). Looking at the weekly set up, this move in yields is pointing to HIGHER stock markets. Again, my followers know this is what I have been predicting since markets began making new highs. There is nowhere to go for yield. Stock markets will continue higher until a black swan event occurs. Now let us look at the flip side. Central Banks. There is a currency war occurring between central banks, and the US Dollar and the Fed are winning. Why do nations want a weaker currency? Generally, the way to boost inflation and to increase exports to try to revive the economy was by weakening the currency. By the way, the classical economics definition of inflation is a weaker currency, meaning it takes MORE of a weaker currency to now buy something thereby increasing the price. The European Central Bank (EBC) wants a weaker Euro. The Eurozone is largely an export union, a weaker Euro makes European exports competitive, and the ECB hopes this would boost the economy has more European exports means more profits which means more jobs etc. The difficulty is that the Euro does not weaken even when the ECB attempts to talk it down. They have increased their 'emergency' asset purchasing program to 1.85 Trillion Euro's (remember mainly to buy bonds to keep interest rates suppressed: buy bonds to drop rates)! Euro shot higher. What option does the ECB have left? To cut interest rates deeper into the negative. Thereby making the interest rate differential between the EU and the USD larger in hopes that people would buy the USD against the Euro. So now you are probably asking why would investors/traders still be buying European bonds when they are yielding negative meaning you will lose money for holding them for the 10 year or more term? Bonds have now become a hold for capital appreciation rather than yield. Remember, if central banks cut rates lower, the bonds that you were holding issued in the previous higher rate environment become more valuable than the bonds issued in the newly lower rate environment. Bond prices move up as rates drop lower! Many are expecting this to happen next year. The ECB's next option in the currency war is to cut rates deeper into the negative in an attempt to weaken their currency. The Bank of England has made it no secret that they are also looking to go negative in 2021. Will the Federal Reserve follow tit for tat to counter the ECB? If the Canadian Loonie, the Australian Dollar, the Kiwi Dollar keep strengthening against the US Dollar, will the central banks in those nations cut into the negative to attempt to weaken their currencies? This is the currency war, and I believe money is already pricing this in. The move out of fiat: going into Bitcoin and Gold and other commodities. Going back to our weekly chart of the Ten Year Yield, it is possible that this bottoming pattern reverses and moves lower if negative rates become a reality in the US. This would continue our long term down trend in bond yields. You see this clearly when I zoom out on the monthly chart: To be quite frank, interest rates will have to be suppressed lower and forever. The world had a lot of debt before, but has even more due to the monetary and fiscal response against Covid. Money printing cannot and will not stop. The US passed a stimulus for $600, and talks are already beginning for a $2000 stimulus check. More will come. Negative rates are appealing because it means that governments can service the debt at a lower rate. A weakening currency is also great for debtors because it means they can pay back debt with cheaper currency. This is why in a very weird way many investors and traders are bullish bonds and see at least one more large move as bond prices increase due to more rate and deeper negative rate cuts. Insane but this is the kind of world we live in. Once again, highlighting yesterday's post: this is why you want to be in Gold, Silver, Bitcoin and other hard assets. The trade will be out of fiat as traders anticipate the next moves by central banks in this currency war. One more message I will leave you with. There are some that believe markets have a way to correct themselves. That even with all this central bank manipulation, prices and rates will correct to true value. This would imply double digit interest rates as bonds sell off heavy and interest rates spike. What I like to call the 'cuckening', and will be my sign to short stock markets hard. Now I am not saying this will happen anytime soon, but it is something to keep in mind. If such an event would occur, it would be the largest wealth transfer in history.
TVC:US10Y
by Uncharted-FX
4
USD's pain is the WORLD's, and CRYPTO's gain !If we break below the black multi-year support line, and if we test it's underbelly successfully by bouncing off the white 0.25 level of the Schiff pitchfork, which we seem to have done already, we need to fall below the white 0.25 level and turn it into resistance. If this happens and if we stay decisively below it, for several weeks, after multiple unsuccessful tries to break through and up. In that case... ...the coming bitcoin bull-run will leave in the dust pretty much every bull-market we've ever seen in the financial world people will be stunned. In the very long run, on a ten to thirty year horizon, the world is going to de-dollarize further. This is bad for the value of the dollar, and very good for the Emerging Market's massive volume of dollar-denominated loans, as the dollar will weaken, those loans will be way easier to finance.
ICEUS:DXY
by Butzibear