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Old 07-02-2018, 02:52 PM
Danny B Danny B is online now
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Join Date: Oct 2012
Location: L.A. Ca.
Posts: 4,492
A crisis here,,, a detonator there

7/02 Morgan Stanley: Vicious cycle will end only when stocks dive – ZH
The aggregate stock markets are down $10 trillion so far.
Armstrong broadly hinted at a bank closure. Deutsche bank may very well trigger this.
They have many $trillions in derivatives that can't realistically be unwound.
The financial sector got access to our savings (Grahm-Leach-Bliley) and speculated against the consumer driving up prices. Wages went up enough to make us non-competitive globally but, NOT enough for us to keep up with price inflation. After our savings were gone, the banks needed continual bailouts to keep functioning.

The mentality of Wall St. did NOT allow any moral hazard to enter the equation. The bailout of Wall St. erased any feelings of financial hazard. This was especially true when every loan was securitized and passed off to some muppet (investor). The bailouts just emboldened AND empowered the self-proclaimed titans to leverage even more. While the FED is owned by it's private member banks, it is slowly becoming aware of the dangers of bailing out irresponsible people.

The FED, ESF and PPT pumped endless liquidity into the system to keep everything going when actual commerce would not do that. The problem comes in when; if you offer money to people, they WILL take it.
7/02 $6.3 trillion…American companies have never owed this much – CNN Money
Excellent article on bull markets and sentiment.
Stock Markets Hyper-Risky 3 -
Keep in mind that a rising dollar will destroy the system.
"Tighter domestic monetary policy and global trade turmoil have set the US dollar for its best quarterly performance since December 2016. The DXY index, which tracks the US currency against a weighted basket of global peers, was up 5.2% in the three months to June 29. "
"U.S. dollar strength or emerging market weakness? It's most likely a mix of both,"
"The U.S. dollar gained 5.2% against the euro, 4.0% versus the Japanese yen, 6.7% versus the Swedish krona, 6.5% against the New Zealand dollar, 5.8% versus the British pound, 3.8% against the Norwegian krone, 3.7% against the Swiss franc, 3.6% versus the Australian dollar "

"14.7% drop in the Brazilian real. Surging inflation, a faltering boom, excessive debt and strongman President Erdogan's threats on central bank independence were behind the Turkish lira's 13.9% fall for the quarter. Vulnerable as well, the South African rand fell 13.7% versus the dollar.

Especially late in the quarter, Asian currencies were under heavy selling pressure. Declines for the quarter included the Thai baht's 5.8%, the Indian rupee's 4.8%, the South Korean won's 4.6%, the Taiwanese dollar's 4.5%, the Malaysian dollar's 4.3%, the Indonesian rupiah's 3.9% and the Singapore dollar's 3.7%."
"Losses included the Hungarian forint's 10.0%, the Russian ruble's 8.9%, the Polish zloty's 8.7%, the Czech koruna's 7.5%, the Iceland krona's 6.5%, the Romanian leu's 5.3%, the Bulgarian lev's 5.2%, the Serbian dinar's 5.0% and the Croatian kuna's 4.5%.

In Latin America, the Venezuelan bolivar sank 48.5%, the Mexican peso 8.7%, the Chilean peso 7.7% and the Colombian peso 4.6%. " Chinese stocks led the rout. The Shanghai Composite sank 10.1% during the quarter. The small cap CSI 500 lost 14.7%, and the CSI Midcap 200 fell 12.5%. China's growth/tech ChiNext index was slammed 15.5%. Hong Kong's Hang Seng financials index dropped 10.7% during the quarter, led by losses from the Chinese securities firms. As for China's two largest banks, Industrial and Commercial Bank of China dropped 12.6% during the quarter and China Construction Bank lost 15.5%.

The emerging markets are in a tailspin and may very well be a detonator. Problem is, there seem to be a dozen "known" detonators spread around the world.
7/02 China is one signature away from dealing the dollar a death blow – Birch
7/02 Renminbi’s worst month ever sparks U.S.-China currency war fears – GATA

China wants a weak currency to help it's exports markets AND a strong currency to stop capital flight.
Socialism is the firewall between Darwinian pressures and, non-producers. What happens when you get TOO many non-producers?

John Mauldin and his Train Wreck series of articles.
Crypto news; 7/02 Some crypto investors are giving up on bitcoin, cashing out of Coinbase – Fortune
7/02 Over 1,000 cryptocurrencies are considered “dead” now – Cointelegraph

The EU is starting to face up to the fact that; borrowing money for consumption just isn't a good idea.
"After more than 2 trillion euros of asset purchases and a zero interest rate policy, it is long overdue. The massive quantitative easing (QE) program has generated very significant imbalances and the risks far outweigh the questionable benefits. The balance sheet of the ECB is now more than 40 percent of the eurozone GDP" Do tell!
"The governments of the eurozone, however, have not prepared themselves at all for the end of stimuli."
"In other words, the problems are still there, they were just hidden for a while, swept under the rug of an ever-expanding global economy."
ever-expanding global money supply

"The 19 eurozone countries have collectively saved 1.15 trillion euros in interest payments since 2008 due to ECB rate cuts and monetary policy interventions, according to German media outlet Handelsblatt. This reduction in costs is financed by pensioners and savers who are forced to invest in these debt instruments, often by institutional mandate."
"Taxes rose for families and small and medium-sized enterprises, while current spending by governments barely fell"
"The main eurozone economies face more than 2.1 trillion euros in debt maturities between 2018 and 2021."
Don't forget about the Euro 1.2 trillion in non-performing loans.
"Where would bond yields be if the ECB was not the largest purchaser of eurozone bonds? We do not know for sure, as there is no discernible market demand at these levels. "

Today, the ECB program buys more than three times the net issuances.
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