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Old 09-18-2019, 03:10 PM
Danny B Danny B is offline
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Join Date: Oct 2012
Location: L.A. Ca.
Posts: 4,848
Increasing volatility in finance

I wrote about the FED repo market yesterday. Obviously, this means nothing to the average person. It is a big signal to the finance industry. The volatility in finance is slowing down demand for credit.
"As Bloomberg reports, today’s surge in Treasury repo rates poses a threat to the market more broadly because traders won’t take new positions without confidence in their ability to obtain funding at consistent rates, "
Overnight financing is the key to driving the economy, leverage.
"This is without a doubt one of the worst things that can happen. In many respects it overshadows the Fed moving tomorrow, because if the plumbing doesn’t work everything starts to break down. "
"It’s a bigger deal than a rate cut by far. It’s meaningless if you put in a rate cut and overnight financing reflects nothing of that rate cut. Which is what’s happening right now."
This is a slowdown that the FED didn't plan on.
"Suffice to say, we’re not supposed to be talking about $ funding markets – the linchpin of the largest & most important (there, I said it) market in the world, US Treasuries – in the same breath as the wreckage wrought in Argentina only a month earlier. We’re definitely not supposed to be saying “the collapse in the Argentine Peso was barely 1/3 of what we just saw in the market that the Fed controls…”
As volatility and rates go up, more money will pull out of the markets. U.S. Treasuries are used as a funding pool for everything in the world.
This will filter down and affect everything else.

Armstrong, "ANSWER: Capital is beginning to move already. Europe is closing in and hunting taxes. The chaos of Brexit and punishing Britain rather than addressing the economic problems has really doomed Europe.

As you can see, the peak in the PE ratio took place at the LOW in 2009, not the high. When you enter these periods of uncertainty, interest rates, dividends, and expectations of profits no longer mean anything. The primary objective is to park money in a safe place where you get it back. Banks are questionable with bail-in policies and negative interest rates. Now even gold is being targeted. Where else to go but equities?"
Armstrong says that capital will flee public debt like treasuries and, move to equities. I just don't see this. Equities are just too small a market to shove $15 trillion in treasuries in. Forget about $6 trillion in corporate bonds. Various States are making it hard to buy gold without a report. The big money will just file the stupid report and, not worry. A lot of money is moving into silver.

9/18 Fed’s first-in-a-decade intervention will be repeated Wednesday – Bloomberg
It didn't work so, try it again.
9/18 Rate cut odds dip below 50% from 92% a week ago – Mish
"They" wanted to avoid another rate cut so, they did QE via the repo market.
9/18 Illinois pension debt now a quarter-trillion dollars and counting: Moody’s – CB
Illinois state workers highest paid in nation | Illinois Policy
Nearly 40000 state workers to get pay raises under new contract

9/18 Could ultra-low interest rates be contractionary? – Project Syndicate
NIRP and ZIRP are supposed to stimulate the economy. BUT, they wipe out everything and everybody who depend on interest income. Apparently, the negative from the loss of interest income wipes out the positive from low rates. NIRP and ZIRP work wonders for the State that can finance expenditures for free. But, these are expenditures, NOT investments.

9/17 In interview, GATA chairman asks: how far will rigging probe go? – GATA
If it goes far enough, the paper gold market will self-destruct and, gold will go to a price of many $thousands an ounce. Since MANY other markets are referenced to the price of gold, there would be chaos in all other markets.
9/18 Germany “cannot accept parallel currencies such as Facebook’s libra” – Reuters
France vows to block development of Facebook’s Libra cryptocurrency on European soil

The CBs can't very well tolerate competition for their paper.
9/18 Orlando housing prices are up 9 percent since this time last year – Orlando Weekly
9/17 One in four of New York’s new luxury apartments is unsold – NY Times

NYC has high taxes and Florida has low taxes.
9/17 Questions, not answers surround U.S. push to war with Iran – Tom Luongo
Yeah, how did israel manage to launch missiles and drones from Iran?
Every time that talks with Iran looked promising, "Iran" attacked a ship or an oil field or something else.

It looks like Netanayahooo is OUT. This is the best of news. The world can breathe a little easier. The election is close and Bibi refuses to concede. Bibi is charged in 3 big investigations and, will go straight to prison.
His opponent, Gantz is problematic also.
A Dutch court has held a hearing on a war crime case against a former Israeli general challenging incumbent Israeli Prime Minister Benjamin Netanyahu in ongoing general elections.

"Whatever the outcome, ordinary Israeli Jews will continue suffering under neoliberal harshness, Arab citizens treated far worse, Occupied Palestinians worst of all.

If Netanyahu loses to Gantz/Lapid, his toxic presence will be gone, his destructive agenda to continue under new management."
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