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Loading ...I guess if you’re right about the SM it will come out of nowhere, because all I’ve seen day after day for the last 8 years is a market that refuses to go down for any length of time.
But what the heck? Short away!
By Pam Martens: February 26, 2019 ~
Congresswoman Maxine Waters
Yesterday, Congresswoman Maxine Waters of California, the Chair of the House Financial Services Committee, released the titles of the hearings she plans to hold during the month of March. Of the hearings held by this Committee in February, none addressed the systemic risk to the U.S. economy from the interconnected mega banks on Wall Street.
In 2015, OFR released an in-depth report on systemic mega bank risks that were still prevalent on Wall Street. The OFR researchers (Meraj Allahrakha, Paul Glasserman, and H. Peyton Young) wrote the following:
“The larger the bank, the greater the potential spillover if it defaults; the higher its leverage, the more prone it is to default under stress; and the greater its connectivity index, the greater is the share of the default that cascades onto the banking system. The product of these three factors provides an overall measure of the contagion risk that the bank poses for the financial system. Five of the U.S. banks had particularly high contagion index values — Citigroup, JPMorgan, Morgan Stanley, Bank of America, and Goldman Sachs.”
One of the reasons these five banks have such interconnectivity risk is that they are also the largest holders of insane levels of derivatives. According to the Federal regulator of national banks, the Office of the Comptroller of the Currency (OCC), as of September 30, 2018 these five bank holding companies held the following in notional (face amount) of derivatives: JPMorgan Chase $58.2 trillion; Goldman Sachs $56.2 trillion; Citigroup $55.7 trillion; Bank of America $36.4 trillion; and Morgan Stanley $33.3 trillion.
To put that systemic interconnectedness in perspective, the 25 largest banks engaged in derivatives held a total of $271 trillion notional amount as of September 30, 2018. Of those 25 banks, just the five listed above held 88 percent of the total. (See Table 2 at this OCC link.)
Stocks always look bullet proof like just before 200o–2008 and now…It’s hard to short a parabolic rally and it’s hard to buy a plunge/washout like in 2008…
San Francisco Bay Area & Seattle lead with biggest multi-month drops since 2012; San Diego, Denver, Portland, Los Angeles decline. Others have stalled. A few eke out records.
The banks claim they’re complying with anti-money laundering regulations.
These unsettling tidbits about sudden problems on the demand-side in China.
“In 30 years, I’ve never seen anything like this”: CEO of warehouse operator Pacific Mountain Logistics.
MMT–Modern Monetary Theory
[For those to who don’t know MMT, the basic idea: we don’t need to “raise money” to pay for government spending, since we can’t go broke or default on our debts, since we can issue the currency. The main (perhaps only) constraint on spending is inflation, which you manage through taxation (i.e. taking money out of circulation).]
Well, what is Trump saying about quantitative tightening?
Why, that it’s terrible of course and should be stopped immediately.
So let’s think about this. If Trump is pushing for the Federal Reserve to not wind down their previous quantitative easing (balance sheet expansion) then isn’t he advocating for a permanent expansion of the balance sheet? And if so, isn’t this the same as the government spending while monetizing it?
Again, it sure sounds an awful lot like MMT.
When you combine this balance sheet pressure with Trump’s complaining about interest rate increases, it is clear that Trump wants fiscal expansion (through tax cuts) along with low interest rates and a permanently large Federal Reserve balance sheet.
I am going to say something that will offend both sides of this debate, but Trump is the most MMT-like-President ever elected.
Yup. I said it. The real question is what does it mean?
Well, I am going to include a chart from my good buddy Brent Johnson from Santiago Capital who will be horrified that I am including him in this piece that will surely irritate both the left and right, but nonetheless – here I go – it’s simply too good a chart.
The Federal Reserve has effectively been neutered with Jay Powell’s recent flip-flopping because of Presidential and Wall Street pressure. So the Fed is now in line. And as the chart shows, a lot of the fiscal stimulus is still ahead of us.
A Central Bank that is facilitating aggressive fiscal stimulus irrespective of the stage of the business cycle sure sounds like an MMT’er’s dream.
with his gibberish in front of the band of idiots aka congress we should be free to move higher.
That’s my story and I’m sticking to it!
There’s no way to guess precisely where gold and silver prices may go – however, we do have historical examples that can be extrapolated for today’s economic climate. Join Mike Maloney as he updates the prices required for gold to account for the massive amount of base currency that is literally being printed as though it is going out of fashion.
So I’m not buying any fat lumpies right now. soee thinks I have it wrong, I’ll play chicken a while longer
is turning out as expected except for the potential rally part…
Well shux. this sucks. HUI better turn north here in within the next couple of points
Trump is no match for me, er…Gartman!!
Seriously hard to short the stock market here, there or anywhere. The damn thing never goes down and it sure as hell isn’t going down on a day when the Fed Head speaks to Congress.
in stocks and bonds and shorting might be the way to go
Trump tweet top ticks stocks?
I offer below a chart of the SPY with each tweet’s dated highlighted. I would further note that the SPY from the prior tweet was the highest point in the history of the known universe. Not the same month. Not the same week. Pretty much the exact millisecond of the top.
Gartman has finally met his match.
vvvvv
, an eerie calm has once again fallen across markets, with volatility across currencies and equities continuing its downward trend.
But nowhere is the market’s “comfortably numb” stupor more evident than in government bonds, where the market is pricing in virtually zero risk of any material moves as the MOVE index (which tracks 1m bond volatility) just a 28-year low, pointing to record complacency around treasury yields.
No doubt, a Fed Head opening his yap is the only thing that matters in the manipulated world of markets!
Don’t you know, war is good for the stock market and bad for gold!
Nonetheless, I’m sticking with my Gartman moment, gold is going to catch up with the USD downdraft later today or tomorrow.
They’ve been beating on NEM the last couple of days. Might be time to take a stab pretty soon.
Yr right….Fed Speak more important than the Paki’s shooting down 2 Indian fighter jets…….nothing like 2 Nuke power squaring off, to send PM’s down.
testifying in the House of Corruption today
Probably not going anywhere in the metals until either later today or tomorrow
This is my Gartman moment.
Some correlation and they want it to go down. Will it pull gold down with it?
