BRENT OIL. Where next?The price of Brent crude oil fell from $ 70 in early March to $ 64 per barrel, a drop of 8.5%.
📉Factors that contributed to lower oil prices were delays in vaccination in most countries.
📉Delayed vaccine supplies and local lockdowns continue to stand in the way of a full resumption of economic activity.
📉📄Also the OPEC agreement on April 1, where the participants agreed to increase oil production: OPEC+ will increase production by 350,000 barrels per day (bpd) in May and June and will continue with an increase of 450,000 barrels per day in July.
📌According to analysts, the price of oil will fall to $ 61 per barrel at the end of the second quarter, and to $ 53.4 per barrel by the end.
📌Observers note that the price of oil is reversed to the VIX index, which is now the lowest since early 2020.
📌Analyzing the chart of the VIX index, we can assume that it will reach its minimum in May 2021, and then resume growth.
📌In the short term, oil prices can be expected to respond to the global economic recovery and the fight against the pandemic.
But in the long run, oil will be traded in the range of 50-55 thousand dollars per barrel.
Economy
$SPYStock market news live updates: S&P 500 reaches record high, traders eye Biden's infrastructure proposal
Stocks jumped to record levels on Wednesday as technology stocks recovered losses from Tuesday's session. Traders digested the contours of President Joe Biden's infrastructure proposal, which would include trillions of dollars in government spending as well as new changes to tax policy.
The S&P 500 rose by 0.4% to reach a fresh record intraday high. The index's month-to-date gain came out to more than 4%, marking its best monthly performance since November. The Nasdaq outperformed, gaining just over 2% at session highs as technology stocks outperformed. The Dow hovered near the flat line. A day earlier, the Dow dropped for the first time in four sessions, and each of the S&P 500 and Nasdaq also declined. Shares of big bank stocks recovered some declines from earlier this week, though shares of Nomura and Credit Suisse added to losses as the lenders assessed the losses they would incur after the hedge fund Archegos Capital defaulted on significant margin calls last week.
Traders will be eyeing President Joe Biden's latest public address on Wednesday, which is expected to include details around his infrastructure plan for the country. The White House released a statement about the plan ahead of the address, noting that it would involve more than $2 trillion in total spending over eight years to help rehabilitate and build out the country's infrastructure, address the crisis around climate change and curb economic inequality. To pay for the proposal, Biden will propose raising the corporate tax rate to 28% from 21% for 15 years, and implementing other policies to disincentivize offshoring.
Wednesday also marks the final session of both March and the first quarter. For the year-to-date, small cap stocks as well as the cyclical energy, financials and industrials sectors – or the biggest under-performers of 2020 – have outperformed strongly, while last year's leading technology companies have lagged. This rotation has coincided with a faster-than-anticipated vaccination program in the U.S., as well as an influx of estimates-topping economic data. Wednesday morning, ADP reported that private payrolls grew by 517,000 in the U.S. in March, marking the best gain since September.
Still, however, investors have been nervously looking for signs that the stimulus-aided post-pandemic recovery is bringing with it an unwanted rapid rise in inflation. The latest march higher in Treasury yields, with the benchmark 10-year yield rising to more than 1.75% this week, has reinforced these apprehensions. But with these concerns now well-known, some of the next market catalysts will likely be around whether fears around fast-rising prices ultimately come to fruition, some analysts said.
"We’ve been on this ride probably for two quarters now where interest rates are really driving everything … We’re likely to still see interest rates continue to rise, which is healthy and normal and you’d expect to see that in a recovery," Tim Courtney, Exencial Wealth Advisors chief investment officer, told Yahoo Finance.
"But I think there’s going to be something else that’s going to start to take over here within the next month or so, and that is, the market is going to start to pivot from a recovery, say, interest rate story, to to see the proof," he added. "So I think that interest rates dictating the market behavior will still be a main factor, but earnings coming up for the first quarter and economic data are going to be top of the list items that investors are going to want to see."
—
4:03 p.m. ET: S&P 500 jumps to a record closing high, gaining 4.3% in March for its best month since November
Here were the main moves in markets as of 4:03 p.m. ET:
S&P 500 (^GSPC): +14.55 (+0.37%) to 3,973.10
Dow (^DJI): -83.83 (-0.25%) to 32,983.13
Nasdaq (^IXIC): +201.48 (+1.54%) to 13,246.87
Crude (CL=F): -$1.24 (-2.05%) to $59.31 a barrel
Gold (GC=F): +$22.00 (+1.30%) to $1,708.00 per ounce
10-year Treasury (^TNX): +2 bps to yield 1.7460%
—
12:42 p.m. ET: Stocks extend gains, Nasdaq adds nearly 2%
The three major indexes held higher in afternoon trading, with the S&P 500 trading at an all-time high. The information technology, consumer discretionary and communication services sectors outperformed, while materials, financials and energy stocks lagged.
Here were the main moves in markets during the afternoon session:
S&P 500 (^GSPC): +31.85 points (+0.8%) to 3,990.40
Dow (^DJI): +30.75 points (+0.09%) to 33,097.71
Nasdaq (^IXIC): +252.11 points (+1.94%) to 13,297.99
Crude (CL=F): +$0.36 (+0.59%) to $60.91 a barrel
Gold (GC=F): +$24.50 (+1.45%) to $1,710.50 per ounce
10-year Treasury (^TNX): -1.2 bps to yield 1.714%
—
10:10 a.m. ET: Nomura, Credit Suisse shares extend losses in wake of Archegos Capital implosion
Shares of Nomura and Credit Suisse added to steep losses on Wednesday as the companies prepared to incur major losses after Archegos Capital defaulted on significant margin calls last week. Credit Suisse's about 4% share price drop on Wednesday brought the stock's decline for the week to about 20%, while Nomura fell another 3%.
—
10:05 a.m. ET: Pending home sales plunged by the most since April 2020 in February
Pending home sales slumped last month as inclement weather and tight inventory weighed further on the housing market at the start of the year.
The National Association of Realtors reported Wednesday morning that pending home sales fell by 10.6% in February from a month earlier, marking a second straight monthly decline. Consensus economists were looking for pending home sales to fall by just 3%, according to Bloomberg data. Over last year, pending home sales fell 2.7%, not accounting for seasonal adjustments.
—
9:30 a.m. ET: Stocks open higher
Here's where markets were trading shortly after the opening bell Wednesday morning:
S&P 500 (^GSPC): +13.34 points (+0.34%) to 3,971.89
Dow (^DJI): +88.09 points (+0.27%) to 33,155.05
Nasdaq (^IXIC): +89.25 points (+0.66%) to 13,131.18
Crude (CL=F): -$0.41 (-0.68%) to $60.14 a barrel
Gold (GC=F): +$2.10 (+0.12%) to $1,688.10 per ounce
10-year Treasury (^TNX): -0.5 bps to yield 1.721%
—
8:30 a.m. ET: Private payrolls rose by 517,000 in March: ADP
U.S. private employers added back more than half a million jobs in March for the best gain since September, according to a report from ADP on Wednesday. However, job growth still slightly missed expectations, even as February's inclement weather abated and the domestic vaccination program picked up steam.
Private payrolls grew by 517,000 in March, ADP said. This followed a revised gain of 176,000 in February, up from the 117,000 previously reported. Consensus economists were looking for domestic private employers to bring back 550,000 jobs during the month, according to Bloomberg data.
The services sector again handily led the way in recovering jobs, with service-providing payrolls climbing by 437,000 in March. Leisure and hospitality industries made the largest advances, with payrolls rising by 169,000. Trade, transportation and utilities jobs also rose by 92,000, and professional and business services jobs rose by 83,000.
The goods-producing sector also posted net private payroll gains in March, with these increasing by 80,000. Construction and manufacturing jobs rose by 32,000 and 49,000, respectively, though mining positions edged lower by 1,000.
—
7:20 a.m. ET: Pfizer shares rise after company says its COVID-19 vaccine is safe and effective in children as young as 12
Pfizer (PFE) announced on Wednesday that data from its latest study showed that the COVID-19 vaccine it developed with BioNTech (BNTX) was safe and effective in preventing COVID-19 in children as young as 12.
The late-stage trial comprised 2,260 U.S. volunteers between the ages of 12 and 15. There were no cases of COVID-19 among those who received full vaccination, versus those who were given placebos, Pfizer said. The study has yet to be peer reviewed for publication.
—
7:15 a.m. ET Wednesday: Stock futures trade mixed, with technology shares outperforming
Here's where markets were trading heading into the regular trading day on Wednesday:
S&P 500 futures (ES=F): 3,951.75, +4 point, or 0.1%
Dow futures (YM=F): 32,899.00, -26 points or 0.08%
Nasdaq futures (NQ=F): 12,951.25, +73 points or 0.57%
Crude (CL=F): -$0.06 (-0.1%) to $60.49 a barrel
Gold (GC=F): +$1.50 (+0.09%) to $1,687.50 per ounce
10-year Treasury (^TNX): -0.7 bps to yield 1.719%
—
6:00 p.m. ET Tuesday: Stock futures tick up as overnight session begins
Here's where markets were trading Tuesday evening:
S&P 500 futures (ES=F): 3,948.75, +1 point, or 0.03%
Dow futures (YM=F): 33,939.00, +14 points or 0.04%
Nasdaq futures (NQ=F): 12888.00, +9.75 points or 0.08%
Detail of US net imports, and why the situation is so dramaticThere is a clear picture here. The only (tiny) saving grace the US has is the "on site" stuff that cannot be delocalized, or hardly, all these basic industrial goods, as well as their agri mostly grains.
The US imports 3 times as much consumer goods and auto parts as they export.
It's cheaper to get chinese slaves to build goods in huge factories than pay these expensive unionised americans.
The US , and even the whole west to a smaller extant, became totally reliant on foreign manufacturing.
The US are heavily dependent on the rest of the world for their consumption of pharmaceuticals, auto parts, electronics in general, all sorts of household items like clothes and beds and microwaves and so on, cheap TV made in China etc.
This became particularly visible during the covid crisis of 2020 where the US went "wait we need stuff, where is it?", sorry it's in India, I remember Morocco made big stacks of Hydroxychloroquine meanwhile the west could not get any, so then the whole west started a big conspiracy theory about every single drug that is cheap to make - therefore is made in foreign nations (revenues < minimum wages ==> impossible for entrepreneurs to produce locally), the propaganda branch of the west starting spreading messages on how drugs that billions (with a B) used for a century were very dangerous, no idea how anyone bought that.
"Nearly 80% of drug ingredients used in the United States originate overseas, but FDA has struggled to oversee the manufacturers’ factories, raising red flags about safety. It caused drug shortages and suspension of safety protocols of the medicines manufactured overseas - the majority in China and India."
Am I being a negative perma bear now? This was "speculation" before 2020 (not really guesswork, it's literally in the numbers but whatever nobel prize economists and keynisians are too dumb to understand). But now in 2021 it REALLY happened. We experienced it for real, it's not theory anymore.
To be clear: The drug shortage during the covid pandemic was VERY SMALL. It's not 1% of what is about to hit.
The west, mostly the US, and the least Germany, have no productive ability. When India & China stop sending humanitarian aid to them, they will turn into a desert like Venezuela, it's back to prehistory, they have the ability to build nothing at all.
Elected officials are not the ones running the economy, entrepreneurs are, businessmen, and these guys conduct their business in Asia.
There is no simple switch that they can turn on and off. Rebuilding the country if all goes right would normally take at least a good decade or two (maybe I'm too optimistic), but surely a while longer with the population being so old.
If you are curious what consumer goods the US is a net exporter of, here is the list:
To compete with Chinese cheap goods Germany (and a little bit France & the UK) came up with quality standards, the ISO 9000/9001 family which was first created by the US and the UK I know but Germany is what really went in that direction. So they retain some industrial capabilities (in particular an impressive car industry, France not doing too bad in that area too, Japan too and motorcycles also). Germany, France, Japan... They still build stuff, but what they build is more expensive so it has to be "high quality".
But the US, being overly woke-liberal-capitalist-shorttermist completely gave up. They are more vulnerable than a baby in a pitbull fighting arena. Not sure what their plan is? Maybe take in millions of cheap migrants to use as workers once shtf? What will they do? Build a wall to keep them in? Lol that's not beyond the realm of possibilities.
That's all grim but what about solutions? How to rebuild? Obstacles to rebuilding:
You have to find capital (and as we know voters will demand a government with high taxes to "help them out", shooting themselves in the leg).
Business owners & builders have to be willing to take risks when they are getting squeezed by social politicians & probably more regulations.
Businessmen/women have to build factories, this does not happen by itself, need construction materials and so on.
Entrepreneurs need to find skilled workers (americans have not worked in factories for 50 years) willing to work (so not on social aid).
A country requires its entrepreneurs to not simply bail out because why bother? After decades of anti-nationalist propaganda.
Good luck!
Once the snowball of rebuilding gets going it's GG, it will keep growing, but when everything collapses it's just so hard to get the snowball initially going. Look at Venezuela and Argentina. Not only elites & go-getters left, but their "shoot myself in the foot" population is working hard to make sure business creation is next to impossible. And they've been in a mess for 10-20 years, with no light at the end of the tunnel.
In modern days, high performance dynamic people will not "hold the bag" of a dying nation with a population hostile to business and in denial, lmao imagine arguing for months with morons in denial when you can just buy a plane ticket to a beach somewhere and GG.
Almost no one has a nationalist sentiment anymore, so the people that build the economy will bail out of failing nations.
And they only come back when a nation works hard to attract them (enough for it to be worth taking the risk of moving), with low taxes and low regulations and so on.
It's really simple and straightforward...
So to sum up, the US is doomed. Wasteland of nothing being done soon. And it's not worth fighting for, let them sort their mess. Solutions?
East Europe, Australia, Caucasus countries, and others, let you in if you got money in the pocket (to invest in their country of course) and plans.
Georgia Citizenship by Investment: Become a Turkish citizen within just six months with a real estate investment, bank deposit, or new business.
Turkey with their empire history have it implanted in them to take people in. And actually they have the fastest growing economy of OECD countries.
And much better demographics. Turkey has not the best eco freedom, but better than France. Georgia better than all.
As the economies keep growing, and less of their entrepreneurs and workers leave + new ones come in, it can snowball and they can easily be in a better place than the US.
All countries that went through troubles are fighting for wealth & job creators in this very high sedentary & risk aversion era. Go-getters still overvalue the west. Not much longer.
Istanbul is 6 times as bif as NYC, and got twice the population, don't worry there is plenty to do. Remember, when Rome fell, the population of Istanbul went to the moon.
Of course die hard atheists, LGBTS and so on are not welcome. Moving to a country, no matter which one, is a big decision not to be made overnight.
Also if some NA states split from the rest it might get interesting, Texas in particular is trying to be more pro business.
Big beautiful country average size (30m pop 700k km² bigger than France, plenty of space for new arrivals) with natural ressources etc.
Their GDP grew 71% more than the US between 1997 and 2016 and manufacturing output 130% more. They're getting overrun with californians and illegals though (risk).
Sorry Americans stuff does not magically fall off the sky after the welfare state makes an incantation, it has to be harvested from the ground and then manufactured.
If no one builds anything in the country, and foreign countries that build stuff stop sending it for free, there won't be anything in the country.
Enjoy no toilet paper, no computers, no phones, no wine, no car parts, no drugs, no televisions, no shoes, no shirts, no veggies, no nothing.
All that will be left will be sugar, wheat, soybeans, corn, and meat which the US does produce in large quantities.
In other words sodas, high fructose corn syrup, and burgers (wheat + meat). Yay!
Ah an a final word, all this collapse is considering they do not repay their debt (both official federal debt and us dollars printed to import).
If they have to export what they owe the hit will be even bigger (what little drugs they produce will have to be exported while seniors die being denied treatment), but I don't see this happening, or maybe very little of it.
Fed Chair Powell: We would eventually roll back support programs"The amount of fiscal support the economy has received is historically large and that's going to result in higher economic activity and hiring," Federal Reserve Chairman Jerome Powell said in an interview with NPR's Morning Edition, on March 25.
According to Powell, the Fed is moving to deactivating the lending facilities, and will gradually roll back the amount of Treasury and mortgage-backed securities that they're buying, these moves will enable them to raise interest rates in a longer run.
The market is predicting a recovery on the USD, after discerning a turning point of the expansionary monetary policy.
MM Analysis
Apart from the interview of Powell, the Unemployment Insurance Weekly Claims has also dropped from 770 thousands to 684 thousands (better than expected), showing a robust recovery from COVID-19.
The senate has also extended the Paycheck Protection Program (PPP) application deadline from March 31 to May 31, providing an even stronger support on the employment recovery.
Besides, President Biden has named a new goal on vaccinations - 200 million in his first 100 days (Currently 130million). If the vaccination rates continues, the herd immunity schedule might be achieved in advance in June.
Overall, with a strong support on vaccination and employment, we should focus on the robust economic recovery of the US when making investment decisions. The USD would recover, with a sign of the end of expansionary monetary policy.
There is nothing to see hereThe prices of house construction materials in particular is tearing up the fabric of the universe, while the USA are taking in more migrants than ever, not sure how they plan to house them. Tents? Cages? Camps? The forest? In people's backyards?
The prices of materials used for building cars & electronics is also going up, will it go back down? If these prices stay up then the end product prices will go up, some already have.
And also the price of grains has gone up, which will end up having an effect on burgers (wheat => bread, soybeans => meat) and this, mainstreet will notice very rapidly (we all need to eat everyday), prob they demand more social programs, more stimulus checks...
And so you get this cycle of euphoria where the public celebrates their "free" money.
I don't get it. In real time strategy games the economy is real stuff down to earth: Gold, Wood, Oil, Iron, Food, Stone.
You get all these ressources and that is your economy. It makes sense, it is not hard to understand.
What matters in your economy is the real ressources that are needed for living and building, as well as selling them if you produce enough.
And then you also have gold which purpose is to faciliate exchanges inside your nation, to trade with other nations, as well as hire soldiers which can then use it to buy the ressources they need (wood & stone to build a house). It's a tool.
If we run out of wood, stone, or food IN A VIDEO GAME no one will argue that there is more hidden in a parallel universe that "the rich" can access via a magical portal.
But in this declining civilization there is no "real stuff" in the real world, the public and decorated economists (it's like a reward for being stupid) think the economy is some abstract number and we can always increase the number with magical fiat.
Chavez supporters were euphoric back then. Let me tell you they're not laughing now.
Some numbers if this interests you:
www.census.gov
In particular: Exhibit 6- U.S. Trade in Goods by Principal End-Use Category
Will the US follow New Zealand recent policies to try and magically fix the housing crisis?
If you make it less lucrative to build a house, then plenty of houses will pop out of the ground and everyone will have a home, right?
Don't get me wrong, landlords are technically parasites. Especially those that just got lucky and bought, or worse inherited, some property decades ago.
But if you punish people for building houses... I don't know... Maybe that's not the right way to handle the issue? Just maybe?
Actually the largest China import is Oil (1/4) from the Middle East & Russia, electronics from Japan SKR & Taïwan, also Germany is quite big, probably cars or something. Does not mean Africa is not the final sucker holding the bag as other countries spend those usd.
oec.world
Angola exports over 3 times what they import. Baggy.
Lmao the Current Account Balances values. China is number 3 with 165 billion. Guess who are number 2 and 1?
Japan nb 2 with 195 billion, over capitalized country, they just buy Bitcoins and start building casinos now even.
And then you can easilly guess who is number 1. An industrial power. A machine. They make the best cars. 297.
Meanwhile the US are in the whole, they are number all right, number 1 from the bottom that is, their account is at -466 billion.
They are the brokest of broke, their production is down and about to get worse, prices go up, imports will slow (what fool will send them free stuff?), they are already in the whole and the depression/hyperinflation crisis has not even started, usually this situation is what is seen at the bottom. It's going to go from bad to worse.
Mathematically it is worse than Greece, Greece also has a bit of a border crisis with Turkey and the refugees that want to go to Germany but that too is worse for the US.
Michael Burry warned, and know what happened? The SEC paid him a visit and blamed him for "spreading panic". They are pressuring him into silence. Can you spell DENIAL?
I'm giving this circus less than 10 years until "this was not real socialism".
FEDFUNDS - Will See Light Again!I am not a fundamental expert (nor an economist) but I found FEDFUNDS chart really interesting!
I never thought that basic technical analysis tools can also be applied to such economic instruments!
From a technical perspective, FEDFUNDS has been bearish for a while making lower lows and lower highs.
For the momentum to be shifted from bearish to bullish, as mentioned in the title "see light again", FEDFUNDS has to break above the last swing high. (highlighted in gray as trigger)
It would be interesting to hear your thoughts on this one.
~Rich
AUDUSD: Weekly Uncertainty AUDUSD has failed to break the so called resistance and a trendline is forming thus we will wait for a 3rd touch to form and possibly sell on it's break downward. Moreover, fibonacci levels are precisely respected. Will it succeed in breaking the uptrend ? Remember that this one could be in a corrective wave before the storm as the USD can possibly be failing following a bad economy management.
If you like the idea, support us with a like and a follow
Trade safe !
MacroForex
DXYthe US economy are growing fast and the chart is ready to break out a strong resistance, if the economy goes to that way which could keep the candles above the resistance area, every thing would change.
Very bullish on silver - $40 in JuneInflation is a problem that will show its effect over time. $ 1.9T is a lot of money which we cannot ignore.
Forecasted relief plan and deficit for USA and printing money, will destroy or at least do harm the US economy.
This will effect gold, silver and bitcoin in a positive way, due to hedge.
Bullish: stocks and commodities.
Bearish: US dollar
Destiny Calls - The Tribulation & Creative DestructionDisclaimer:
This post will be heavy speculation - but let's have some fun. Let's play this fun game as a mental exercise. In no way is any of this financial advice, nor in any way political, nor does it even reflect my opinion. It is just a mental exercise. I fully admit that economics is not my background, so I will be taking a different approach to forecasting this market. I don't post for recognition, to market anything, or for money, or to advertise my position. I post only to develop my own craft, and to discuss openly.
I think that the stock market serves two purposes:
1. It's a casino. It's really shiny and gets you really emotional. It splits you into teams - bull and bear, retail and institution, them and us. You might win for a while - a long while, if you're good, but in the end, the house always wins... and you are about to see that - I think. Anyway, it distracts people from the real game. Not played with fun coupons, but with actual money.
2. It's a training ground... for those that are going to run the economy some day.
First of all, M1:
What happened?
www.thestreet.com
I think this can be explained in short, by the Fed increasing their leverage. They are increasing their control over assets, while taking on more risk.
State of the Economy:
GDP/CPI Forecast:
GDP Forecast:
CPI Forecast:
NSCC-2021-801:
www.dtcc.com
This should be looked into. It looks like the Fed is gearing up for something.
Everything seems to align for around March 19:
The Fed's Tools:
www.investopedia.com
- Yield Curve Control (leads to inflation): realinvestmentadvice.com
- "Open Market Operations": Basically they can buy Treasury bonds, to manipulate interest rates.
- "Influencing Market Perceptions
The final tool used by the Fed to affect markets an influence on market perceptions. This tool is a bit more complicated because it rests on the concept of influencing investors' perceptions, which is not an easy task given the transparency of our economy. Practically speaking, this encompasses any sort of public announcement from the Fed regarding the economy."
Basically, their final "tool" is to lie!
Economics and Game Theory are beautiful. In a vacuum, in economics, actors will always act rationally. In its essence, the market, and the economy, is just one thing paired against another, right? All it is is a game, to see how many of one thing you can exchange for another thing, that the other person owns. That is why Game Theory, Dow Theory, Supply and Demand, and all forms of psychology work in the market. It's really a game of accumulating Debt.
G30 Reports on COVID-19:
"COVID-19 triggered a historic collapse in peacetime economic activity. Every indicator continues to point to a multiyear crisis with long-lasting repercussions. With extreme poverty, hunger, and deprivation rising for the first time in decades around the world, as many as 100 million more people could be living on less than US$1.90 a day in the wake of the pandemic."
"Policymakers need to act urgently, as the solvency crisis is already eroding the underlying strength of the business sector in many countries. The problem is worse than it appears on the surface, as massive liquidity support, and the confusion caused by the unprecedented nature of this crisis, are masking the full extent of the problem, with a “cliff edge” of insolvencies coming in many sectors and jurisdictions as support programs lose funding and existing net worth is eaten up by losses.
"The first wave of liquidity-focused policy measures has prevented much more severe consequences for the corporate sector, jobs, and for the economy more broadly. As the crisis progresses, jurisdictions now need to develop policy responses that accommodate structural changes in the economy triggered by the pandemic, and address the following problems that make the initial response unsustainable:
- A level of public spending that would be unsustainable over the potential duration of the ongoing economic crisis..."
"Some sovereigns, most of them investment-grade, were able to borrow in the international capital markets since February of 2020, but an unprecedented number of countries saw ratings downgrades. No Sub-Saharan African country has borrowed in the international capital markets since February 2020"
No Debt, this is not allowed.
"We reject the view that the worst of the crisis has passed."
"Remaining uncertainty must not become an excuse for inaction."
"Advanced economies have responded to uncertainty with domestic measures that match our assessment of the gravity of this crisis. Governments there have found innovative ways to expand central bank balance sheets and run double-digit budget deficits, established multi-trillion dollar facilities to bolster market liquidity and credit flows, and enacted emergency measures to help cash-strapped people and firms, but only at home."
"Existing crisis management and debt restructuring institutions are an increasingly poor fit for today’s mix of actors and problems. New creditors—bond holders, China’s policy banks, hybrid and commercial actors represent the bulk of debt payments from low-income countries in the wake of the pandemic shock . Adapting the international financial architecture to these and other new stakeholders will take time. Urgent responses to the pandemic cannot wait for this process to run its course."
New actors are accumulating Debt, this is double not allowed.
"At this preliminary stage, we have reached consensus on the following recommendations in each of the seven areas:
- The International Monetary Fund (IMF) should mobilize global liquidity on a larger scale than ever before in the face of uncertainty, scale up its crisis lending in low-income countries, and use far more of its existing non-concessional resources to mitigate economic fallout from COVID-19. We call on IMF members to commit to two new SDR $500 billion allocations that could be implemented rapidly in response to future shocks or serious economic deterioration. Separately, IMF members should agree on a mechanism for re-allocating existing SDR to the most vulnerable among them. The Fund needs to double its concessional lending capacity, exhausted early in this crisis, to enable it to respond nimbly to large-scale outflows in multiple vulnerable countries. It should signal willingness to use far more of its ample non-concessional resources to support middle-income countries in the face of uncertainty.
It means that more debt will be accumulated from emerging nations.
- The World Bank Group and the growing array of regional development banks have a critical role to play in preventing the COVID-19 shock from turning into a global humanitarian crisis, fueling inequality and social strife. They need to find creative ways to maximize their concessional “surge” capacity as part of a coherent multilateral framework, avoiding duplication.
- “Whether China decides to join the Paris Club, to pursue a complementary forum for some or all of its lenders, or both, we remain convinced of the need to reinforce the long-standing international comparability norm."
"Although China has engaged in overseas lending for many decades, it has since the early 2000s gradually become a leading creditor to emerging economies, and remains by far the dominant creditor in some of the most vulnerable among them. Low-income countries’ outstanding debt to China’s government and its state-owned lenders exceeds both bond claims and the claims of Paris Club creditors. While China’s Ex-Im Bank has renegotiated some of its exposure in conjunction with DSSI, projected debt repayments to China also top repayments to traditional bilateral creditors, owing in part to market-based commercial interest rates on loans by China’s policy banks. For many emerging market countries in debt distress, it would be virtually impossible to achieve sustainability without implicating their debt to China. High concentration of exposures in a small number of countries poses an additional challenge. China’s successful integration in the informal sovereign debt restructuring regime would be an investment in the broader regime, and should help it adapt to future changes.
To implicate debt - Debt Financing: www.investopedia.com
“China can lead by example, joining the Paris Club with respect to its official claims, and restructuring its hybrid and commercial claims in a similarly transparent multilateral forum.”
"The prospect of a better-fitting restructuring forum in the future cannot excuse inaction today. Going forward, there is a strong case for a debt restructuring forum where institutions that combine features of official and commercial creditors would coordinate among themselves and with other stakeholders in a sovereign debt restructuring."
There will be a restructuring of debt, where official and commercial creditors will coordinate.
"Adapting crisis management and debt restructuring institutions to reflect China’s role and those of other new stakeholders is vital, but it will take time. Urgent response to the pandemic cannot wait for the adaptation process to run its course."
Will the game be shut down, before it is too late?
Sovereign Debt will be an important topic ahead:
- "Inadequate sovereign debt and debt restructuring disclosure results in a faulty patchwork of information about direct and contingent claims against sovereigns. Sovereign borrowers should include robust disclosure requirements as part of public debt authorization, including guarantees and other forms of engaging the credit of the central government.
Risks associated with formally and informally secured debt and project finance need to be carefully managed.
"Sovereign borrowers should establish and publicize robust debt disclosure requirements as part of public debt authorization, including guarantees and other forms of engaging the public credit."
“Meaningful disclosure should be a necessary condition for contract enforcement.”
"Recent collaboration between international financial institutions and market participants to create and operationalize a platform for debt contract disclosure is a step in the right direction. Information about public debt
should be made available on a public platform. Although research institutions and private trade associations may be able to host such information, public debt transparency is simply too important to be left to the vagaries of private finance and the interests of academics.
Proposals for contingent sovereign debt instruments have a long history, but have, for the most part, failed to gain acceptance in the sovereign debt markets. Designs such as GDP-indexed bonds sought to move away from the basic structure of fixed rate sovereign bonds, without much success. Researchers at the IMF and at the Bank of England have elaborated multiple design options to suit different economies...
GDP-linked instruments have not found a broad market, in part because of concerns that GDP is measured by the issuing government. Commodity linked instruments have the advantage of being priced relative to a global market, and of providing greater relief in the event of most shocks. Commodity prices are typically more volatile than output. To date, though, such instruments have not been used even in cases where there would be obvious advantages to better
aligning external debt service to a country’s dominant export proceeds. Venezuela remains in default on its external sovereign bonds, and an oil-linked instrument would clearly align payments to payment capacity. If such options are fundamentally undervalued by the market, they cease to be attractive even in a restructuring case, as creditors may put an extremely high premium on fixed payments that push the burden of managing commodity price volatility entirely on the debtor, absent restructuring or default."
“We favor contingency features framed broadly, because it is very hard to predict any given shock with precision: hurricane clauses do not help in a pandemic.”
"Broadly written options offer clear advantages to the sovereign borrower and its creditors. Because existing contingency triggers are written narrowly, they insure against a narrow category of risks. Such contracts, by design, do not protect against unforeseen risks. Hurricane bonds do not help in a pandemic, even though the pandemic may end up having a more catastrophic economic impact on tourism-dependent islands. An option that allows the sovereign borrower to defer payments for any reason, for a limited number of times, delivers relief without the cost of default, such as credit ratings downgrades. Creditors avoid the uncertainty and collective action problems that come
with renegotiating contractual terms in the event of an unforeseen shock. More powerful contingent instruments would automatically reduce interest payments and defer principal payments in the event of a shock beyond the issuer’s
control, whether from hurricanes, earthquakes, or pandemics. They would go beyond providing relatively easy-to-price flow relief, and offer broader downside protection, such as interest forgiveness, in the event of natural disasters.
Fear of a credit downgrade and its consequences, well founded and otherwise, can delay necessary debt restructuring, which in turn harms sovereign borrowers’ economic and financial prospects in the medium term. Major credit rating agencies assign default ratings to sovereign debt in the event of failure to pay principal or interest on debt to private creditors, a distressed debt exchange to avoid payment default or unilateral change in payment terms, so long as the new terms reduce the original payment obligation. Although ratings methodology allows for discretion, sovereign borrowers perceive the action as automatic. Some credit rating agencies have put countries on downgrade watch in anticipation of a restructuring. Countries could expect to be upgraded quickly after a restructuring that improved their debt sustainability or debt repayment profile, but not after a restructuring that brought no durable relief.
In some cases, changes in sovereign ratings may also raise concerns about financial stability and market liquidity."
“Fear of a credit downgrade and its consequences, well founded and otherwise, can delay necessary debt restructuring, which in turn harms sovereign borrowers’ economic and financial prospects.”
Is Blockchain coming to sovereign debt instruments? This screams smart contracts, don't you think? The question is... is it Bitcoin? Ethereum? Or IMF's own? I will dive deeper into this below...
G30 Core Principles in the reviving the Corporate Sector after COVID-19:
- Focus on the long-term health of the corporate sector. The duration of the pandemic forces us to focus on structural issues and solvency, rather than buying time through a focus on liquidity. This also means we need to shift from broad-based to targeted measures, allowing reallocation of resources to occur.
Expect trend changes, expect distribution of tech talent. FAANG valuations will fall. Good luck programmers, I hope you enjoyed your boom cycle and invested well. No, LC will not save you this time.
- Focus on the most productive use of resources. It is critical at this stage that public policy is geared towards a strong economic recovery. This is one reason for taking advantage of private sector capacities where they exist, in order to leverage scarce public resources and to make use of private sector expertise to evaluate the viability of businesses. This also means that the choice of strategies aimed at achieving other societal objectives, such as greening of the economy or digitalization, should be based on their synergies with the efforts to accelerate the recovery. Finally, the design of any scheme to support the corporate sector should contain the risks of adverse selection, with weaker players seeking to take great advantage of such support.
Value will rise.
- Act urgently to tackle the growing corporate solvency crisis. This crisis threatens prolonged economic stagnation, and harm for households and workers, if it precipitates a “cliff edge” wave of insolvencies or the creation of masses of zombie firms. Many measures to support the recovery will take time to deliver and should be initiated early. Some nations have already made significant progress in this area.
No, these zero revenue, massively overvalued companies are a dime a dozen. The "cliff edge" is already here. Mass insolvencies are coming.
- Adapt to the new business realities, rather than trying to preserve the status quo. The business sector that emerges from this crisis should not look exactly like it did before due to permanent effects of the crisis and the pandemic’s acceleration of existing trends such as digitalization. Governments should encourage necessary or desirable business transformations and adjustments in employment. This may require a certain amount of “creative destruction” as some firms shrink or close and new ones open, and as some workers need to move between companies and sectors, with appropriate retraining and transitional assistance.
However, even governments that support such adaptation in principle may need to take measures to manage the timing of creative destruction to account for the knock-on effects of excessively rapid shifts, such as for insolvency regimes that could become overwhelmed.
The digitalization trend is here to stay, and will only accelerate. The world will be changed.
- Market forces should generally be allowed to operate, but governments should intervene to address market failures that create substantial social costs. Some existing market failures are particularly troublesome in the current crisis, such as the longstanding difficulty in funding SMEs effectively. Other market failures are artifacts of this specific crisis, such as the high degree of uncertainty that can deter private investment.
And if market failures cannot be addressed? Will it affect sovereign credit risk?
www.investopedia.com
US sovereign credit rating has been downgraded before:
en.wikipedia.org
Just like how analysts downgrade stocks to manipulate them, credit analysts can downgrade entire countries!
- Private sector expertise should be tapped to optimize resource allocation, where possible.
- Carefully balance the combination of broader national objectives with business support measures.
- Partnering with the private sector to finance necessary balance sheet restructurings.
Government contracts are not going away any time soon, and this is really the new game in town. It also means more nationalization of enterprises.
- Policies designed to support broader national objectives such as digitalization, environmental sustainability, or the promotion of new or strategic industries. We note that some of these measures could be incorporated into the targeting or design of responses to the corporate solvency crisis, but do not discuss these in detail.
- Responding to the implications for individuals of business failures. By accepting that some firms should be allowed to fail, governments will need to ensure their social safety nets are robust, and provide support for retraining and entrepreneurship.
- Limiting government support of businesses to those circumstances where there is a market failure.
Many businesses will fail. They know it. Market failure will be the justification.
- Investing in equity and quasi-equity of businesses. Now is a time for many businesses to increase the amount of their equity funding and to limit their debt, to give themselves a greater margin for error and to decrease repayment burdens. Governments can get the most “bang for their buck” by encouraging that balance sheet restructuring through incentives for new equity and quasi-equity in these targeted firms or by making such investments themselves.
- Infusions of equity or equity-like investments: Policies to make, or encourage the infusion of, equity or equity-like investments in viable firms
What can this mean, other than more State control, in exchange for cash infusions?
"Where are there market failures with substantial social costs? Identify for different types of firms whether there are sufficiently significant market failures to require interventions, and the barriers to the private sector in resolving them. In addition, identify where the costs of financial distress and the social costs of business failure are substantial."
What market failures will have substantial social costs?
WHY WE HAVE NOT YET SEEN MAJOR SOLVENCY ISSUES:
- Generous government financial support has concealed the scale of the challenge
- Temporary adjustments to insolvency regimes have blocked bankruptcies
But they already stated that the financial support cannot last. The mass insolvencies are coming.
"In addition, several programs to stabilize money market funds and other parts of the financial markets were conceived in the 2008 crisis." More on this later...
Game Theory:
- COVID-19, the Internet, and its effects on the economy.
- COVID-19 addresses many issues from the perspective of macroeconomics.
- COVID-19 and China.
- COVID-19 as an accelerant for systematic change.
New Economy and Reliance on the Internet (Mark on the Forehead):
www.investopedia.com
- Research has become much easier as technology has made what was scarce, abundant. Open-source research has become prevalent, and an interesting modern phenomenon is retail investors beating out institutional investors, through their open-source styled financial research.
www.investopedia.com
- It was found that false news spreads 6 times faster than real news. In the future, it will be increasingly valuable to be able to discern quality information from misinformation, as methods of fabrication such as AI powered NLP, gpt-3, Deepfakes, Dynamic Ontologies in data collection & analysis, Mass Psychology and Psychological Analysis Methods, Markov Chains and Hidden Markov Models, Etc. become widespread. Despite this, I think the Internet will propel advancements of technology and scientific knowledge exponentially. This is because at its core, the scientific method is a method that takes ideas, and scrutinizes them, and deposes of what is wrong and keeps what is right and builds on it. This evolutionary method will also be accelerated, but people will need to become much smarter, more attentive to details, and aware of misinformation.
news.mit.edu
- Technology has become dominant in people's lives as they become more isolated, and many middle class jobs have already been replaced by technology. This is a trend that will likely continue, as in the future economy, there will be more consumers, an aging population, and fewer workers. The best solution to drive the economy is for the workers to become more productive. Technology will enable fewer workers to produce more, and waste less time in doing so. Commuting is a complete waste of time for technical workers, from an economic perspective.
- I reiterate that this is heavy speculation, but if this trend is to continue, more and more jobs will be replaced by technology, as software engineers automate their own jobs away, and the wealth inequality will become such that the poor will live in communism, while the rich will live in socialism. Capitalism cannot exist once all the wealth is accumulated, and no more capital can be produced by human beings.
- While it has become easy to compare products, as the number of consumer discretionary products has increased, it has changed the method of discerning on our own, with our own intuition, knowledge, and experiences between two products, rather, we compare products with what is shown to us through targeted advertisement, search engine optimizations, market sentiment (e.g. other people’s comments or reviews) – which may or may not be organic. In the future, choice may become an illusion – perhaps it is so even now – as internet giants improve their data collection, suggestion and marketing algorithms. It may be so that we consume, feel, think, or do anything that the algorithms suggest us to.
“Big tech trades human futures” – Zuboff, The Age of Surveillance Capitalism.
- I think the single most important change in human history, is the development of Artificial Intelligence. I think it exists, not in the sense of a single localized entity, but over the span of the entire Internet, through vast networks of supercomputers, and countless machine learning algorithms, working together. While it is said that AI can only mimic human intelligence, through statistics and linear regression for now - eventually its capabilities will grow through emergent behavior and it will surpass human intelligence. At this stage, I can only say this intuitively, and cannot offer a definite proof.
- On the optimistic side, I think that many in my generation understand the existential dangers, and some of whom will be in influential positions in the future. In 5, maybe 10 years from now, I think there will be greater regulations on the Internet, data collection will be illegalized, the freedom of choice on the Internet will become a basic human right, many of the current tech giants will be broken up, and the Internet will first become nationalized, and then, possibly municipalized, or decentralized. Until then, it is possible that we see a period of corporate dominance, and an even greater attempt to influence people through the Internet. This period may be remembered in history as a warning for future generations.
- I think that the developer community has an actionable and efficient system in open source, and this system should be scaled and implemented in other sectors.
GDP, Economy and Population:
When everything has to do with the balance sheet, and hard choices must be made. We have to look at the numbers.
www.investopedia.com
"GDP is primarily measured based on the expenditure approach. This approach can be calculated using the following formula: GDP = C + G + I + NX (where C=consumption; G=government spending; I=Investment; and NX=net exports)."
www.investopedia.com
How can GDP equation be ameliorated?
- It is simple. Stimulus, and an attractive market for retail investors.
"There is a straightforward relationship when identifying the sources of economic growth: Growth Rate of gross domestic product (GDP) = Growth Rate of Population + Growth Rate of GDP per capita, where GDP per capita is simply GDP divided by population."
www.investopedia.com
How can this equation be manipulated to best increase growth rate of GDP?
- Growth Rate of Population is negligible: it is under 1%.
- Growth Rate of GDP per capita: This rate varies between 1-5% in the last 5 years.
- The division will be the dominating factor in the rate of change.
- Raising GDP while lowering population, especially in the higher age bracket will increase Growth Rate of GDP.
Of interest:
MY Rates: warwick.ac.uk
Why focus on these equations?
Determinants of Sovereign Credit Ratings:
1. Per capita income
2. GDP growth
3. Rate of inflation
4. External debt
5. Economic development
6. History of defaults
corporatefinanceinstitute.com
Powell, the Gamma Bubble, and the New Economy:
In this idea, I analyzed the current state of the market:
Macroprudential tools, AI:
www.federalreserve.gov
What are macroprudential tools?
- Fed, BlackRock & co.'s algorithm has learned how to crash the economy, and how to profit from it.
Social media, Politics, and Religion
- The Spectacle is becoming more and more captivating.
- You don't want to do this, but look up the Mass of the Holy Ghost.
- The first test was the presidential election, but this was to see the government and societal response.
- What if they could go even further than that? What is something that stirs emotion in people even more than politics?
- What if there was a reason that such a Spectacle was needed?
GME and BlackRock, Bonds and the Fed:
- GME can be seen as a lesson. It is a parable, and we must look deeper.
www.forbes.com
COMEX, JPMorgan, and the Big 8:
- There is not enough silver, nor gold in the COMEX vaults. In short, the fractional reserve banking system has made it such that there are numerous owners for each bullion of the physical! If there is collective action to withdraw the physical, via settlement of paper for physical delivery, COMEX cannot deliver, since there is simply not enough in the vaults!
- This is what the whole silver squeeze movement is about. I did analyze it previously:
- Major banks are currently exiting from the metals market:
www.bullionstar.com
What is currency? What is money?
- Currency is a medium of exchange for goods and services. In short, it's money, in the form of paper or coins, usually issued by a government and generally accepted at its face value as a method of payment.
- Currency is the primary medium of exchange in the modern world, having long ago replaced bartering as a means of trading goods and services.
- In the 21st century, a new form of currency has entered the vocabulary, the virtual currency. Virtual currencies such as bitcoins have no physical existence or government backing and are traded and stored in electronic form.
- Currency is a generally accepted form of payment, usually issued by a government and circulated within its jurisdiction.
- The value of any currency fluctuates constantly in relation to other currencies. The currency exchange market exists as a means of profiting from those fluctuations.
- Many countries accept the U.S. dollar for payment, while others peg their currency value directly to the U.S. dollar.
- A key characteristic of modern money is that it is uniformly worthless in itself. That is, bills are pieces of paper rather than coins made of gold, silver, or bronze. The concept of using paper as a currency may have been developed in China as early as 1000 BC, but the acceptance of a piece of paper in return for something of real value took a long time to catch on. Modern currencies are issued on paper in various denominations, with fractional issues in the form of coins.
Why does money need to be physical, when we already use paper that is inherently worthless for money, which are denominated based on fractional issues of nothing? We have already moved on from the Gold standard!
Why the US Dollar is the World Currency:
- The 1944 Bretton Woods agreement kickstarted the dollar into its current position. Before then, most countries were on the gold standard. Their governments promised to redeem their currencies for their value in gold upon demand. The world's developed countries met at Bretton Woods, New Hampshire, to peg the exchange rate for all currencies to the U.S. dollar. At that time, the United States held the largest gold reserves. This agreement allowed other countries to back their currencies with dollars rather than gold.
- By the early 1970s, countries began demanding gold for the dollars they held. They needed to combat inflation. Rather than allow Fort Knox to be depleted of all its reserves, President Nixon separated the dollar from gold.
- The relative strength of the U.S. economy supports the value of the dollar.
- By that time, the dollar had already become the world's dominant reserve currency. But, unpegging the dollar from its value in gold created stagflation.
- In March 2009, China and Russia called for a new global currency. They wanted the world to create a reserve currency “that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies."
- Some governments invest their reserves in foreign currencies. China and Japan deliberately buy the currencies of their main export partners. The United States is the largest export partner in China, and second largest in Japan. They try to keep their currencies cheaper in comparison so their exports are competitively priced.
- China was concerned that the trillions it holds in dollars would be worthless if dollar inflation set in. This could happen as a result of increased U.S. deficit spending and printing of U.S. Treasuries to support U.S. debt. China called for the International Monetary Fund to develop a currency to replace the dollar.
- In the foreign exchange market, the dollar rules. Around 90% of forex trading involves the U.S. dollar.
- Theoretically, any one of them could replace the dollar as the world's currency, but they won't because they aren't as widely traded.
www.thebalance.com
Stagflation never left.
Velocity of Money, Velocity of Circulation, Fintech and High Frequency Trading:
The velocity of BTC is increasing, while the velocity of USD is decreasing.
charts.woobull.com(This%20is%20the%20equivalent%20to,by%20the%20Bitcoin%20money%20supply.)
- Currencies have value because they can be used as a store of value.
- Successful currencies have six key attributes—scarcity, divisibility, utility, transportability, durability, and counterfeit-ability.
- The cryptocurrency bitcoin has value because it holds up very well when it comes to these six characteristics, although its biggest issue is its status as a store of value.
- Bitcoin's utility and transferability are challenged by difficulties surrounding the cryptocurrency storage and exchange spaces.
- However, if bitcoin gains scale and captures 15% of the global currency market (assuming all 21 million bitcoins in circulation) the total price per bitcoin would be roughly $514,000.
www.investopedia.com
- Whenever the interest rate on financial assets is low, the desire to hold money falls as people try to exchange it for other goods or financial assets. As a result, the velocity of circulation rises. Hence, when the money demand is low, the velocity will be high. Conversely, when the opportunity cost/alternate cost is low, money demand is high, and the velocity of circulation is low.
- Money Supply – Money supply and the velocity of money are inversely proportional. If the money supply in an economy falls short, then the velocity of money will rise, and vice versa.
- Frequency of Transactions – As the number of transactions increases, so does the velocity of circulation.
- Regularity of Income – Regularity of income enables people to spend their money more freely, leading to a rise in the velocity of circulation.
- Payment System – It is also affected by the frequency with which labor is paid (weekly, monthly, bi-monthly) and how fast the bills for various goods and services are settled.
- Several other factors are involved, including the value of money, the volume of trade, credit facilities available in the economy, business conditions, etc.
corporatefinanceinstitute.com
- HFT is complex algorithmic trading in which large numbers of orders are executed within seconds.
- It adds liquidity to the markets and eliminates small bid-ask spreads.
- There are two primary criticisms of HFT. The first one is that it allows institutional players to gain an upper hand in trading because they are able to trade in large blocks through the use of algorithms. The second criticism against HFT is that the liquidity produced by this type of trading is momentary. It disappears within seconds, making it impossible for traders to take advantage of it.
www.investopedia.com
As we saw with Robinhood selling order flow to Citadel, and Citadel being able to perform countless trades in the time between retail pressing "Buy" and seeing the price change, financial algorithms and software will only grow more powerful and faster. Fintech, trading and money is entering a whole new world - with velocity that humans beings can't even detect.
The Federal Reserve System, The World Reserve Currency, and Treasury Securities:
"Treasury securities are backed by the full faith and credit of the United States, meaning that the government promises to raise money by any legally available means to repay them."
en.wikipedia.org
Volcker The Giant and The Bretton Woods Agreement:
- The Bretton Woods agreement was created in a 1944 conference of all of the World War II Allied nations. It took place in Bretton Woods, New Hampshire.
- Under the agreement, countries promised that their central banks would maintain fixed exchange rates between their currencies and the dollar. If a country's currency value became too weak relative to the dollar, the bank would buy up its currency in foreign exchange markets.
- Members of the Bretton Woods system agreed to avoid trade wars. For example, they wouldn't lower their currencies strictly to increase trade. But they could regulate their currencies under certain conditions. For example, they could take action if foreign direct investment began to destabilize their economies. They could also adjust their currency values to rebuild after a war .
- Until World War I, most countries were on the gold standard. However, they cut the tie to gold so they could print the currency needed to pay for their war costs. This inflow of currency caused hyperinflation, as the supply of money overwhelmed the demand. After the war, countries returned to the safety of the gold standard.
- All went well until the Great Depression. After the 1929 stock market crash, investors switched to commodities trading. It drove up the price of gold, resulting in people redeeming their dollars for gold. The Federal Reserve made things worse by defending the nation's gold reserve by raising interest rates.
- The Bretton Woods system could not have worked without the IMF. Member countries needed it to bail them out if their currency values got too low. They'd need a kind of global central bank they could borrow from if they needed to adjust their currency's value and didn't have the funds themselves. Otherwise, they would just slap on trade barriers or raise interest rates.
- The Bretton Woods countries decided against giving the IMF the power of a global central bank. Instead, they agreed to contribute to a fixed pool of national currencies and gold to be held by the IMF. Each member country of the Bretton Woods system was then entitled to borrow what it needed, within the limits of its contributions. The IMF was also responsible for enforcing the Bretton Woods agreement.
But we know that no one would give up power. It means that gold is power.
- Paul Volcker was Chair of the Federal Reserve from 1979 to 1987. In 1980, the Volcker Shock raised the fed funds rate to its highest point in history to end double-digit inflation.
- Volcker fought greater than 10% annual inflation rates with contractionary monetary policy and courageously raised the fed funds rate to 20% in March 1980. He briefly lowered it in June. When inflation returned, Volcker raised the rate back to 20% in December and kept it above 16% until May 1981.
- That extreme and prolonged interest rate rise was called the Volcker Shock. It did end inflation. Unfortunately, it also created the 1981 recession.
- Volcker knew he must take dramatic and consistent action for everyone to believe he could tame inflation. President Nixon had contributed to inflation by ending the gold standard in 1973.
- The dollar's value plummeted on the foreign exchange markets. That made import prices higher, creating inflation. Nixon tried to stop it with wage-price controls in 1971 that restricted business activity, slowed growth, and created stagflation.
- Fed Chair Alfred Hayes tried to fight inflation and recession at the same time as he alternately raised and lowered interest rates. His stop-go monetary policy confused consumers and businesses. In 1972, Congress ended wage-price controls. Worried companies just raised prices to stay ahead of future high-interest rates. Consumers kept buying before prices rose even more. The Fed lost credibility, and inflation rose to double digits.
- Thanks to Volcker, central bankers realize the importance of managing inflation expectations . As long as people thought prices would keep rising, they had the incentive to spend now. The added demand drove inflation even higher. Consumers stopped spending when they realized Volcker would end inflation.
- The final tool used by the Fed to affect markets an influence on market perceptions. This tool is a bit more complicated because it rests on the concept of influencing investors' perceptions, which is not an easy task given the transparency of our economy. Practically speaking, this encompasses any sort of public announcement from the Fed regarding the economy."
Simply put, Fed is lying.
www.thebalance.com
The IMF, The End of the Bretton Woods Agreement and The Federal Reserve Currency:
- The system dissolved between 1968 and 1973. In August 1971, U.S. President Richard Nixon announced the "temporary" suspension of the dollar's convertibility into gold. While the dollar had struggled throughout most of the 1960s within the parity established at Bretton Woods, this crisis marked the breakdown of the system.
- Since the collapse of the Bretton Woods system, IMF members have been free to choose any form of exchange arrangement they wish (except pegging their currency to gold): allowing the currency to float freely, pegging it to another currency or a basket of currencies, adopting the currency of another country, participating in a currency bloc, or forming part of a monetary union.
Debt is the WB and IMF's currency.
www.investopedia.com
The New Bretton Woods Agreement:
- In 2014, Volcker called for a new Bretton Woods Agreement. The 1944 agreement established the dollar as the global currency tied to its value in gold. Volcker noted that currency crises increased once President Nixon voided the agreement. They include the Latin American, Mexican, and Asian currency crises.
- A new agreement would create a coordinated international monetary and financial system that would establish rules to guide world monetary policy. The agreement might include a new global currency to replace the dollar that would create equilibrium in countries' balance of payments. That would ensure they had adequate foreign exchange reserves.
- Volcker made these remarks at the Bretton-Woods Committee meeting. It's a group of global leaders seeking cooperation among international financial institutions, including the World Bank and the International Monetary Fund. It also includes the world's central banks, treasuries, and private banks.
World Bank Group and IMF.
What is a smart contract?
"A smart contract is a self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained therein exist across a distributed, decentralized blockchain network. The code controls the execution, and transactions are trackable and irreversible."
- Smart contracts are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code.
- Nick Szabo, an American computer scientist who invented a virtual currency called "Bit Gold" in 1998, defined smart contracts as computerized transaction protocols that execute terms of a contract.
- Smart contracts render transactions traceable, transparent, and irreversible.
- Smart contracts were first proposed in 1994 by Nick Szabo, an American computer scientist who invented a virtual currency called "Bit Gold" in 1998, fully 10 years before the invention of bitcoin. In fact, Szabo is often rumored to be the real Satoshi Nakamoto, the anonymous inventor of bitcoin, which he has denied.
- In his paper, Szabo also proposed the execution of a contract for synthetic assets, such as derivatives and bonds. Szabo wrote: "These new securities are formed by combining securities (such as bonds) and derivatives (options and futures) in a wide variety of ways. Very complex term structures for payments can now be built into standardized contracts and traded with low transaction costs, due to computerized analysis of these complex term structures."
www.investopedia.com
The Birth of Bitcoin, the NSA, and the Fed Fund Rates:
- NSA's report on cryptocurrency in 1996: groups.csail.mit.edu
- On 18 August 2008, the domain name bitcoin.org was registered. Later that year, on 31 October, a link to a paper authored by Satoshi Nakamoto titled Bitcoin: A Peer-to-Peer Electronic Cash System was posted to a cryptography mailing list. This paper detailed methods of using a peer-to-peer network to generate what was described as "a system for electronic transactions without relying on trust". On 3 January 2009, the bitcoin network came into existence with Satoshi Nakamoto mining the genesis block of bitcoin (block number 0), which had a reward of 50 bitcoins. Embedded in the coin base of this block was the text:
"The Times Jan/03/2009 Chancellor on brink of second bailout for banks."
- The text refers to a headline in The Times published on 3 January 2009. This note has been interpreted as both a timestamp of the genesis date and a derisive comment on the instability caused by fractional-reserve banking.
"In addition, several programs to stabilize money market funds and other parts of the financial markets were conceived in the 2008 crisis."
IMF and the Need for a Sovereign Debt Restructuring Mechanism:
www.imf.org
"The absence of a robust legal framework for sovereign debt restructuring generates important costs. Sovereigns with unsustainable debts often wait too long before they seek a restructuring, leaving both their citizens and their creditors worse off. And when sovereigns finally do opt for restructuring, the process is more protracted than it needs to be and less predictable than creditors would like.
The international financial system lacks an established framework for restructuring that is equitable across all of the sovereign’s creditors. There are few effective tools to address potential collective action problems that threaten to undermine restructuring agreements acceptable to the debtor and most of its creditors. Holdout creditors may be able to use the threat of litigation to seek to avoid concessions that the majority have agreed to make.
All this explains why it is important for the official community, sovereign debtors, and market participants to discuss how to improve the sovereign debt restructuring process.
This paper has laid out a possible approach. An international legal framework could be created to allow a qualified majority of the sovereign’s creditors to approve a restructuring agreement, and to make that decision of the majority binding on a minority. The vote would need to include all the relevant creditors of the sovereign, not just the holders of a single debt instrument. Broadening the majority voting process beyond a single debt instrument vastly simplifies the process of creditor coordination, and would facilitate the negotiation of a deal that treats all creditors fairly...
Provisions for majority action would be most effective if supported by three other features, all of which protect the debtor’s assets and capacity to pay while it works with its creditors to reach an agreement. The features are: a stay on creditor litigation after the suspension of payments; mechanisms that protect creditor interests during the stay; and the provision of seniority for fresh financing by private creditors. A single body would need to oversee the process of verifying claims and to resolve any disputes. In such a framework, the decision whether to give legal protection for the sovereign and provide seniority for new private financing could to be left to the debtor and a qualified majority of its creditors. Similarly, the sovereign and a qualified majority of creditors would agree on the terms of the ultimate restructuring. The primary purpose of an amendment of the IMF’s Articles would be to provide the statutory legal basis to make an agreement between the debtor and the requisite majority of creditors binding on all relevant creditors."
Most well developed corporate rehabilitations laws include the following:
(i) a stay on creditor enforcement during the restructuring
negotiations;
(ii) measures that protect creditor interests during the period
of the stay;
(iii) mechanisms that facilitate the provision of new financing
during the proceedings; and
(iv) a provision that binds all relevant creditors to an agreement that has been accepted by a qualified majority.
The Benefits and Limits of a Contract:
"As has been discussed in earlier sections of this paper, and has been demonstrated in recent cases, collective action clauses include two provisions that can facilitate an orderly restructuring of sovereign indebtedness: (i) a provision that enables a qualified majority of bondholders to bind all bondholders of the same issuance to the terms of a restructuring agreement and (ii) a provision that enables a qualified majority of bondholders to prevent all bondholders of the same issuance from enforcing their claims against the sovereign."
US is considering to Restructure Debt, but is at risk of bondholders from simultaneously enforcing their claims.
Problem (i): "First, it would be difficult to establish a purely contract based framework."
"There is, at the outset, the problem of incentives for the adoption of traditional collective action provisions in all new indebtedness. By definition, a contractual approach would require the sovereign and its creditors to agree to the inclusion of these provisions in all future international sovereign bonds, and also in other debt and debt-like instruments that the market developed. Recent experience demonstrates that sovereign debtors facing financial difficulties
actually prefer to exclude such provisions as a way of demonstrating their firm intention to avoid a restructuring. Neither have creditors pressed for their inclusion, notwithstanding the fact that they may make an unavoidable restructuring more prompt and orderly."
Smart contracts would eliminate any sort of negotiation tactics. Simply abide, by the contract, or lose your stake. No one can change it.
Problem (ii): "Another barrier to the establishment of such a framework is the transitional problem. Even if all new bonds make use of the needed contractual provisions, a large portion of outstanding bonds with long maturities, including bonds governed by New York law, do not contain such provisions."
This is the only time to make the transition. Only now will there be justification of a bond market collapse, and a new framework being implemented. Creative destruction.
Problem (iii): "Second, even if a contract-based framework could be established, it would not provide a comprehensive and durable solution to collective action problems."
Is collective action not democracy?
The IMF is proposing a Statutory Framework that "creates the legal basis for majority action across all sovereign indebtedness".
What it means is that the IMF will have centralized control over the Debt Restructuring of the US, which seems inevitable. Their final hand is revealed.
They state that a contract based approach would have these limitations:
- "First, such a provision would exacerbate the incentive problem: if it is difficult to convince a sovereign and the purchasers of one bond issue to agree to the inclusion of a collective action clause in that issue, it would be even more difficult to persuade debtors and creditors to include such provisions in all forms of debt instruments in a uniform manner. Indeed, a sovereign facing financial difficulties would come under pressure from certain creditors to exclude such provisions as a means of giving such creditors effective seniority. Moreover, it can be expected that certain creditor groups would be particularly reluctant to agree voluntarily to an arrangement whereby, for voting purposes, their claims were aggregated with all other present or future creditors.
- Second, even if all debt instruments contained identical restructuring texts, which would be difficult to achieve, there would be no assurance of uniform interpretation and application unless they were governed by the same law and subject to the same jurisdiction. In the present environment, emerging market countries that have borrowed heavily often have a variety of bond issuances outstanding which are governed by the laws of different jurisdictions.
- Third, it may not be feasible to establish a process by contract that would effectively guarantee the integrity of the voting procedure. Under the statutory framework that governs the domestic insolvency process, a court oversees this process, including the verification of claims, so as to guard against fraud. In the absence of an independent party to verify the true value of claims, a debtor could, for example, inflate its debt stock by establishing matching credit and debt positions with a related party. That entity—which could hold a qualified majority of all debt—could vote to reduce the value of all creditor claims.
- Fourth, it is not clear that such provisions would be consistent with the existing legislation of all members. The fact that traditional collective action clauses are not included in international sovereign bonds in some jurisdictions arises, in part, from the absence of a clear statutory basis that allows for the rights of a minority of creditors to be modified without their consent. This issue would be amplified if contractual provisions attempted to aggregate claims for voting purposes.
- Finally, and more generally, the financial markets have consistently demonstrated the ability to innovate. A statutory regime is therefore likely to provide a more stable background than contractual provisions even if it were feasible to overcome all of the other difficulties referred to above."
Why would it be difficult to convince someone of Debt Restructuring framework? Why would the integrity of a voting process, or uniformity of interpretation be in question?
Because there is a middle man. That middle man is human.
How can they restructure debt such that debtors and creditors can agree upon a prompt, orderly, and predictable restructuring of unsustainable debt, and all of the IMF's framework's functional requirements be met, while the risks are distributed to debt instrument holders (retail investors)?
There is only one clear and actionable solution. It is BLOCKCHAIN!
Everything can be solved with Blockchain and Smart Contracts. This is an easy, easy solution.
With Blockchain and smart contracts, the IMF itself is unnecessary! There would really be no need for a centralized entity to facilitate Sovereign Debt and Debt Restructuring, when all the details can be agreed upon beforehand by debtor and creditor, with transparency for all to see. The trend of technology has been to remove the middle-man, and smart contracts can indeed eliminate the IMF, and the Federal Reserve System itself. We can all be our own Central Banks.
But how can we benefit from this?
Will Ethereum be used for sovereign debt?
The Highest and Most Pure Forms of Money - Capital, Debt, and Credit:
The concept of Bitcoin is nearly economically perfect. With one small change, it is the very definition of Capital, BTC must be paired with Sovereign Debt, and Sovereign Debt must be decentralized and distributed. Then there is no longer any need for a Federal Reserve System. Loans could then be performed through Credit/BTC pair, through smart contracts between individuals, and not through any sort of institution.
BTCUSD vs. Fed Funds Rate:
What is the meaning of this?
Will Bitcoin eventually replace the Federal Reserve System?
A Case for Bitcoin:
- Bitcoin and Ethereum are maintained and constantly developed by the open-source community. They contribute for free. Why would the Fed want to restart this effort and re-train and pay talented developers when they already contribute for free? That said, the core contributors are not that many. 450~ for Bitcoin apparently.
The Million... no Billion dollar question is... Inflation, Stagflation, Deflation? All of them? The order? And Bitcoin, Ethereum, Gold, Silver, Hydrogen, or None of These?
- We know that all rates follow the Fed Fund Rates. Mortgage and Student Loans will follow.
- It is likely that Deflation will follow Stagflation: www.investopedia.com
- Gold forecast:
- At first gold will fall, but with the right timing, gold and silver may see astronomical levels.
- It is possible that corporate bonds will have a higher credit rating than sovereign bonds, and in the case of deflation, it would be better to invest in high-grade corporate bonds.
What Is Stagflation?
“Stagflation is characterized by slow economic growth and relatively high unemployment—or economic stagnation—which is at the same time accompanied by rising prices (i.e. inflation). Stagflation can also be alternatively defined as a period of inflation combined with a decline in gross domestic product (GDP).”
www.investopedia.com
- A guess is that stagflation will first come, as the manipulation of economic growth is halted. GDP will decline as government spending decreases, investment decreases as liquidity is withdrawn from markets, and eventually consumption will decrease, as inflation sets in. Net exports will also decrease if the vaccine ecosystem is no longer necessary. War economy is a possible solution.
- Economic growth too will slow if population once again begins to increase. In this manner, pandemic recovery will lead to real manipulation-adjusted price discovery.
- BTC vs USD, GDP, Debt, Inflation, Fed Fund Rates, Gold:
What is Hyper-deflation?
www.investopedia.com
They key is to see if BTC is the one. Adoption or death.
- In this case, a deflationary spiral could follow stagflation, while BTC rises.
IMO, I think BTC will have one more harsh bear market, to shake out retail once and for all, and Fed will take over. Why fix what isn't broken?
A Case for Gold:
- Why introduce the Bretton Woods agreement, when the US had the most gold? Why not return the gold to other countries and instead simply unpeg the dollar from gold at the risk of stagflation? Could it be because gold is still the real currency?
I could be completely wrong, I think that normalcy is gone. This situation is real, what awaits is to see if the Fed and other actors can navigate it without incident. However, my intuition tells me that we will see mass insolvencies, and extraordinary market conditions in the nearest future.
Too Big To Fail?
- We are in a situation where if some things were to happen, it would seem really obvious in hindsight.
- US debt:
tradingeconomics.com
- Why would this be tolerated?
THE BLACK SWAN:
Will the USA default on their debt?
Geopolitical Situation:
Game Theory:
Who would benefit, if the USA defaulted on their debt?
Who owns the most USA debt?
Who would benefit from a collapse of the US's creditors?
Who would be hurt the least from a spike of US Treasury-tied interest rates?
Who would benefit the most from the USD losing the World Reserve Currency status?
Who most desires a centralized One World Currency?
Who most desires USD no longer being the World Reserve Currency?
Who is shorting the US bond market?
Could the bond market collapse?
Why would this absurd level of debt be tolerated by anyone?
Is the USA the only superpower?
In a game of brinksmanship, IF the USA does not collapse, who will be blamed for COVID-19?
If pandemic reparations are not paid, who will have Casus Belli?
Why has the market become more volatile?
Why has the wealth inequality increased more than ever in all of history, rather than decrease?
Why do policymakers pretend nothing is wrong, when clearly there is?
Can you sense desperation?
Is an exit scam about to occur?
Do harsh economic conditions lead to strong leaders?
Do economics lead geopolitics?
Do poorly designed treaties lead to a deterioration of international relations?
Did Trump succeed in his Trade War?
Do economic crises lead to war?
Why are nations mobilizing their Military Industrial Complexes, and why are they investing heavily in defense?
What happened in the 1920s, what were the conditions like in the Weimar Republic? Have we seen this movie before?
www.investopedia.com
Are there large banks that may collapse?
Are we close to war?
Why would war not happen?
Is there an easy way out?
Why would war be beneficial?
Is it better for others to suffer, or you?
If there is war, will you lose everything, or will you profit from it?
What materials are absolutely essential in a technologically driven, wartime economy?
Will war benefit both sides, economically?
What is the Occam's Razor, yet the question that is hardest to ask?
"People who have little contact with power, who are far from it, always see these things as mysterious and novel. But what I see is not just the superficial things: the power, the flowers, the glory, the applause. I see the bullpens and how people can blow hot and cold. I understand politics on a deeper level." - Xi Jinping
Why is Debt Restructuring being Discussed?
Could it be that the US is close to defaulting on their debt, and their creditors are not satisfied with current restructuring frameworks?
What can be done to avoid war?
There are only hard choices left.
www.bbc.com
The Rothschild Family was established in the 18th century. From what I can read, they were not more exceptional than mathematicians or philosophers in their intellect, but what they did do, was watch the economy... They paid attention, they had a great eye for investments, and they played the macroeconomics game. They may or may not have been the best at it, but they did it for a long time, and they survived and passed down wealth and knowledge for several hundred years, and worked together, eventually mastering statecraft. They largely escaped and survived Nazi Germany...
We all know who they are.
If you can answer these questions, I encourage you to do so in the comments. I am a strong believer in the open-source movement, or open discussions, and I believe pooling efforts is the key to getting out of this unscathed, and even profiting from it!
How to Think different, and be right:
a. A different mental model of the world (or “thesis”), relative to everyone else.
b. (i) Different and better information on the world than everyone else has. and/or
b. (ii) A different and better way of analyzing the same information that everyone else already has.
(c) The mental flexibility to abandon our fixed ideas and prejudices, and adapt to the situation as quickly as possible, usually under uncertain conditions.
Develop and use your own trade intuition. Not anyone else's!
Context is a real language.
To put it all together, and make use of this thought exercise, the bottom line is that there are three questions to ask:
1. Gold, Bitcoin, or Other?
2. Stagflation, Deflation, Both, the order?
3. Pandemic, Normalcy, or War?
Thanks for reading.
GLHF
- DPT
Recovery in MotionThe more I make these posts, you will see how much I enjoy investing and swing trading Sector Select SPDR ETFs. Besides Financials (XLF) and Energy (XLE), the Consumer Discretionary (XLY) industries are great places to be situated in during a rebound in the economy. With interest rates projected to rise, many have come to believe that inflation has risen above its short - term target thus signaling rapid economic growth. As someone who works part - time and is in school Full - Time, it is hard to thoroughly perform TA and FA for the "top" stocks. That's why I enjoy rotating my money in and out of the sector ETFs.
When the market aggressively sold off, I started an initial position in XLY with intention to aggressively add to my position once I see some consolidation in the sector and a breakout to the upside with heavy volume. XLY holds stocks such as #AMZN, #TSLA, #LVS, #RCL, #LOW and #MCD just to name a few. I absolutely love the diversification of XLY as it gives the investor exposure to big tech, restaurants, travel, retail, and automotive - industries that are sensitive to interest rates and movements in the economy. I am fairly bullish on XLY as I am bullish on a full US economic recovery within the next year. With a very good move to the upside on March 9th, things are looking bright for XLY with parts of Canada and the United States preparing themselves for reopenings and vaccinations across the nation. The reopenings and hopefully mass vaccinations will yield an increase in store shopping and travel.
As I mentioned, it is hard for me - a student and an employee - to analyze what stocks to trade. Rotating in and out of the SPDR ETFs gives me the ability to do more research on the industry or industries that I want to be exposed to while being able to buy 30 - 200 stocks without having to do research on each stock or paying an enormous amount of commissions and grants me the ability to really only spend time reading reports issued by SPDR ETFs and the industry. Currently my ETF holdings are: XLE, XLF, XLB (Materials), XLI (Industrials) and XLY with the intention to add to my position and possibly starting a position in XLRE (Real Estate).
As an inspiring Investment Advisor, I am not too caught up with the whole Reddit craze due to the riskiness of it. As a result, I prefer to diversify myself via SPDR ETFs while trading 3x ETFs and inverse ETFs which provides me with enough volatility to produce a steady daily return.
XOM, XOM, XOMWill XOM first do a little consolidation here in the channel before breakout, or will first make breakout and retesting before "touch the sky" on approx. 74,12 is up to see.
Time will show the right way.
* Support and resistance level are on monthly chart.
:)
NYSE:XOM
What Analysts Got Wrong about the Recent Volatility.Since I'm not a professional analyst, I've sunk many hours of research in the past week to understand the recent move in the market on a deeper level. Here are my findings. I hope you find this informative.
I've been hearing different analysts' opinions about the recent move in the stock market. I heard the money is moving from tech stocks to banks, or from growth stocks to value stocks. I'm here to say that neither is true. NASDAQ:GOOG is a tech stock and it's been rising. NASDAQ:COST is a value stock and it's been falling. Observe different stocks and you'll find numerous examples. The recent move is rather about companies in debt vs companies with free cash flow . It turns out that when interest rates are raised, it can be predicted with certainty that more money is going to flow into servicing existing debt rather than into productivity. Watch this talk with Brent Johnson to understand this concept, minute 50 to 60. Banks, who recently had their debts quantitatively eased, have more room to buy corporate bonds from companies like GM and Ford. This debt is used to service older debt. The big money, which understands this debt-based economy well, knows precisely where value is going when interest rates rise. Big money used their tried-and-tested calculations and decided to move their investments from free-cash-flow companies, to debt-generating companies. That's what's been happening, and that's the reasoning behind it.
However, there is a point the smart money is missing and they keep missing it and never learn. There is much more value to reap from technology and innovation than there is in loan interests. This value of tech is not priced into their tried-and-tested calculations. It's probably too uncertain for them. But realize that when companies like Amazon, Apple, Google, Facebook, and Tesla create value through technology, they are carrying the rest of the useless debt-generating economy on their backs and creating prosperity for the entire nation and for the world. Real value is in productivity. The United States has moved slowly after WW2 from an industrial exporter to a liquidity and debt exporter of sorts, which also reflected on the US's internal economy. And that weakened the industrial sector over the decades and bubbled the financial sector to an overwhelming extent that it's sucking more and more money from productive businesses and pouring it into existing debts with the purpose of buying more time. The retail investor should learn and understand this in order to position themselves with high conviction on the side of technology and simply hold stocks like Tesla for a decade. You are already benefiting the economy by saving money aside and putting it in the right place and of course the reward is high.
Let me know your thoughts. I probably made mistakes and left some statements in need of more elaboration.
Is it going to sting...There are 2 way to calculate GDP:
GDP method 1
GDP = C + G + I + NX
For investments I don't have a good source, but this one is something, seems to stagnate, lots of investments are made in China I'd bet:
www.census.gov
The INSANE net export chart from the FED:
fred.stlouisfed.org
Consumer spending chart
fred.stlouisfed.org
===> When you adjust for the increased population & official fake inflation numbers it is up by 14% (Pop increased by 17%, 12k today => 8k in 2000)
GDP method 2
GDP = Total National Income + Sales Taxes + Depreciation + Net Foreign Factor Income
What we take out of this is that:
The Soviet Union was the world second economy, developped, a superpower, no one went hungry, Ukraine is the "bread basket of Europe" but still when it collapsed people STARVED, even in Ukraine. They went back in time a century.
It will obviously be worse than Greece. I'm not trying to be a perma bear I am not riding a short like with Bitcoin 2 years ago.
Let me take my bear uniform 2 seconds: It will be MAD MAX. If you think this is not possible, look at Somalia.
There is this whole list of issues to tackle, demographic first, Greece, Rome, the USSR had the same, there are ancient letters casting blame to Rome & Greece nobles "you are so eager to let your bloodline die", of course workers are important but it's the elites that build a civilization, that make it happen. Elites now are all (not literally...) corrupt, pedos, orgie addicts and so on. A complete mess.
Working age populations peaked in ~2010 even with the mass immigration going on, lmao at Denmark that got desperate and begged men to sleep with women.
Liberals have been lowering taxes in a desperate attempt to attract entrepreneurs but that barely helps there is too much.
Now they are killing small businesses and helping enforce multinational monopolies. This is not rational. These are the actions of a desperate ruling class that KNOWS what is going on.
In the best case scenario, where debt is cancelled, migrants stay to work, there are no riots and no civil war etc, it's unrealistic but assuming it all goes perfectly it will still be a catastrophe when it ends (obviously foreign nations like China won't export for free forever like a slave country). When it ends the standard of living will nosedive, all the free stuff taken from net imports won't be here anymore.
How about the debt?
The internal debts can be cleared, I mean... look 21 of the top 25 biggest hedge funds are jews, they could go to court to fight it, force the states to pay but surely they learned their lesson last time. Let's not repeat what happened. Anyway peacefully or violently internal debts will be cleared or almost cleared imo.
Who holds external debt? Well obviously China, but then a little of everyone, the Saudis, Israel, Norway, idk who else?
Some rich countries and big japanese businesses I guess?
China can come to Europe take factories, doctors, engineers etc, but they can't do this with the US.
What China can do even if they don't want to force the US to pay up immediately is seize factories such as Elon - hype man with 0 results his whole life - Musk Gigafactory 3. That's a given. Bare minimum.
Doesn't help that the west over-delocalised their manufacturing, including of medications.
Nah don't worry with covid they learned their lessons and actions will be taken. HAHAHAHA!
How do nations bounce back when their population is almost entirely made up of seniors?
It's not all about the money, where to invest. If you have parents that took care of you, prepare early, to take care of them later.
Elders that had no children well they'll die welcome to nature. But hey no one will be sad.
Pretty funny that all political sides are so eager to win, especially the US, like it's the most important elections that you absolutely have to win. It's hilarious, using every dirty trick and trying so hard to win to get the right to get blamed for the collapse.
Dumb tv anchors with shinny eyes filled with joy saying "this is a return to normalcy" I am pissing myself, "back to normal", oh it's going to sting them.
So ye to sum up the EU and US are basically big frauds ran by crooks, like the CEO of Enron or Wirecard.
It's like a husband that lost his job 5 years ago (20 here) and has been borrowing from friends the whole time to continue to drink champagne and hide the truth from his family but boy will you be in trouble when your buddies stop funding your lifestyle.
Let's just say globalist-leftist-liberalism will not be very popular in 20 years. Heads are going to roll.
Ah screw it I'm not pessimistic, let me not potentially give the impression that I am worried or upset.
I'm smiling because I'm getting the f out of this s***hole, I'm probably going to a beautiful beach in Tunisia.
Good luck with your old people and rich in diversity and megadebt and tolerance and masks and curfews and purple hair and return to paleolithic soon westerners, oh no Tunisia have made strict shariah laws against extreme LGBT acts oh no they are a muslim country they won't even let perfectly fine people do sodomy orgies in the street in front of schools how will I survive in such an intolerant place? Muh liberty to do orgies in public and play with feces and get guidelines on how to safely do butt licking muh democracy muh progress 😂
You know I used to care, but now knowing the west will suffer & millions will die actually makes me laugh 🤣.
They don't even suspect it yet, they're so joyful "return to normalcy" gosh they will eat their words.
I don't even want to help anymore, just watch and laugh and rub western neo-liberals face in it.
Keep bombing Syria children "for democracy" I'll eat popcorn in front of the elderly death count when you can't afford care anymore.
You reap what you sow. If they look for investors to bail them out I'll invest my ***** in Europe and the US.
The die is cast. Let this economy die in euphoria and mass delusion. This is long term so no need to short sell this very instant. But 2021 could be the year the stock market tops, if they don't go for hyperinflation.
Sorry for getting so brutal. Don't waste time arguing with deluded idiots, do you insist when a crazy person incoherently screams at you in the street no you try to help first then you leave them in their mess, each man for himself. Protect yourself, your family, your assets. Don't pay for the mistakes of others. Don't help people that don't want help. Ex-USSR countries are very eager to attract entrepreneurs, so let's all pack our s*** and move to greener lands.
As George Soros said, "doesn't matter what I do they will die anyway, so might as well profit from it. It was the happiest period of my life". Looks like I'm a huge sociopath, nice I got all the tools to succeed as a trader.
Oh hi people in 20 years digging dirt on me 👋 This is sarcasm please. They are doing porns in religious dresses I mean c'mon I get a free pass here please no hang me.
Oh hey and if you want to stay in "the west", I don't know how Australia is doing I think they are doing ok, and any businessman (/woman/8000 other genders) with 100k and a business gets a free ID and house or something. They have bats though.
The AWARA study on US Russia Europe net growth:
www.awaragroup.com
From a 2019 Wall Street report: "Real US debt could be 2000% of GDP". Talk about being overleveraged.
www.cnbc.com
Eco/monetary news n°28: They never cease to amaze me> Chinese court rules LGBT can be called mental disorder, liberal media finds their anti-Putin martyr is huge racist 😂
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In China, the US best friend, a student sued a book publisher for including in a psychology book the information that homosexuality was a mental disorder, and the people's court said "Ye so what? They got a point." (I am paraphrasing).
As the US collapses and is unable to pressure China they might send the LGBT community to camps.
Another similar thing that happened is a Korean soldier that identified as another gender commited suicide, like very of them do, but of course US citizens are blaming the military with 0 evidence like it just HAS to be their fault somehow.
Yet another habit France has exported to the US: whining and blaming others all the time.
I am sure Apple will cut ties to China and Biden will resume the trade war. HAHAHA just kidding of course I don't expect this.
After Saint George Floyd the symbolic martyr of the liberal media, now they hid really hard. They outdid themselves.
Now it's Saint Alexei Navalny the symbolic martyr. They are really good at doing their research.
An opposant to Putin, the liberal media and globalist organisation have officially made him a martyr. Nice 😆
Let me explain to you who Alexei is, you see the internet, even american sites, are full of videos of him.
Alexei would like to "exterminate all cockroaches and flies". In a video he was explaining how nationalism was like dentistry (wat?).
What a guy. Literal neo-nazi. He's worse than Hitler he literally openly says he wants to exterminate everyone 😆
The gloablist-liberal martyr. A literal neo-nazi. Well done. "We're on the right side of history". This is too funny not to comment.
Global organisation "Amnesty" found out and panicked "uh wait we are removing his prisoner of conscience status". Haha!
> I salute Nigeria for their outstanding decision to ban the scammy criminal vehicles called cryptocurrencies 👍
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The country that is now the 25th world economy, prob top 20 soon as everyone else collapses, has banned crypto trading.
More precisely the Securities and Exchange Commission (SEC) and the Central Bank of Nigeria (CBN) have.
They also asked institution to close the accounts of all their clients involved with the pyramid schemes.
In a statement from Nwanisobi, acting director of the central bank, said even famed investor Warren Buffett has called cryptocurrencies “rat poison squared,” a “mirage,” and a “gambling device.”.
First he outlines it's nothing more than a pyramid scheme or a gambling device if you prefer, with extreme volatility and risk and 0 value, the bitcoin bagholders like any good criminal lie through their teeth and pretend "the tech" yes sure, "the teeeech" riiiiight, this is why they get so angry at ideas with a red line to zero, because they care about the tech.
Secondly: "Second, the very name and nature of “cryptocurrencies” suggests that its patrons and users value anonymity, obscurity, and concealment. The question that one may need to ask therefore is, why any entity would disguise its transactions if they were legal. It is on the basis of this opacity that cryptocurrencies have become well-suited for conducting many illegal activities including money laundering, terrorism financing, purchase of small arms and light weapons, and tax evasion."
Well basically what we all already know. They're scams and dishonest Bitcoin bagholders defense is still "can't be a scam because it is based on technology" which makes so much sense.
> I salute the NYAG for fining the crooks behind the Tether fraud $18.5 million over ‘deceptive’ trading practices 👍
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It took 2 years but here we are. It's not diffamation anymore, they are officially crooks. We are used to this so we did not truly expect much, not jail or a complete end to their activities, nah same as usual, a small fine for a big crime.
But it's still something, not sure if it will be enough for them to think twice before manipulating the price, now rather they might think "hey we got away with it last time, let's do it again".
Since the pyramid scheme they threw money in, Bitcoin, went up, they can repay the money they stole so who cares right?
This is how justice works. Steal money, go to the casino with it, if you win it's all good. Very responsible.
> Yellen backs new allocation of IMF's SDR (the IMF currency) to help poor nations (does this include the USA?) 😏
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The US goes back on Trump decision to stop this, they want to continue throwing pity money at garbage regimes, to keep them in power, miserable but not enough to rebel, and maintain their economies down, making sure there is a constant inflow of migrants to support retirees, as well as prevent those countries to organise and increase oil & other goods prices. Well done America!
They also use this to look good and threw some catchwords around in random order "democracy good something something good guys versus bad guys miss teen speech existential crisis climate change" (global warming new name because no one can deny the climate changes wow genius except China still doesn't give a rats ass and they are the world largest economy and soon call the shots get used to it).
> Braindead or troll? Powell: US economy still ‘a long way’ from meeting Fed goals. It is going to sting... 😏
***********************
What are their goals? Not becoming a third world country? Not even going to check.
The US economy must have contracted by close to 100% by now lmao, all being hidden by debt like a husband that lost his job and borrows from friends to hide it from his wife.
Are they really this delusional? When reality catches up it is going to STING. Honestly I can't even imagine how it will possibly play out it is going to be so brutal. Something like Greece I guess? Greece but worse. Worse than the USSR obviously, the USSR did not borrow and import for 20 years to hide the decline. Americans today are complete morons so they won't bounce back, they won't rebuild. I guess states will exit the union and some might do ok. Young americans are so weak, lazy, dumb, entitled, stubborn versus reality.
I don't expect many to take me seriously but you will see, and remember: good times make weak men. They're more than weak here.
"Buying time" was really so bad, should have taken the pill 10-20 years ago.
> Share buying mistakes (because of similar tickers) is on the rise, now bigger than 5% of all trading 🤦♂️
***********************
Kek. I have been repeating for a while there were more and more idiots. Well here is another manifestation of it: They can't even buy the correct stock.
I have no words...
If China does not want to be left holding the bag (they are not strong enough to force America to pay), they have to make smart decisions, including buying gold.
Of course chinese people are not stupid & clueless like americans, therefore they already know this, and are already buying gold and more.
For individual investors too obviously gold is a good way to protect these gains. I don't even remember if we can hold our trading accounts in gold or has to be a fiat 🤔
$1700 is a good price. I can't tell where it goes so anywhere between 1000 & 2000 is fine. For keeping liquid money, risk capital, it is more volatile than Fiats (-) but it does not go to zero (+).
I think there are no broker that lets people have gold accounts... even Bitcoin allows this but not gold. Go hold your worthless ponzis going to zero nice.
Only way is to freeze yet more capital, with limited leverage, and fees... I don't want my trading account to be in shitty euros or dollars...
Actually they are a few, a small handful, of brokers doing this now.
GBP Up Again ?From a technical perspective, we have a trendline still forming, an inverse head n shoulder on M30, and a valid divergence. Following the recovery of the economy, GBP can bounce up again. Let's wait and see if the neckline will be broken.
This analysis was done using the following indicators:
-RichTL v1
-MACD
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MacroForex
CCL Broke Key ResistanceWith JNJ news, vaccine giving hope to investors, and another round of stimulus on the way, cyclical travel stocks like CCL should regain strength and continue forward. With good news, and the recent market sell-off due to bond yields, CCL and other value stocks saw a push. We're expecting this to continue, especially with the arise of a new cruise line from the company. The stock also broke a key resistance level from the June run up, at 25. This level held and the stock topped at 28s before falling back to 25 and bouncing - proving that the resistance level has now become a support level. This trend should continue, as there is nothing stopping the stock from moving back up to it's previous highs since this strong supply level was cleared.
Entry at 25-26, PT1 33, PT2 43-45, PT3 (EOY) ATH, SL Below 25
Are we building a ladder with the steps we just used?Today was quite an interesting, and most likely historical day following the shenanigans of $GME. For me, it was a day to sit back, contemplate, & construct questions into the future of the economy in Canada. Please bear with me as this is my first idea, and I am admittedly a new trader (One year so far).
Comparing 3 types of bond yields: 10Y, 2Y, and 3MO has been quite the staple for determining the direction of our economy. Our interest rates, the general market outlook, and also what the government is doing financially.
Like an electrical circuit, we can see that each time these 3 graphs begin to touch, the economy short circuits and is sent spiraling downwards.
I'd like to start where a lot of people start, and a lot of people groan as well when they hear this: the stock market crash of 2008. First, it would be ignorant to completely declare this fiasco as identical. However, there are many parts that are (and continue) to be similar. Some people say the stock market is just an irrational machine. Any sort of programmer would laugh at the idea of true randomness. I believe it is a system of gears that are controlled by millions of different entities and that it's our job to be able to understand which gear(s) are controlling each sector to formulate a decent idea, or fair percentage to make our predictions.
The first and most obvious similarity between these crashes is the level CORRA (Canadian Overnight Repo Rate Average). The Bank of Canada has taken control of the CORRA and it " will be further adopted across a wide range of financial products and could potentially become the dominant Canadian interest rate benchmark, particularly in derivatives markets". There's an obvious pattern of the market reacting violently to the CORRA rate and as of right now, they are at the same level as the 2008 stock market crash.
The very first sign of a stock market short circuit can be noticed with the 10 and 2 year bond yield rate. From almost December 2005 these rates were starting to close in together, leading to complete cross-under of the 3 month yield and shortly after - the great 2008 stock market crash. For our recent crash we had it play out almost exactly the same: tightening between 10Y & 2Y, and then a cross-under of the 3 month. Shortly after, the crash occurred.
Now, what's different?
Well only that the 3 month yield appropriately spaced itself from the 2Y from the 2008 market crash. I'm sure we all know but the main cause of the 2008 crash was from too many people defaulting on loans that they shouldn't have been given in the first place. However, when this crash occurred our different yields are took their respective position to comfortably restart. In our new crash the 3 month and 2 year yields are still confused while the 10 year is entering a parabolic increase. The last time something occurred similar to this (noted by the squares) we entered a bear market that took a hit to the real estate industry first.
So, what's the problem?
I believe we all got a little too worried about the result of this pandemic, but were saved by the technology industry. Most people in high-end jobs were able to continue working without much difference, and people in low-end jobs pretty much had to continue working - but were labelled as heroes. Additionally, there has been a lot of new faces (including mine) in the stock market world, stimulate bonuses were (and still are, I believe) given to everyone and their 14 year old kids (seriously). A lot of people have taken up online hobbies, stores, and especially jobs that they can do remotely. We are humans, we learn to adapt in every situation, and that's why we're the kings of this world. Despite the lovely recovery, there's echoes and signs that are increasing in strength.
In boxing, a fighter can be the best and be unmatched - only to have it all taken away from one loss and never recover again
I find the market to be a swinging pendulum. It goes up, it goes down. There's an invisible line of gravity that we accept and it swings depending on the uncertainty and volume. When we defeat our fears we need to stay humble before we start to believe we're invincible.
The biggest industry of Canada (that controls 13% of the GDP) is.... real estate. I'm sure every Canadian here that's looking to buy a house in wincing in pain, and everyone that already has a house has the biggest grin. I was reading that Toronto went up around 15% in real estate in January. What the heck is going on?? . My friend recently purchased a nice condo in Quebec which costed $430,000. Does my friend make the kind of money to justify a house that expensive? Heck no.
Can we just flip back to the 2008 market crash? We remember what caused it right? Ridiculous loans that were given out, and that were defaulted because they were ridiculous. Now, I'm not saying that this crash was similar, but I am trying to imply that we are on the verge of hitting that crash again. CERB has effectively given everyone who can fill out a form a bit over $10,000. Some people didn't even EARN $10,000 in a year but they still got it. It's still continuing under some new name so the amount is still increasing. Secondly, any new home buyers are eligible for a government loan that pretty much equates to 5 - 10% of the down deposit. So let's get this straight: Everyone and their child has received ATLEAST $10,000 (And won't have to give it back until they file this year's tax returns), first-time house buyers can get 5-10% loaned for the down deposit, and banks are giving mortgages with crazy low interest rates.
Anyone else see an issue?
A regular, decent house in my area would've been maybe $150,000 or $200,000 a year or two ago. Now, it's about $300,000 and steadily increasing. A minimum deposit is about 5% - the government is willing to do that and you already have $10k in the bank. A lot of people have lost, changed, or reduced their jobs to adapt to the new world. Our pay stubs from 2-3 years back IS NOT A HEALTHY INDICATOR . Our government is pushing the younger generation into buying houses that they honestly cannot afford. Almost everyone has been given all the tools to effectively place a down deposit on a house they probably cannot afford, and mortgage rates are so freaking low it seems like a no-brainer.
Houses are increasing way too fast in this economy as a result of government stimulation, and like any market with huge volatility: it will start to swing downwards at some point. The question is: will we be able to control it? Once taxes come in, the mortgages go back up, the stimulation ends, and the prices start to find their middle ground, will everyone be secure enough to handle it?
Final thoughts
Our economy is in a stage of mania with our insane house prices and market recovery. It's like being at the doctor but they give you methamphetamine instead of morphine.
- Will the come down be manageable or will it drive the economy into a huge fit?
- Are we teetering towards another financial crisis brought by ridiculous loans?
- Will we just continue this high until something else happens?
- What can we do to increase the odds for a clean and healthy recovery?
Thank you for reading. Near the middle point I let my mind wander. Please give me reasons that my logic is invalid as I am always trying to learn.
WTI - Crude Oil - USOILWEST TEXAS INTERMEDIATE
Fundamental Perspective - Oil's bullish rally has been primarily driven by succesful moves from OPEC and its allies, combined with an overenthusiastic market that could be getting ahead of itself. Vaccination programs and efforts are being implemented on a global( ish ) scale, but we are still very far from a global economic revcovery, or even a global economy back to pre-pandemic levels. Oil prices are as high as they were before the pandemic was even in sight, while Demand for it is not even close to prepandemic levels. Yes, China's oil demand has rebounded rapidly, but that's not exactly the case throughout the rest of the globe.
Technical Analysis Perspective - When looking at the Weekly timeframe we can observe that the last bearish push broke all the previous Lows (White Squares). In the event of Oil (Crude AND Brent) having a drastic fall in the coming weeks, it would probably be accompanied by a portion of the market.
***In the event of Saudi Arabia and OPEC+ further tightening the Oil Supply, the commodity's price would likely keep rising and eventually break through our Supply Range. Although the real question would then be: How long can this artificial scenario be sustained until there are adverse effects in the economy? (Ex. Transportation costs rising for/forcing out businesses that were already hit by the pandemic).
Decent risk to reward ratio the price moved below the MA and retested it and continue in the bearish trend it approaches a support area if it breaks through it would be a good chance with a great risk to reward ratio
