Economy
Reverse Repo MarketReverse repo market cooling off.
Let's see how this affects the Fed's positioning, considering the liquidity implications.
Expecting a 6-8 month lead time for the liquidity to make it's way to the market.
1. Banks pulling liquidity to backstop any liquidity crunch
2. Banks expecting the fed to pivot, so they can get better returns lending that money out rather than using it for RR ops. Lock long term high rates, lending money out, now.
Guessing this is front-running the fed.
Publishing to keep an eye on it.
IMO, Fed pivot != bullish. It means they likely overshot their desired outcome. Fed halting to re-analyze would be the best outcome in my eyes.
Master of MarketsThis is an update to a chart I posted last September
Trading View updated the scale for ON RR so I'm reposting the idea so we can watch the rise/fall in playback.
Wall Street banks are now drinking the market liquidity cool-aid.
I wonder which one will be the first to implode this time.
2006-08 was a time of idiots without Money
2020-22 will be the time of idiots with to much Money.
USA $31.4T Debt: How will this affect BTC and Stocks?❗ WARNING ❗ You're about to read an unpopular opinion...
Over the past few days, we've seen bullish price action across nearly all markets. Infact, this is the first time since 2013 that Bitcoin has closed so many green dailies consecutively. This entire market reversal seemed a bit sudden, and many claimed "bull trap". (I'm a believer in the Macro, so when it comes to pure charting without fundamentals, longing was the way to go over the past few days, no argument on this).
However, another interesting this happened today - the U.S. government hit its $31.4 trillion borrowing limit TODAY, amid a standoff between the Republican-controlled House of Representatives and President Joe Biden's Democrats on lifting the ceiling (which could lead to a major economic crisis in a few months). Suddenly, I thought to myself, the entire reversal seems even more suspicious. Now here's my unpopular opinion : What if this is part of an elaborate plan to eliminate some of the debt? The world is dependent on the dollar, if the US financial system is in trouble, so is most of the world. Everything is just too interconnected at this point. Across the giants of investment world, there are rising concerns about unsettling markets and risking a recession. Senate Republican leader Mitch McConnell predicted that the debt ceiling would be lifted sometime in the first half of 2023 under conditions negotiated by Congress and the White House.
According to Reuters, the White House is refusing to negotiate with Republicans on raising the debt ceiling because it believes that the majority of them will eventually back off their demands, as a growing group of investors, business groups and moderate conservatives warn of the dangers of edging towards a default. The high-stakes deadlock is widely expected to last for months, and could come down to the last minute as each side tests the other ahead of June when the U.S. government might be forced to default on paying its debt. A default means being unable to pay. Because U.S. debt is considered the bedrock of the global financial system, due in part to its stability, a default could shake economies across the world. Americans could also face a recession, including higher unemployment, and the stock and bond markets would likely plunge. Today, a government that defaults may be widely excluded from further credit; some of its overseas assets may be seized; and it may face political pressure from its own domestic bondholders to pay back its debt.
Today on Twitter, Elon Musk said openly that even if the government taxes every billionaire by 100%, it wouldn't even make a notable dent. According to him, the only way to make a notable dent in this debt is to tax the citizens even more. But what about the markets, the whales, the insider trading between banks, governments and large corporations ?? Trading markets is a multi trillion dollar industry. To make it more practical, the total value of global equity trading alone was 41.8 trillion U.S. dollars in the third quarter of 2021. We know that the Total cryptocurrency market is currently standing just under 1T. I'm unable to find data on the total worldwide value of the commodity market, if you do please comment below with your source. It is estimated that the total amount of money in the world is a couple of quadrillion. Whatever that means. Suddenly, 30 Trillion seems pale in comparison.
Furthermore, investment options go far beyond just stocks, cryptocurrency and commodities. Some of the other less frequently discussed options include:
1. High-yield savings accounts
2. Certificates of deposit (CDs)
3. Money market funds
4. Government bonds
5. Corporate bonds
6. Mutual funds
7. Index funds
8. Exchange-traded funds (ETFs)
9. Dividend stocks
10. Real estate
Now imagine, scooping off a bit of cream from the top?? You wouldn't need to necessarily wipe out an entire market, but a good 20% to 30% drop across markets and Bob's your uncle ! The money machine carries on until next time it's overspent. Hike interest rates. Increases taxes. Inflation. Liquidate markets. Repeat cycle.
So the point that I'm trying to get at is this - remember tot take profits. Nothing wrong with taking a hedge to manage your risk during these uncertain economic times. I personally won't be surprised if there's some major "news event" that sends the markets into a overnight flashcrash soon. I could be totally wrong, in fact I would prefer to be wrong in this case.
What are your thoughts on this?
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CryptoCheck
CDSP peaks are a possible lagging indicator of recession startsThe new CDSP numbers are in for the previous quarter (consumer debt as percentage of household disposable income) .
Large spike up in consumer debt loads as people are burning through their last cash and borrowing to keep up their life style before the crash. Goldman-Sachs claims that retail has unloaded their positions from the bull run. Thanks to @FXEvolution for the article.
DotCom and GFC also had similar spikes.
If a recession has already started, then earnings season will be bad. This fact is what can put us on the path to SPX ~3300-3500
What to do:
If the CDSP in the future starts to spike down, it may be an indicator that a recession has already started. Check back in 3+ months.
230117 - Who's Tapering and Who's Not. I have to re-visit this. I am struggling to get 2 charts on the screen. Sorry for the dealy.
If the sell-off on Dow Jones, or the rally on Gold have anything to do with tapering the Central Banks' Balance sheets, they have a lot to talk about in Davos.
Notice the Difference between the M3 and Central Banks' Balances.
BOTH IS RELATIVE AND REAL TERMS.
Tapering is nigh impossible
S&P 500 market will open for the forth day todayThe S&P500 index yesterday closed at its highest trade line level in three days at 3,999.26 as investors turned to US stocks.
Most of the gains in this week's pullback in US stock prices have been led by bank stocks as well as shares of some media companies, which were probably untapped by individuals and businesses.
The S&P is now up 5.2% this week
This is not a piece of financial advice.
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