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Market Crash watch

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  • #31
    Originally posted by Sparko View Post

    Sorry, my point was that we would be still be energy independent if Biden hadn't screwed that all up, making our economy in a much better position to wait out the sanctions against Russia.
    To be honest with you, I'm not sure where the price of oil would be with or without the Keystone pipeline issue. IOW, I can't say where that exact distinction with general inflation lies. Perhaps the oil price would be lower, but inflation overall is affecting the price of all commodities across the board -- i.e food prices. And if the Fed starts to tighten, I expect much of the money in the stock and bond market to move into commodities which will affect prices even more.

    Comment


    • #32
      "The Dirty Work Of Going Through Old Positions On Bank Balance Sheets Is Being Done Around The Clock As We Speak"

      (emphasis mine)
      When was the last time a geopolitical risk event walked through the door behind a tech crash? George Soros always said “when past excesses are being corrected - it is always a period of maximum risk.”

      Going into the Ukraine-Russia tragedy, the ferocious “buy the dip” psychology was already impaired – now the matador just put forth his final sword. The wounded bull has been laid to rest. In the early 2000s, we called it “the other side of the mountain” – use vicious countertrend - short covering rallies to raise cash. We have clearly moved from a BTFD mentality to sell the rallies mode.

      A bear has arrived for lunch and unfortunately, he's staying for dinner.


      We have been up all night working the phones. It has been a Lehman weekend - as in a 24-hour scramble to find and calculate the risk - NOT the size of the risk.

      The dirty work of going through old positions on bank balance sheets is being done around the clock as we speak. We do know the cost of default protection on French banks has diverged from UK-Asia-centric HSBC meaningfully.

      After working at Soc Gen for three years we can tell you, the books on most EU banks are a cobweb of darkness. In 2016, when Glencore was going down, every week we found more and more risk tied to Glencore assets. The truth bled out very slowly.

      Italian banks have been very close with Russia as well. The point is, it's very tough for politicians to "target" SWIFT sanctions into this darkness, very tough. In a loud voice the client said - “Larry - details matter BIGLY – we need to urgently to know exactly what is sanctioned here. They - Olaf - Macron - Biden - will try and dance around risk with a targeted SWIFT but they’re probably not qualified to do so.

      They are messing with the plumbing of the global financial system. If they shoot from the hip, there could be large consequences.”

      Politicians are reaching in the dark to find risk. If they sanctioned the CBR (central bank of Russia) and the transfer agents for Eurobonds, then Russia will default on all foreign debt immediately. And if Russia tries to find a back door through China - will the USA fine or sanction Chinese banks?

      Over the weekend another client said "Germany can play SWIFT tough guy all they want - but Macron has to protect the vulnerable Soc Gen and Draghi is probably trying to ring-fence exposed, Moscow cozy Italian banks like Intesa and UniCredit.”

      Lost in the Ukraine tragedy – the Fed ́s favorite inflation measure – core PCE has moved from 3.7% in September to 5.2% in January, and the war-torn invasion only pours lighter fluid on this fire. *SCHOLZ: GERMANY TO SPEND MORE THAN 2% OF GDP YEARLY ON DEFENSE + massive social costs across the EU to off set energy prices as well.

      So long to the planet's global negative yield anchor. We are heading back to a 1967 – 1979 regime. Overweight hard assets, take down financial assets and buckle up.
      Whether one accepts my earlier theory this is all being done to intentionally crash the markets and reset western economies (particularly the sanctions) or this was all just a perfectly timed accident, one thing is for certain, the Ukraine crisis was a gift from heaven for western central banks, and whether they continue QE or tighten (the latter most likely), they're now free and clear of any and all blame from the economic effects of that -- "It's Russia's fault!"

      Comment


      • #33
        Originally posted by seanD View Post
        "The Dirty Work Of Going Through Old Positions On Bank Balance Sheets Is Being Done Around The Clock As We Speak"

        (emphasis mine)


        Whether one accepts my earlier theory this is all being done to intentionally crash the markets and reset western economies (particularly the sanctions) or this was all just a perfectly timed accident, one thing is for certain, the Ukraine crisis was a gift from heaven for western central banks, and whether they continue QE or tighten (the latter most likely), they're now free and clear of any and all blame from the economic effects of that -- "It's Russia's fault!"
        That article you posted seems to be a string of colloquialisms and stock market pithy sayings to to me that didn't actually say anything cogent.

        I have no idea what is going to happen. Historically, at the beginning of wars, the stock market is in flux because of uncertainty, but once a war has begun the stock market seems to rally and rise. I think the Dow went up 50% during WW2 for instance. Right now we are in the flux and uncertainty part. This Ukraine thing could be over in days or weeks, or it might spread and become WW3 if he attacks NATO. Adding on top of that the whole bit of the fed playing with interest rates and maybe COVID finally going away and who the hell knows what is going to happen? I kinda of hedged my bets and I have about half of my money left in stocks and half moved to money markets or cash.

        Cryptocurrencies are all a flutter too. But I only have about $2K in that.

        Comment


        • #34
          Originally posted by Sparko View Post

          That article you posted seems to be a string of colloquialisms and stock market pithy sayings to to me that didn't actually say anything cogent.

          I have no idea what is going to happen. Historically, at the beginning of wars, the stock market is in flux because of uncertainty, but once a war has begun the stock market seems to rally and rise. I think the Dow went up 50% during WW2 for instance. Right now we are in the flux and uncertainty part. This Ukraine thing could be over in days or weeks, or it might spread and become WW3 if he attacks NATO. Adding on top of that the whole bit of the fed playing with interest rates and maybe COVID finally going away and who the hell knows what is going to happen? I kinda of hedged my bets and I have about half of my money left in stocks and half moved to money markets or cash.

          Cryptocurrencies are all a flutter too. But I only have about $2K in that.
          You don't seem to get it. I tried to make it as plain as I could in this thread, but I guess that failed.

          Fed turns hawkish at the end of 2021, and is set to tighten next month (March), and announces this in 2021 before this year began (the market trend typically turns bear whenever the Fed does this -- i.e. 2018).

          Hence the reason I started this thread at the end of last year -- "Market Crash Watch."

          As expected, right when Fed announces this, the market turns bear and started going through crazy swings ever since the beginning of this year (because of the Fed), before the invasion happened (in 2018 the market turned bearish, went through crazy swings and ended up down before the Fed reversed course).

          Then the end of February comes, Biden admin starts sounding the alarms about imminent invasion, and then invasion happens right at the end of the very month before the next month (March) the Fed is set to begin tightening.

          Now everyone, including the MSM, falsely blames the conflict itself for the market turmoil (as well as inflation and all other economic woes that ensue). Just read the headlines.

          The Fed (as well as the ECB) now have perfect cover. They can either tighten (followed by a continued bear market and eventual economic recession as a consequence) or continue QE (a bull stock market, but worse inflation).

          Whatever the central banks decide to do -- dovish or hawkish (personally I still think the central banks will follow through with tightening) -- everyone will erroneously blame the conflict for the ensuing consequences.

          The timing with all this to me is just a bit too on-the-nose. But it could still just all be a lucky accident.
          Last edited by seanD; 02-28-2022, 12:07 PM.

          Comment


          • #35
            Originally posted by seanD View Post

            You don't seem to get it. I tried to make it as plain as I could in this thread, but I guess that failed.

            Fed turns hawkish at the end of 2021, and is set to tighten next month (March), and announces this in 2021 before this year began (the market trend typically turns bear whenever the Fed does this -- i.e. 2018).

            Hence the reason I started this thread at the end of last year -- "Market Crash Watch."

            As expected, right when Fed announces this, the market turns bear and started going through crazy swings ever since the beginning of this year (because of the Fed), before the invasion happened (in 2018 the market turned bearish, went through crazy swings and ended up down before the Fed reversed course).

            Then the end of February comes, Biden admin starts sounding the alarms about imminent invasion, and then invasion happens right at the end of the very month before the next month (March) the Fed is set to begin tightening.

            Now everyone, including the MSM, falsely blames the conflict itself for the market turmoil (as well as inflation and all other economic woes that ensue). Just read the headlines.

            The Fed (as well as the ECB) now have perfect cover. They can either tighten (followed by a continued bear market and eventual economic recession as a consequence) or continue QE (a bull stock market, but worse inflation).

            Whatever the central banks decide to do -- dovish or hawkish (personally I still think the central banks will follow through with tightening) -- everyone will erroneously blame the conflict for the ensuing consequences.

            The timing with all this to me is just a bit too on-the-nose. But it could still just all be a lucky accident.
            You think Biden planned the Ukrainian invasion in cahoots with Putin?

            Yeah I think they are taking advantage of the war to pass on the blame. That's what democrats do, pass the blame. If it weren't Putin they would be blaming it all on Trump.

            Comment


            • #36
              Originally posted by Sparko View Post

              You think Biden planned the Ukrainian invasion in cahoots with Putin?

              Yeah I think they are taking advantage of the war to pass on the blame. That's what democrats do, pass the blame. If it weren't Putin they would be blaming it all on Trump.
              I wouldn't go that far.

              Russia was deploying troops on the Ukrainian border during the spring of last year, which makes the timing of this even more extraordinary.

              They apparently waited until November to acknowledge this, then went all in with the alarmism at the end of this month. Maybe this month they released info they knew would get to Putin (like finalizing NATO membership for Ukraine or something like that) and knew that info would trigger the invasion.

              I think it's interesting that in a matter of a few days after Harris met with Zelensky in Germany for "diplomatic" discussion, the invasion happened.

              Comment


              • #37
                Definition of a 'Market Crash.'

                It's important to distinguish temporary market peaks and dips from actual bear/bull market trends and what exactly Fed policy influences, and I thought I'd clear that up here.

                When the pandemic news in the beginning of 2020 crashed the market, I consider this essentially just a dip even though it lasted for about a month. The DOW lost all gains previously made in the last four years, then regained everything a month later and, in the middle of lockdowns and nationwide riots, went on an actual bull trend run pretty much the entire rest of the year of 2020-21. The latter was Fed influenced.

                Contrariwise, we saw an actual downturn trend in the fall of 2018 when the DOW steadily lost about 5,000 points (with dips and peaks in between) over the course of the rest of the year and into 2019, and this was again irrelevant to anything political, social, or geopolitical that was going on at the time. This was Fed influenced.

                Ever since the Fed started intervening with its monetary policy (around the turn of the century), situations like this Ukraine conflict only affect temporary peaks and dips that merely last days or weeks. For example, you might have a market peak of several hundred points one day/week when Ukraine negotiations look positive, and then a dip the next day/week when negotiations break down and fighting continues. These are just peaks and dips. But the overall trend for 2022 will likely be downward of several thousand points or more, unless the Fed reverses, which would be a bear trend.

                And though the markets started a downward trend in the beginning of this year (the DOW has lost about 2,000 points from its peak) even before the conflict, I still consider this only in the dip faze. As stated in the beginning, social, political, and geopolitical situations will affect peaks and dips, but only the Fed affects actual bull/bear market trends that last at least a few months or more.

                If you're a short term investor (day/swing trader), you're concerned about the former, and probably not as concerned about what the Fed does in the long term. If you're a long term investor, you'd be more concerned about the latter and so the Fed is your best friend.

                Comment


                • #38
                  Despite Russia’s invasion of Ukraine and a sliding stock market, Federal Reserve Chair Jerome Powell told Congress on Wednesday the central bank plans to raise its key interest rate from near zero this month to fight a historic surge in inflation.

                  Powell said he'll propose a quarter-point hike, rather than a half-point, suggesting that's likely what the Fed's policymaking committee will approve.

                  “With inflation well above 2% and a strong labor market, we expect it will be appropriate to raise the target range for the federal funds rate at our meeting later this month,” Powell said at a House financial services committee hearing. "I would say we will proceed cautiously along the lines of that plan."

                  "I'm inclined to propose and support a 25 basis point rate increase," he added.

                  He noted, however, the Fed is prepared to possibly lift rates more sharply, depending on the effects of the Ukraine war and other developments.

                  "Inflation is too high – we understand that," Powell said. "It'll take some time but we're going to get it under control."
                  https://www.usatoday.com/story/money...22/9332358002/

                  ==============

                  Powell expects a quarter-point Fed rate hike this month

                  Chair Jerome Powell said he supports a traditional quarter-point increase in the Federal Reserve’s benchmark short-term interest rate when the Fed meets later this month, rather than a larger increase that some of its policymakers have proposed

                  https://abcnews.go.com/US/wireStory/...month-83202528

                  Comment


                  • #39
                    I've seen a range of 1% to 2% for the amount of the total increase for 2022. I'm predicting it will come in closer to 2% and won't be surprised to see it over 2% by the end of December.

                    The White House, of course, will be pushing for lower increases since this is an election year and the impact is almost universal in the US.
                    "For I desire mercy, not sacrifice, and acknowledgment of God rather than burnt offerings." Hosea 6:6

                    "Theology can be an intellectual entertainment." Metropolitan Anthony Bloom

                    Comment


                    • #40
                      Originally posted by Thoughtful Monk View Post
                      I've seen a range of 1% to 2% for the amount of the total increase for 2022. I'm predicting it will come in closer to 2% and won't be surprised to see it over 2% by the end of December.

                      The White House, of course, will be pushing for lower increases since this is an election year and the impact is almost universal in the US.
                      Yeah, same reason Biden won't stop buying Russian oil and is lifting mask mandates.


                      Comment


                      • #41
                        Dang. I should have refinanced at 2.25%, 15-year mortgage.

                        Comment


                        • #42
                          Originally posted by Ronson View Post
                          Dang. I should have refinanced at 2.25%, 15-year mortgage.
                          The current rate is still 3.3% for 15 year.

                          Comment


                          • #43
                            Originally posted by Sparko View Post

                            The current rate is still 3.3% for 15 year.
                            I stand corrected. That's right

                            Comment


                            • #44
                              Originally posted by Sparko View Post
                              Despite Russia’s invasion of Ukraine and a sliding stock market, Federal Reserve Chair Jerome Powell told Congress on Wednesday the central bank plans to raise its key interest rate from near zero this month to fight a historic surge in inflation.

                              Powell said he'll propose a quarter-point hike, rather than a half-point, suggesting that's likely what the Fed's policymaking committee will approve.

                              “With inflation well above 2% and a strong labor market, we expect it will be appropriate to raise the target range for the federal funds rate at our meeting later this month,” Powell said at a House financial services committee hearing. "I would say we will proceed cautiously along the lines of that plan."

                              "I'm inclined to propose and support a 25 basis point rate increase," he added.

                              He noted, however, the Fed is prepared to possibly lift rates more sharply, depending on the effects of the Ukraine war and other developments.

                              "Inflation is too high – we understand that," Powell said. "It'll take some time but we're going to get it under control."
                              https://www.usatoday.com/story/money...22/9332358002/

                              ==============

                              Powell expects a quarter-point Fed rate hike this month

                              Chair Jerome Powell said he supports a traditional quarter-point increase in the Federal Reserve’s benchmark short-term interest rate when the Fed meets later this month, rather than a larger increase that some of its policymakers have proposed

                              https://abcnews.go.com/US/wireStory/...month-83202528

                              Another thing to keep an eye on is their balance sheet bond reduction (to see if they really actually reduce it)...

                              So far it's at 8.9+ trillion...



                              Comment


                              • #45
                                With President Biden banning Russian oil, watch out for more sharp declines.

                                Also watch out for Chairman Powell to change course and the next rate hike is high that 0.25%.
                                "For I desire mercy, not sacrifice, and acknowledgment of God rather than burnt offerings." Hosea 6:6

                                "Theology can be an intellectual entertainment." Metropolitan Anthony Bloom

                                Comment

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