The perfect storm is brewing:
Corona virus = Global economic slowdown
Oil market crash = $2 Trillion in BBB- junk bonds
Liquidity crunch in Repo Market = Banks too scared to lend $$ = Fed bail out of Repo market
Get ready folks. This is getting real. https://t.co/JsobmEtFNr
How the fuck is anyone supposed to trade when giant central players with unlimited funds and unnatural motivations(i.e. not caring about losing value) can enter the market at any time and with massive consequence? I always assume forex was an insider's game, but this post-2008 atmosphere can't even be called capitalism.
This points to something seriously wrong under the hood. First it was the quarterly tax payments but that should have ended this need for excess liquidity back in September. Here we are 6 months later and it’s clearly gotten worse.
yes indeed. Shale-Oil Bust Turns into Massacre Shares of shale oil drillers collapsed by 25%-50% today [march 9, 2020] https://wolfstreet.com/2020/03/09/great-american-shale-oil-bust-turns-into-massacre/
European Bank Stocks Collapse to March 2009 & 1988 Levels [march 10, 2020]
travel industry taking a big dump. empty ports in i think oakland. supply chain disruption.
Agreed. I have long been of the belief that the economy is not as strong as the market would imply. And yeah yeah I get that the economy is not the stock market and the market is not the economy but they are definitely tied in a lot of ways. When the fed started raising rates in 2018/2019 and the markets revolted, mortgage applications dried up, it was a huge signal that things were not as great as they appeared. If the economy cannot handle a 3% fed funds rate and 4% 30 year mortgages then IMO, things are not good.
'Moments ago we got confirmation when the Fed reported that one day after it expanded its repo operations, there was a record demand for Fed liquidity in both the term and repo operations'...'As we pointed out last week, this continuing liquidity crunch is not only bizarre, but increasingly concerning, as it means that not only did the rate cut not unlock additional funding, it actually made the problem worse, and now banks and dealers are telegraphing that they need not only more repo buffer but likely an expansion of QE... which will come soon enough, once the Fed funds hits 0% in a few days and is forced to restart bond buying to prevent the next crash'.
even after the .50 basis point fed rate cut [rate currently at .50] - zero hedge