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Stock Market Crash! (merged) Pt. 9

Discussions about the economic and financial ramifications of PEAK OIL

Re: Stock Market Crash! (merged) Pt. 9

Unread postby GHung » Wed 18 Sep 2019, 13:44:24

rockdoc123 wrote:
“European car registrations dropped 8.6% in August as volume brands Nissan, Renault, Fiat and Volkswagen posted double-digit sales declines, according to industry data published on Wednesday… Registrations fell to 1.07 million cars last month from 1.17 million a year earlier across the European Union and EFTA countries, the Brussels-based association said in a statement.”


and yet in the US total car sales remain as strong as they have historically been

Image


In the US, dealers can get financing for just about anyone with a pulse, and dealers are overstocked. In the EU, not so much.

Anyway, US auto sales are about where they were @2007. Not sure if I would use that as a good indicator, going forward
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby rockdoc123 » Wed 18 Sep 2019, 14:07:21

Anyway, US auto sales are about where they were @2007. Not sure if I would use that as a good indicator, going forward


not sure what the problem with that is....that was the highest they had been in decades and that level of sales was relatively static for the previous 5 years. The current level of sales is 1.75 times what it was during the recession. Pretty hard to make a bad story out of that.
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby GHung » Wed 18 Sep 2019, 14:30:57

rockdoc123 wrote:
Anyway, US auto sales are about where they were @2007. Not sure if I would use that as a good indicator, going forward


not sure what the problem with that is....that was the highest they had been in decades and that level of sales was relatively static for the previous 5 years. The current level of sales is 1.75 times what it was during the recession. Pretty hard to make a bad story out of that.


My point was that if you were using that metric as a sign that everything is hunky dory, short-to-mid-term, it doesn't hold up. Vehicle sales and new home starts were pretty solid prior to 2008. And I have personally witnessed irrational exuberance on fairly alarming levels just before major downturns. The company I worked for prior to the dotcom bust added about 10% to it's significant workforce, and moved to a new bigger location less than a year before that crash. The developer my wife and I both worked for increased land purchases, building starts and borrowing @2007. Both were cautioned by advisers and banks to pull back. What I heard was a boatload of confirmation bias from these guys (I'm very familiar with that mindset in "movers and shakers"). Both went into Chapter 7.

Meanwhile, I know the owner of both car dealerships in our town and he's telling his people to move cars fast, no matter what it takes. He's been around the block a few times.
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby shortonoil » Wed 18 Sep 2019, 15:16:55

This article says that the Repo is the lender of last resort for global banks. To use the Repo the banks need collateral. The Repo froze because the collateral is turning toxic?


To issue debt the borrower must post collateral to cover their loan in case of default. So much debt has been issued that there is very little high quality collateral remaining. What banks are attempting to use is the bottom of the barrel in the collateral market. The Brokers do not want to accept it at the Fed Funds Rate, so the price being charged for these short term loans is going out of sight. Like oil, the quality of the collateral remaining has fallen so low that no one wants it. It is an indication that we are reaching the top of the debt curve. $331 trillion is all the debt that the system can handle before it starts going into cascading defaults.

Next stop, world bankruptcy. Today the FED passed on QE4. There isn't even enough junk collateral in the system for them to exchange for their FERNs. Helicopter money is the last recourse, but they will try to hold out until the elections before using it. The banks might start going bust before then?

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Re: Stock Market Crash! (merged) Pt. 9

Unread postby rockdoc123 » Wed 18 Sep 2019, 16:14:50

Vehicle sales and new home starts were pretty solid prior to 2008.


for seven years and they have been sold for about 4 years now. At what point is strong sales indicative of future bad sales? The point is if you can't use strong sales to suggest there is currently no problem then suggesting waning sales is equally a poor metric.

And I have personally witnessed irrational exuberance on fairly alarming levels just before major downturns.


the stock market has shown "irrational exuberance" for at least 5 years yet has kept on ticking upwards as many called for it to fail imminently. Heck Armegadon has been calling for it to fail next week since at least 2011.

At any given time you can find things that point to either a growing or slowing economy or somewhere in between. None are exacting indicators of an immediate recession. In the past there were recessions where we didn't know we were in one until the financial guys told us we were....some months before it started. It's a difficult thing to predict time-wise. What is guaranteed is there will be another recession as sure as night follows day, when that will happen is still up for grabs as far as I can tell.
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby GHung » Wed 18 Sep 2019, 19:53:25

Some of us are at least as concerned about what's coming as we are about what is.

Markets That Live by the Fed, Die by the Fed

September 17, 2019

The "everything bubble" is not permanent.

All eyes are again on the Federal Reserve, as everyone understands that the Fed is the market-- the stock market, the bond market, the art market, the housing market, etc. All markets have been driven higher by one force: central bank money creation and distribution to the financial sector of financiers and corporations, the richest of the rich.

What few seem to grasp (because they're paid not to?) is the Fed is powerless over what actually matters in a healthy economy:

1. The Fed is powerless to create productive, profitable ventures for capital to invest in. Productivity has gone nowhere in the Fed's reign while speculative profits leveraged by the Fed's free money for financiers have soared.

2. The Fed is powerless to raise wages. Despite ginned-up claims that wages are finally rising 3% a year after a decade of stagnation, wages are still losing purchasing power once real-world inflation is factored in.

3. The Fed cannot force creditworthy households and enterprises to borrow more money, nor can they stop banks from lending to the only people who want to borrow more money, those who are credit risks, i.e. borrowers who will default at the first spot of bother.

4. The Fed is powerless to stop the New Gilded Age consequences of their policies via The Cantillon Effect: it's not just how the money is created, but how it's distributed. Those who get the Fed's nearly free money can use it to buy productive assets and pursue speculations such as stock buy-backs, while everyone else who didn't get a single dollar of the Fed's trillions experiences a loss of purchasing power as the Fed's new money expands the money supply without actually expanding the real economy.

The only power the Fed has is to incentivize profiteering via stock buy-backs and speculations of the super-wealthy--the power, in other words, to create a New Gilded Age of obscene wealth inequality. ..........

Charles Hugh Smith
more: https://www.oftwominds.com/blog.html


I'm pretty agnostic on the Fed. It is what it is though that doesn't mean things aren't as Charles describes. But when the Money Wazoos run out of places to shove trillions of dollars they conjure up, they've outlived their usefulness to just about everyone.

It's not that people can't see it coming. It's that they don't want to. Probably not the kind of change they want.
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby Armageddon » Wed 18 Sep 2019, 21:23:01

Business confidence among top US chief executives fell for the sixth quarter in a row. Companies “now have their foot poised above the brake, and they’re tapping the brake periodically."

https://www.ft.com/content/89caece4-da1 ... 216ebe1f17
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby Yoshua » Thu 19 Sep 2019, 00:51:23

If I understand it correctly...in 2008 the banks used subprime mortgages that had been sliced and diced as collateral...until they became toxic and the Repo froze.

Today the banks use junk bonds that have been sliced and diced into CLO,s...subprime auto loans and EM bonds as collateral...and now they are turning toxic.

The Repo will freeze unless the Fed goes in and buys that toxic debt and keeps it on its balance sheet.
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby shortonoil » Thu 19 Sep 2019, 07:08:39

Today the banks use junk bonds that have been sliced and diced into CLO,s...subprime auto loans and EM bonds as collateral...and now they are turning toxic.


That junk was toxic the day it was born, and everyone with the IQ of a Buggy Bird knew it! As total debt grows exponentially more and more of the debt will go bad. The next recession will turn most of the BBB corporate bond market into toilet paper. The Federal government will have to buy more $1 million toilet seat covers to provide the banks with useable collateral. That will be when cases of Kentucky whiskey become more valuable the Federal Reserve Notes. With $331 trillion in world debt it is now all about perception. If the average Joe Six understood the Repo Market the liqueur stores would now be standing room only.
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby shortonoil » Thu 19 Sep 2019, 07:36:25

DJIA F 27,099 -44 -0.16%
S&P F 3,004.00 -4.60 -0.15%
NASDAQ F 7,899.25 -18.75 -0.24%
Gold 1,510.50 -5.30 -0.35%
Silver 17.93 0.011 0.06%
Crude Oil 59.24 1.13 1.94%

Did someone mention that the FED cut rates yesterday? It looks like the FED's mojo is getting a little weak. This is the second time that they have cut rates and the market went down. Maybe Trump will notice that a 50 point cut may not be such a bright idea?
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby Yoshua » Thu 19 Sep 2019, 09:00:04

The Fed is now buying the Repo at a rate of USD 75 Billion a day. At this rate the Fed will inject USD 20 Trillion into the markets annually.

The money is just sucked into a black hole since the stock market isn't exploding higher.

Just stay calm and print.
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby shortonoil » Thu 19 Sep 2019, 09:44:20

The Fed is now buying the Repo at a rate of USD 75 Billion a day. At this rate the Fed will inject USD 20 Trillion into the markets annually.

The money is just sucked into a black hole since the stock market isn't exploding higher.

Just stay calm and print.


Is the FED planning on using Powell's collection of Green Stamps as collateral? Houston, we have a problem.

Liquidity Shortage Getting Worse: Fed's Repo Oversubcribed Even More As Funding Demand Jumps
For those hoping that the dollar shortage and overnight funding crunch would ease on the third day after the G/C repo rate exploded as high as 10%, we have bad news: it has not.

https://www.zerohedge.com/markets/fed-b ... rates-ease

The FED is now below the neutral interest rate of 2.23%. Anything that they do will further restrict the economy. It looks like $331 trillion in total world debt was the break point. The point where the world ran out of collateral for forming more debt!

Banks will have to start cutting their loan books. If you ever planned on owning a new BMW, today is the last day of the sale. Money is going to start getting real scarce. The back room where they conjure it up will be closed for renovations.

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Re: Stock Market Crash! (merged) Pt. 9

Unread postby Cog » Thu 19 Sep 2019, 09:50:09

Part9 of this doom fail train. LOL
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby Cog » Thu 19 Sep 2019, 09:53:17

Yoshua wrote:The Fed is now buying the Repo at a rate of USD 75 Billion a day. At this rate the Fed will inject USD 20 Trillion into the markets annually.

The money is just sucked into a black hole since the stock market isn't exploding higher.

Just stay calm and print.


Math and the underlying reality of math, isn't really your strong suit is it? :lol:
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby StarvingLion » Thu 19 Sep 2019, 11:28:12

"We now interrupt programming for this important news bulletin"
Two kittens were seen to be looking at each other in an odd manner
"We now return you to our regularly scheduled world-wide suicide"

Only a couple of more days until more "drones" hit KSA.

Fake Money demands it.

Very soon, the whole place will be on fire....Just like ForSaleIca.
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby shortonoil » Thu 19 Sep 2019, 12:29:52

Math and the underlying reality of math, isn't really your strong suit is it?


Yoshua is not adding $75 billion a day to the system. The FED is doing it! Since they will run out of collateral for their QE long before $20 trillion, his figure is probably overly optimistic. They could do it with helicopter money, but then your $50 a month in food stamps would be worth about a nickel. Yoshua's point is that the FED just plucked the goose that laid the golden egg, and bald birds are not very happy birds. The underlying reality is that some pretty disguised birds are heading our way.
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby Yoshua » Thu 19 Sep 2019, 15:01:50

The Fed just announced that they will conduct a fourth day of Repo operations.

I admit that I'm not a Repo expert. I fail from time to time following the global economy and global finance.

So...the Repo is short term loan. The Fed's Repo is a tool to keep short term loans low by injecting short term liquidity into 24 primary dealers...banks that are connected to the Fed...who are then supposed to pass that money to banks that need it short term.

There seems to be a liquidity problem...and no one seems to agree on why this problem started or where it's coming from.

There's just so much debt out there...toxic debt...that the primary dealers might not want to pass that money to the banks that need it.
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby Outcast_Searcher » Thu 19 Sep 2019, 15:15:58

shortonoil wrote:
Math and the underlying reality of math, isn't really your strong suit is it?


Yoshua is not adding $75 billion a day to the system. The FED is doing it! Since they will run out of collateral for their QE long before $20 trillion, his figure is probably overly optimistic.
[/quote]


Except that in the real world, they did this ONE day to the tune of $75 billion, not daily as you say. :shock:

It already looks like this is winding down, but perhaps not, since it's hard to know what's at the root of it. (No, the economically clueless doomers don't know either, even though they bray a lot, all the time).

https://apps.newyorkfed.org/markets/aut ... 01/01/2000

Don't take my word for it. Look at the numbers.

$5 billion so far today (which is getting toward normal range, looking at the last 25 operations, but might be much bigger tonight, of course).

Funny how the fast crash doomers project doom a good 10,000% as often as something even approaching that happens, so of course, they'll try to make hay out of ANY event like this, whether valid or not.

And of course with their ever-accurate track record, I'll certainly be hiding under the bed. :roll:

...

By the way, I'd certainly prefer balanced budgets, living within our means, and not piling up debt all the time. But that doesn't mean we're all going to die tomorrow, next week, or next year.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby Outcast_Searcher » Thu 19 Sep 2019, 16:15:02

Being curious about the whole overnight repo scare, I did a little more looking around.

The SOFR, or Secured Overnight Financing Rate, as reported by the Fed, looks like a good way to get a feel for how the "financing scare", re Fed repo operations is going.

https://apps.newyorkfed.org/markets/autorates/SOFR

Per this, things looked MUCH better the 18th, than they did the 17th. The rates didn't really get high (5%) until the 99th percentile, and were only 3% at the 75th percentile on the 18th. On the other hand, most of the financing was expensive the 17th, with the 25th percentile already at 5% -- meaning there was a significant shortage of willing cheap lenders.

Based on this and the only 5 $billion size of the operation this afternoon, I would imagine tonight's operation statement by the Fed is mainly as a just in case, continued calming action.

...

One of theories of what made this necessary this time, per an article I read, was the confluence of several stresses on the system like quarterly taxes being due, plus the unusual events (which raised fears) re the KSA attack. That sounds as reasonable as anything I've heard, since the financial markets are huge and complex, and it's hard to know WHAT all could be going on in the short term -- even for the (actual, vs. self proclaimed) experts.

Disclosure: I am NO financial expert and don't claim to be. I mainly get by on reading credible sources, and an adult lifetime of financial common sense accumulated from several decades of investing.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby GHung » Thu 19 Sep 2019, 16:31:06

Outcast_Searcher wrote: ...........

Except that in the real world, they did this ONE day to the tune of $75 billion, not daily as you say. :shock:

It already looks like this is winding down, but perhaps not, since it's hard to know what's at the root of it. (No, the economically clueless doomers don't know either, even though they bray a lot, all the time).

https://apps.newyorkfed.org/markets/aut ... 01/01/2000

Don't take my word for it. Look at the numbers.

$5 billion so far today (which is getting toward normal range, looking at the last 25 operations, but might be much bigger tonight, of course).

Funny how the fast crash doomers project doom a good 10,000% as often as something even approaching that happens, so of course, they'll try to make hay out of ANY event like this, whether valid or not. .........


Uhhhh

The Fed has a repo problem

Cash available to banks for their short-term funding needs all but dried up earlier this week, and interest rates in U.S. money markets shot up to as high as 10% for some overnight loans, more than four times the Fed’s rate.

That forced the Fed to make an emergency injection of more than $125 billion over the past two days, its first major market intervention since the financial crisis more than a decade ago, to prevent borrowing costs from spiraling even higher. While the effort restored a measure of order to the short-term bank funding market, it was not enough to stop the Fed’s benchmark lending rate from rising on Tuesday above its targeted range of 2.00% to 2.25%.
.......
https://www.reuters.com/article/us-usa- ... SKBN1W30EJ


So more than $125 billion magically gets minimized to $75 billion. Thank God for fuzzy math. But many Money Wazoos are indeed scratching their heads, and some seem alarmed that the Fed is losing control of things. Seems the US Treasury needed to borrow more cash to pad its accounts while corporations needed billions to pay their taxes. Funny, that, in light of Trump's big tax cuts and "the greatest economy ever", as he states. So what happened to all of that new tax revenue Trump promised would result from cutting taxes for corporations and the wealthy?
Cumulative FY19 Deficit through August 2019: $1.067 trillion (with a 'T') The U.S. federal budget deficit for fiscal year 2020 is $1.10 trillion (well that's what they say now).

Fed loses control of its own interest rate as it cut rates — ‘This just doesn’t look good’
https://www.cnbc.com/2019/09/18/fed-los ... -good.html

"... But the bigger problem is in the balance sheets of U.S. banks, ..."
https://www.wsj.com/articles/short-term ... 1568807648

Nothing to see here, doomers. Nothing at all. Move along.

It's pretty easy to spot those who don't have a Plan B.
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