Tuesday, May 2, 2017

Ghost Economy by Betty Crocker

Hey dough boy, what's cooking?
Well, the Fed have avoided several market crashes to this point.  Is that a good thing or bad?  0 percent interest rates are crazy, it’s lunacy.  David Stockman,"Okay, so no one sees it coming until suddenly there is an event, a black swan, something unexpected or unpredicted that tells everybody that the emperor is naked.  You know who is naked?  The Fed.  They’re running a con game." (end Stockman)  

There is a lot to unravel: the Fed’s $4.5-trillion balance sheet holds $1.8 trillion in mortgage-backed securities and $2.4 trillion in Treasuries.  As they mature, the Fed replaces them by buying more.  The question, then, is how would the Fed respond.  The answer, according to a Deutsche Bank analysis of the future shape of the Fed's balance sheet, is with another $1 trillion liquidity injection.

I guess at this point we could close down all manufacturing, service and still have a stock market.  Railroad carload delivery is at the same as the end of 2015 in Nov.  New orders for manufactured goods in the United States increased 0.4% percent in March 2017.  The Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, fell for the tenth straight session on Tuesday, March 28, hurt by weaker rates across all vessel segments.

The housing bubble in Canada, Toronto, where last month average selling prices surged by 33%.  Home Capital Group, over 70% of the company's deposit base had been withdrawn, a $2 billion emergency line of credit keeps the company afloat.  Canada's Equitable Group, another alternative mortgage lender, said Monday (May 1) it had started seeing a decrease in deposit balances, traditionally a bank contagion (run) is taking place.  The same is taking place in London, foreign investors particularly China, are sweeping up real-estate at records highs.  In this QE lifted market (all countries are doing it) tangible value is a reality, because gold and silver are manipulated and it cost a premium to store your gold, ah I would not use a bank.

Wall Street -- Update Monday 5/8/17 The CBOE Volatility Index VIX, -6.15%  slides to 9.72 intraday, hitting its lowest level since 1993.  Based on options contracts on the S&P 500 index (SPX, -0.08%) 30 days in the future, has only finished in the single digits on 10 occasions.  The VIX is called the fear factor, fear to settle  into the market. 

How about foreign bonds and treasuries?  Japan has dumped $66 billion the largest since 2002. , China’s holdings of US Treasuries have plunged by $215.2 billion, or 17%, over the most recent 12 reporting months through November, to just above $1 trillion.  So who is buying all these Treasuries – the Fed, China, and Japan – have stepped away, and when in fact China, Japan, and other countries have become net sellers, and when the Fed is thinking of shedding some of the Treasuries on its balance sheet, as nearly $900 billion in net new supply (to fund the US government) flooded the market over the past 12 months? So who's buying them?  If there was ever a ghost ship, this is the one.

You know all around the world much of the population class does not seem to matter anymore along with human rights and the mother Earth.  I would wager the world is tired of war -- with that, let this ghost burn out gentleman!!!

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