10 hours ago, Jorma said:One thing is with the stock liquidation that the bear market has brought, where is the ‘cash’ going? Why isn’t there a stampede into Tbills at 2+% ?
Well who’s taking down the bills is one thing, but who is doing the RRP’s? That’s what we need to know. Has anyone asked?
Falling prices destroy more money than the pittance that liquidation transfers from buyers to sellers at the margin. The losses in margin accounts is far greater than the cash received by sellers. And remember, it’s just a transfer. The buyers of the falling stocks must withdraw cash from their bank accounts, liquidate other assets, or also use margin to make the purchase. Falling prices do not create liquidity, they destroy it.
Meanwhile the Fed has promised for months to tell us which class of permitted buyers — Primary Dealers, banks, or money market funds– are depositing their cash in the Fed’s RRPs. Why isn’t the Fed doing this? It’s obviously something that could be done instantly.
Meanwhile, back at the market as of 6 AM in New York, this speaks for itself. The red oval is the conventional measured move target of the top breakdown on the ES, 24 hour S&P fuguetures that I posted last week.
They either need to get back above 4000, or hold at the long term trendlines at 3940ish to avoid their ignominious fate.
From the Department of BTC Leads, Or At Least Correlates, there’s a suggestion that stocks won’t break below where they are this morning, for the time being.
In the bond market, the 10 year Treasury yield is similarly poised for a breakout. With a $57 billion net Treasury coupon settlement today, that could give the yield a little push over the top.
Meanwhile, gold continues to prove itself to be a useless asset class as so-called “insurance,” or “money.” It’s obvious where this decline must stop and reverse, lest this horror show get even worse.
Finally, a chart of the EUR/USD going back 23 years shows the euro fighting a last ditch holding action, lest it enter an abyss.
The entire financial world is at the precipice of an abyss today. Right now. And few are here to watch. The rest are still at the beach, or rushing around getting the kids all set for the school year.
Good luck, world.
Oh, yes, and I forgot to mention that tomorrow the Fed begins extracting money from the system and extinguishing it at double the rate of the past 6 months. The effect of that will be interesting.
- Swing Trade Screens – Good Week For Our Shorts Last Week, Adding More NowAugust 29, 2022
- Freak Out Now Before It’s Too Late August 29, 2022
- Warnings of August Liquidity Crash Come to Fruition – Here’s What to Do August 28, 2022
- Gold Miners Swing Picks August 26, 2022
- Has Rule Number One Been Repealed? August 18, 2022
- “As Good as It Gets” Was Good While It Lasted August 6, 2022
- Treasury Confirms Supply Tsunami We Expected – Will Obliterate Everything August 3, 2022
- Withholding Tax Collections Solid in July, But Here’s Why the Party is Over August 2, 2022
- The Bond Rally That Fooled The Majority And Didn’t Help Dealers July 27, 2022
If you’re serious about the underlying forces of supply and demand that drive the markets, join me!
If you are a new visitor to the Stool, please register and join in! To post your observations and charts, and snide, but good-natured, comments, click here to register. Be sure to respond to the confirmation email which is sent instantly. If not in your inbox, check your spam filter.
