Did the move into safe haven assets get too extended?
Chris Vermeulen, founder of The Technical Traders kicks off today by looking at the recent downtrends in the safe haven assets. We look at the speed of the breakout and what the long term outlook is. To wrap it up Chris shares a trading strategy for natural gas.
Some stocks I am falling are slowly sinking, you know that feeling when you stand on an overpass and look down. Is this 2008, a replay. DT
falling should be following! LOL! DT
DT, potentially worse, because derivative problem has grown unabated.
The problem is now so big……BANKS CANNOT BE BAILED OUT.
therefore, they will be looking for a BAIL IN………beware……
MANY DERIVATIVES OFF-SET.
But they are unregulated and NO ONE KNOWS how they balance out.
The only estimates we have that are quasi-accurate come from the BIS, with extrapolation.
The total derivative exposure PRIOR TO OFF-SETTING, is now somewhere around $200 Trillion. (Trillion not Billion.)
Even if they 99% off-set, we are looking at a $2 Trillion problem, and the odds of a 99% offset are minimal.
CFS,
Actually the total notional amount of derivatives in the U.S. banks is probably considerably less than that $200 trillion number as reported by the OCC. Why is that? Because that $200 trillion is what it would add up to if you count the amount of derivatives that each U.S. bank has, individually. The fact is that the large banks make many of their derivative contracts with other large banks so in many cases you would end up counting the same contract twice if you added up the amount of each bank separately. So for example, if I made a $10 bet with Bob which means that Bob has a $10 bet with me, does that mean that the total amount of the bet is $20 (My $10 bet plus Bob’s $10 bet)? Of course not. The total amount of the bet is just $10. You do not add up my $10 bet with Bob and Bob’s $10 bet with me to get the total amount of the bet. If you did that that would be counting the same bet twice. But that is what is happening when people, like those in the ALT media, report that total notional amount of derivatives globally is well over $1 Quadrillion. The fact is it is about half that amount. This is why the BIS reports that the total amount of global derivatives (OTC and exchanged-traded) is around $650 trillion and not that amount over $1 Quadrillion that gets tossed around.
JMiller………any derivatives is too much……….all gambling, and on top of that the FED IS FAKE……..Hell, the banks are all fakes…..can not even cover over night REPO amounts with a back up….NO TRUST IN THE SYSTEM….JMO
The Rothchild plan will continue., because no one understands DEBT…..Printed Money is DEBT…….especially the US DOLLAR……we are all victims of a SCAM…..
Jerry,
You will not get an argument from me about the amount of derivatives still being large and still being a problem. Just wanted to explain why the BIS reports that the number of derivatives is about half the amount that people, like those in the ALT media, say it is. People are actually making the mistake of double counting many of the contracts.
JMiller……….good thought …….appreciate your reply……hoping you are having a good day……
Correct. Bondholders and stockholders will take the majority of the loses as they usually do when a bank fails. As far as depositors go, only deposits above the FDIC insured amount that are in any bank considered to be systemically important would also at risk of being part of a bail-in.
CFS, thanks for bringing up the derivatives problem again, the public will be in no mood for forgiveness when their prosperity is at stake. Derivatives are so intertwined and honeycombed that a blow to one can bring down hundreds, if not thousands. We know The Central Banks are big investors in derivatives. DT
https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=404482
However, Capitol Hill will learn about it today.
OOPS Tommorrow.
I didn’t watch The Democratic candidates last night, if I had a question to ask them it would be this, “Do you know what causes inflation”. I know none of them could figure out such a simple question. If you want to lead a country that has The World’s Reserve currency wouldn’t you want a candidate that understands at minimum the simple workings of a financial system. DT
Does anyone understand the time lag between excess money printing and inflation ?
I have, over the years, looked at predictions of Nobel prize winners, who have gotten it wrong.
I will hazard a guess on the lag between excess money printing and inflation, my guess is somewhere between 8 to 10 years. I justify my answer by referring to the real estate market after a crash. DT
I think it varies invariably based on a multitude of factors but the shortest lag probably comes from massive deficit spending at a time when the economy is shaky. Nothing weakens a currency as quickly as deficit spending when tax collection is falling.
Real GDP peaked in 1999 or 2000 and gold’s 5-6 fold rise in the decade that followed reflected an 80% decline in the dollar (and all of its foreign counterparts/derivatives).
When I get a politician calling me and asking for my vote, I ask them if they understand fractional reserve banking.
Not 1 ever has.
Keynes himself told it like it is:
“There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”
—–
So the Left, which includes the neocons, runs on destruction.
“I work for a Government I despise for ends I think criminal.”
― John Maynard Keynes
Well , it took 400 yrs. for the money clipping Roman Empire to Fall…….lol
I’m in my twilight years…..I can’t wait that long.
And there’s nowhere else better I want to move to.
The amount of outright dishonesty in banking and securities dealing is increasing.
You would not believe what goes on behind closed doors!
https://hastingsgroupmedia.com/PIABA/ExpungementStudyNewsEvent.mp3
The SEC and FINRA are an absolute JOKE in regulation. They DO NOT REGULATE.
Pilgrim Society at work……..nobody is thinking……who and what they have been doing and will continue to do so……….silver stealer.net…..
Steven Saville is correct and I’ve been saying the same thing for years:
“Now, if there’s one thing we can be sure of it’s that the next crisis will look nothing like the last crisis. The financial markets work that way because after a crisis occurs ‘everyone’, including all policy-makers, will be on guard against a repeat performance, making a repeat performance extremely improbable. Therefore, we can be confident that even if the recent temporary seizure of the US short-term funding market was a figurative shot across the bow, within the next couple of years there will NOT be a major liquidity event that looks like the 2007-2008 crisis. However, some sort of crisis, encompassing an economic recession, is probable within this 2-year period.”
https://tsi-blog.com/2019/10/monetary-inflation-and-the-next-crisis/ (Thanks 321gold)
https://www.youtube.com/watch?v=EoXIBtDzxaM
Bix Weir and Bail-outs
Doc, I just bought some OR@9.10 Watch it sink now.
Remember NAT? In one month it went from 1.66 to 4.47 but is falling back.
Did you talk to Al before his hernia surgery? 16 months ago you told me I did not need surgery for my hernia until it started to hurt. So far it does not hurt and may even be healing. Thanks.