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With farvacola i do agree. Bearish for the rest of the year for the financial markets.
For the housing market i am far less pessimistic though,at least when it comes to the market in europe. The usa i find more difficult to judge in this regard.
Printing money after the financial crisis did make real estate in the strong areas in europe go up over 50% in like 5-6 years.
Now a similar amount of money is beeing printed if not more.
In europe i think prices will stop going up,possibly drop maybe 5%-10% in the next 1-2 years but i also think that within 10 years prices will be at least 50% higher in the good areas,mostly based on monetary inflation. (and i expect the same would go for the good areas in the usa).
The difference between the good and the bad areas will also increase further i think (good beeing the big citys and the perifery,bad beeing the country side and places with little economic activity in general),an effect you also saw after the financial crisis when prices did start to recover. The bad areas will see a bigger and longer slump then the good areas,followed by a slower recovery.
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On April 30 2020 06:16 GoTuNk! wrote:
I'm glad I'm invested in real money, namely bitcoin, instead of the fiat USD or worthless commodities like oil.
Bitcoin's halving is in 2 weeks, hoping for a big rally upwards.
I'm a bitcoin investor (first bought when it was 237 per coin, will not sell until it's 100k per coin. I alsotrade it to accumulate more)
Currently short (hedge).
I honestly think it will revisit 1-2k in the next couple of years or so before a true markup phase (it could still go to 20k before going to 2k imo) However, as someone who has seen Bitcoin go jaw dropping ballistic, I don't sell. Won't sell until 100k or I see signs of massive distribution.
not financial advice
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It's interesting how Blackrock being the emergency asset manager for the fed and too big to sell their stakes without crashing everything has their stock not looking so good. It just double topped.
Gold looks like it's setting up for a jump to 2k at least.
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On May 13 2020 17:04 BerserkSword wrote:Show nested quote +On April 30 2020 06:16 GoTuNk! wrote:
I'm glad I'm invested in real money, namely bitcoin, instead of the fiat USD or worthless commodities like oil.
Bitcoin's halving is in 2 weeks, hoping for a big rally upwards. I'm a bitcoin investor (first bought when it was 237 per coin, will not sell until it's 100k per coin. I alsotrade it to accumulate more) Currently short (hedge). I honestly think it will revisit 1-2k in the next couple of years or so before a true markup phase (it could still go to 20k before going to 2k imo) However, as someone who has seen Bitcoin go jaw dropping ballistic, I don't sell. Won't sell until 100k or I see signs of massive distribution. not financial advice
Speculation aside, what is the ultimate determination of bitcoin's value is what bitcoins is used for? And what is it used for is to my knowledge, some grey market web online businesses, drug dealers, and shady money laundering by organised crime. How the hell can we expect bitcoin to really go up by entering white markets, and challenging credit cards and paypal? I doubt it can ever do that due to its shortcomings (long time taken to execute trades, weird and cumbersome wallets due to cryptocurrency structure)
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DJIA just completed a textbook shoulder-head-shoulder.
I'd guess we see a fakeout in the wrong direction, then a violent reversal to where it's actually going.
Meanwhile Trump keeps poking China with sanctions hoping for them to fight back. In vain. His latest thing was to forbid pension funds to invest there. The most obvious target for China is apple, but they won't bite lol.
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^TA is woo. Besides the concepts of support and resistance there's nothing about it that actually correlates with how the market trades. Otherwise you'd write an algorithm and make over 100%/year, and the execution speed would barely matter, right?
These days I mostly sell covered calls and buyback->sell at higher strike if they go ITM and I want to avoid taxes on the underlying. Any strategy that's neutral will get demolished by MM/HFT and anything bearish will get demolished by the Fed/US Gov. Covered calls are nice because you basically collect premium and then autosell when the stock goes over your target, and it's long term bullish. You just have to be able to afford the collateral and be OK with selling the underlying if it makes big gains.
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On May 14 2020 13:37 Chocolate wrote:
^TA is woo. Besides the concepts of support and resistance there's nothing about it that actually correlates with how the market trades. Otherwise you'd write an algorithm and make over 100%/year, and the execution speed would barely matter, right?
These days I mostly sell covered calls and buyback->sell at higher strike if they go ITM and I want to avoid taxes on the underlying. Any strategy that's neutral will get demolished by MM/HFT and anything bearish will get demolished by the Fed/US Gov. Covered calls are nice because you basically collect premium and then autosell when the stock goes over your target, and it's long term bullish. You just have to be able to afford the collateral and be OK with selling the underlying if it makes big gains.
Yeah the thesis that the Fed is omnipotent is widespread. So far it was right, until it is not. They are still a bank.
There was no BRRRR or moneyprinting either. They gave out loans taking US treasuries as collateral. Money printing is pure currency demolition. Only happens at the very end.
Btw VIX just reached the value from May 1st. I don't think that was supposed to happen. If it doesn't make newer lows it's gonna erupt.
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No the Fed is not omnipotent, but they are going to try to keep equities and bonds from collapsing in part because if they do, severe damage will be done to our retirement system - additionally the current fed chairman is a bit of a Trump minion which makes this a political issue. I do believe they essentially printed money to buy distressed loans and bonds, e.g.: https://www.wsj.com/articles/bond-etfs-climb-as-the-fed-kicks-off-historic-purchase-program-11589296012. I would not be surprised if they started buying distressed equities if we need to do another round of SIP.
I'm not one to think the BRRR is necessarily bad, as recessions are usually deflationary, and hopefully the Fed will be able to sell all the stuff on their balance sheet. I'm going to keep selling calls because there is no way we are heading back up to ATH with the economy in this state
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On May 14 2020 21:28 Vivax wrote:
There was no BRRRR or moneyprinting either.
It's money-printing in all but name. Sure, in theory it's just short-term loans - but if those loans just get rolled over ad infinitum, with no real plan to ever stop doing so, how short-term is that, really? The assets the Fed gained from the so-called "Great Recession" weren't ever properly unwound; what makes anyone think these are going to be any better?
They may have started with uncontroversial assets like T-bills, but they moved well into the territory of buying sketchier items like commercial paper and even junk bonds. And more importantly, they signaled to the market that the Fed is the willing bagholder for all bad debt, and it looks like the credit markets got the message and resumed their heavy questionable lending as a result.
Necessary to save healthy companies from locking up due to lack of liquidity? Questionable, more so regarding "healthy" than liquidity since decades of cheap debt have propped up many horrendous zombie companies and even ensures that some of said companies are considered to be household names. But it sure as hell looks like money printing to me, practically speaking.
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On May 15 2020 11:07 LegalLord wrote:Show nested quote +On May 14 2020 21:28 Vivax wrote:
There was no BRRRR or moneyprinting either. It's money-printing in all but name. Sure, in theory it's just short-term loans - but if those loans just get rolled over ad infinitum, with no real plan to ever stop doing so, how short-term is that, really? The assets the Fed gained from the so-called "Great Recession" weren't ever properly unwound; what makes anyone think these are going to be any better? They may have started with uncontroversial assets like T-bills, but they moved well into the territory of buying sketchier items like commercial paper and even junk bonds. And more importantly, they signaled to the market that the Fed is the willing bagholder for all bad debt, and it looks like the credit markets got the message and resumed their heavy questionable lending as a result. Necessary to save healthy companies from locking up due to lack of liquidity? Questionable, more so regarding "healthy" than liquidity since decades of cheap debt have propped up many horrendous zombie companies and even ensures that some of said companies are considered to be household names. But it sure as hell looks like money printing to me, practically speaking.
The trick they're using is masking insolvency with liquidity, money printing would be noticed in the FX markets.
Using loans ensures there's as much demand as there is supply, keeping the currency stable.
It's telling that Boeing refused the bailout, they know they have more leverage over the government than the other way around. The US is protecting their industries from the inflow of foreign reserves by keeping stock prices high since they have negative NIIP, so they own less of the world than the world owns of them.
Some inflection point will arrive when short-term loans either spiking the dollar or defaulting meet lack of demand for the exploding US debt, because that's the asset on the Feds balance sheet (+gold).
You can then print money to offset the liabilities (unlikely), raise the interest rates and cheapen your stocks (not an option), or you can revalue gold to increase the assets. Different paths to the same outcome: Gold wins (except if rates are raised).
This is an important read for those who want to play the mines.
https://www.kitco.com/commentaries/2020-05-01/The-importance-of-a-dollar-SWAP-line.html
I'm personally not fond of paper claims on gold that claim to have it vaulted somewhere. Gold stocks with western swap lines, their ETFs and physical are fine though imo. It's really the only no-brainer trade out there. I don't really trust cryptos.
Trump or someone more competent in his circle of advisors is probably reflecting whether to print, go negative on rates spelling trouble for the banks, or revalue gold. Meanwhile UST yields have been unofficially capped since April 1st, and commercial real estate is already toast.
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United States43211 Posts
Boeing refused to consider a bailout that would dilute the ownership of their current shareholders because, while they wanted socialized risk, they did not want socialized profits. Boeing instead issued bonds which would, under normal conditions, have increased risk and therefore require increased interest. However with the Fed treating junk bonds as AAA rated and buying them then the cost of raising capital is much reduced.
Boeing got bailed out, they just accepted government money through subsidized debt rather than equity dilution.
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On May 15 2020 23:37 KwarK wrote:
Boeing refused to consider a bailout that would dilute the ownership of their current shareholders because, while they wanted socialized risk, they did not want socialized profits. Boeing instead issued bonds which would, under normal conditions, have increased risk and therefore require increased interest. However with the Fed treating junk bonds as AAA rated and buying them then the cost of raising capital is much reduced.
Boeing got bailed out, they just accepted government money through subsidized debt rather than equity dilution.
Yeah, bailed out with treasuries. Seems like a good idea on a record budget deficit.
Looking at the 10y-3m spread, the structure of the curve now reminds me a lot of Lehman going bust on 9/15/08.
As in, something going belly up puked treasuries and there's a bunch of financial corpses in a closet somewhere while the fed suppresses rates.
Now, if I'm not wrong bailing something out on treasuries as collateral means the governments tax returns go straight into the pockets of the fed, and from there straight into junk bonds. If you couple that with an exploding public deficit, you have peeps paying taxes for services from unprofitable companies they still have to pay.
So they save more as a result and it self-perpetuates.
Thanks for playing.
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Money printing would be noticed in the FX markets.
Not if everyone is doing it.
And it did clearly show in the fx market after 2008. The usa did start first in 2009-2010 which gave euro/dollar 1,40.
Then when eu started printing money in 2012 during the euro crisis it went back to 1,10-1,20.
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No predictions or advice, just guesswork 
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If financing is harder and fewer people have money, that’s a prime recipe for a softer housing market for those that can afford to buy one despite those conditions.
The real estate industry is still in the “prices will be high forever, so buy buy buy sell sell sell” stage, but a lot of the more aware real estate owners know this isn’t going to last and are trying to unload what they wanted to sell ASAP before prices take a bigger hit.
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On May 17 2020 02:44 LegalLord wrote:
If financing is harder and fewer people have money, that’s a prime recipe for a softer housing market for those that can afford to buy one despite those conditions.
The real estate industry is still in the “prices will be high forever, so buy buy buy sell sell sell” stage, but a lot of the more aware real estate owners know this isn’t going to last and are trying to unload what they wanted to sell ASAP before prices take a bigger hit.
Actually it has to last according to CBs because otherwise mortgage backed securities are going to nuke some banks balance sheets built on housing valuations.
You'd think they had learned something from 2008. No, they made it worse, and put a government bond backstop to it.
Last time they passed those funny little things to German banks, now they are passing it to the fed (or maybe BR).
It isn't even the fed directly buying high yield, it's blackrock. They are kind of too big to fail for the entire world. (Fun fact: Riksbank is in clinch with their parliament and they hired BR for the negotiations).
Whatever this is, we're past capitalism. If anything systemic fails, the government fails with it, imo.
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Well, said banks should quickly move to offload their MBS’s on some unwitting bagholders with the time that the Fed has bought them via money-print. It doesn’t take much foresight to see that massive unemployment will lead to lots of defaults and far fewer new purchases, so unless the government is just going to pay everyone’s bills for the next year or two, real estate is going to take a beating. And the system that has used said mortgages to play convoluted games of leveraged finance won’t be far behind.
The system was fragile during the “good” times, and those are now long gone. It’s not looking like things are going to improve any time soon, and you can’t really do much better than “infinite QE” for money pumping.
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On May 17 2020 03:24 Vivax wrote:Show nested quote +On May 17 2020 02:44 LegalLord wrote:
If financing is harder and fewer people have money, that’s a prime recipe for a softer housing market for those that can afford to buy one despite those conditions.
The real estate industry is still in the “prices will be high forever, so buy buy buy sell sell sell” stage, but a lot of the more aware real estate owners know this isn’t going to last and are trying to unload what they wanted to sell ASAP before prices take a bigger hit. Actually it has to last according to CBs because otherwise mortgage backed securities are going to nuke some banks balance sheets built on housing valuations. You'd think they had learned something from 2008. No, they made it worse, and put a government bond backstop to it. Last time they passed those funny little things to German banks, now they are passing it to the fed (or maybe BR). It isn't even the fed directly buying high yield, it's blackrock. They are kind of too big to fail for the entire world. (Fun fact: Riksbank is in clinch with their parliament and they hired BR for the negotiations). Whatever this is, we're past capitalism. If anything systemic fails, the government fails with it, imo.
They did learn from 2008. If all your high risk investments don't work out then the government will step in and save you so keep doing it.
On May 17 2020 06:21 LegalLord wrote:
The system was fragile during the “good” times, and those are now long gone. It’s not looking like things are going to improve any time soon, and you can’t really do much better than “infinite QE” for money pumping.
When interest rates went back up the market had a meltdown. They can't ever unwind any of this just put it off until it crashes.
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Judging by this morning's futures, it looks like the market is up a decent bit. It's not hard to trace that to the fact that Powell made the news cycles yesterday, and made some remarks that sound exactly like him saying, "don't worry about how bad the numbers are, because the Fed will bail out everyone everywhere forever!" It's a whole lot of bluster, but it makes for a good stock pump for the day.
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EPT
