Crescat capital shows us in pictures…someone who knows nothing can spot the outliers here. Just wait a week or two to see the giant coming spike in the second chart!
Unprecedented. Commercial & Industrial loans just surged at the highest rate in 73 years. This level of government intervention is unparalleled with anything we’ve seen in history. Not to mention: Every previous spike in loans also preceded a recession.
M2 money supply only surged like this one other time in history. October 2008. We’ve yet to hear of institutions failing.
1. The big question: Who is going to bail out whom? -Plunging corporate earnings & household consumption -Government spending skyrocketing -Economy falling to pieces The US government is broke. Increasing money supply won’t fix anything. It’s time to buy gold & sell stocks.
In the blink of an eye! And by the way, $5 trillion is only jacks for openers…
Federal Reserve’s Balance Sheet Tops $5 Trillion for First Time March 26, 2020
(Bloomberg) — The Federal Reserve’s balance sheet topped $5 trillion for the first time amid the U.S. central bank’s aggressive efforts to cushion debt markets against the coronavirus outbreak through large-scale bond-buying programs.
Total assets held by the Fed rose by $586 billion to $5.25 trillion in the week through March 25, according to data published Thursday on its website. Borrowing by banks from the Fed’s discount window jumped to $50.8 billion.
The central bank has rolled out several liquidity programs over the last few weeks to keep credit flowing in financial markets and the economy amid investor panic over the global spread of the virus. The scale of its current bond-buying efforts already dwarfs that of the purchase programs it undertook in the wake of the last financial crisis.
Erik has been saying this since 2000 because he was correct then and even more correct today as absolutely nothing has been done to fix the debt problem. 2008 was bad enough as they threw more debt at a debt problem as the fix. Will throwing 10’s of $ trillions of newly created debt money…fix debt? Nevermind the shaky creditworthiness of borrowers, the collateral has now evaporated and nothing can be done to reflate it. Sir Richard the Good named it “inflate or die”.
Bill Holter’s Commentary
And just like that we have “QE infinity”. Central banks will now monetize and buy everything. Their currencies will now make the final journey to zero … When all is said and done, currencies will drop faster than assets “go up”. It is called hyperinflation. If they can keep markets open, what will look like a spectacular rise on a chart in reality will be vast losses of purchasing power.
The Federal Reserve Just Pledged Asset Purchases With No Limit To Support Markets March 23, 2020
The Federal Reserve said Monday it will launch a barrage of programs aimed at helping markets function more efficiently amid the coronavirus crisis.
Among the initiatives is a commitment to continue its asset purchasing program “in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy.”
That represents a potentially new chapter in the Fed’s “money printing” as it commits to keep expanding its balance sheet as necessary, rather than a commitment to a set amount.
The Fed also will be moving for the first time into corporate bonds, purchasing the investment-grade securities in primary and secondary markets and through exchange-traded funds. The move comes in a space that has seen considerable turmoil since the crisis has intensified and market liquidity has been sapped.
Someone might have lost a little money? Wait until people decide what “money” really is?
The Median US Stock Is Now Down 50% From Its Highs As World Loses $25 Trillion In A Month March 19, 2020
Global stock and bond markets have seen $25 trillion of ‘paper’ wealth erased in the last month, wiping out all the gains from the Dec 2018 crash lows….
Global bonds are actually still up around $5 trillion while global stocks have lost around $5 trillion since the Dec 2018 lows, and a lot of those losses come from the US markets where the median stock is now down 50% from its highs… (because the Value Line index below is based on a geometric average the daily change is closest to the median stock price change)
A valid question: is it not finally time for least at some sort of bounce? A valid question: is it not finally time for least at some sort of bounce?
Bill Holter’s Commentary
Depression? Ya think? Here is some rocket science for you! “Markets” are actually slightly behind this thought process but don’t worry, they’ll catch up…
JPMorgan Now Expects A Global Depression In The Second Quarter March 18, 2020
Earlier we reported that in a report titled “the lamps are going out all across the economy”, JPMorgan’s chief US economist, Michael Feroli slashed his Q2 US GDP forecast to a staggering -14%, which he optimistically expects to form the bottom of a V-shaped recovery that then lifts the US economy by +8% and +4% in Q3 and Q4, respectively (at least until the next downward revision in his forecast).
We doubt the V-shaped recovery will take place, in fact if there is any “recovery” it will be L-shaped especially if medical experts are correct that the pandemic will take 12-18 months to full clear out. That said, the Q2 prediction alone is catastrophic, and if that slowdown persists the US is facing not only a recession, but probably a second Great Depression.
However, if JPM’s forecast revision for the US was catastrophic, than its latest global outlook is downright apocalyptic.
In a separate note by JPM’s Bruce Kasman, has also taken a flamethrower to his global economic forecasts, and the bank’s head of economic policy now anticipates Europe to implode an unprecedented 22%, the UK to crater by a depressionary and with the US plunging 14%, he sees the global economy ex China contracting by a whopping -13.7%. In short, JPM now expects no less than a global depression in the second quarter. This will follow a Q1 quarter in which China is expected to collapse by -40.8%, which however will somehow surge by 57.4% in the second quarter.
Fed Launches Primary Dealer Credit Facility Which Will Accept Stocks As Collateral March 17, 2020
Earlier today, when discussing the launch of the “Lehman crisis playbook” in response to the Global Covid Crisis, we listed the alphabet soup of measures the Fed may launch which are a replica of the measures adopted in the aftermath of the Lehman collapse. These included the AMFL, the MMIFF, the TAF and last but not least, the PDCF, or Primary Dealer Credit Facility, which as Rabobank said “would provide overnight funding to primary dealers, similar to the way the discount window provides a backup source of funding for depository institutions.”
Just three hours later, at 6pm ET, the Fed, as expected, announced the establishment of a Primary Dealer Credit Facility (PDCF) “to support the credit needs of households and businesses.” What the Fed really meant is that it is now launching a way for dealers to monetize the stocks they own, as the facility will be collateralized, among others, by “equity securities.”
As the Fed announced, the PDCF “will offer overnight and term funding with maturities up to 90 days and will be available on March 20, 2020” and will be in place for at least six months and may be extended as conditions warrant.
But here is the punchline:
Credit extended to primary dealers under this facility may be collateralized by a broad range of investment grade debt securities, including commercial paper and municipal bonds, and a broad range of equity securities.
MASSIVE SURGE IN PHYSICAL SILVER BUYING: Totally Distorted & Broken Markets March 14, 2020
The world economic and financial markets have entered into a crippling cannibalization of the system in which few are prepared. While the politicians, financial analysts, and media are providing optimistic forecasts for the future, they continue to underestimate the seriousness of the global contagion. Thus, after a week or two, these forecasts will be revised lower (once again) to reflect a more gloomy, negative and more realistic outlook.
So, in another a few weeks, the world as it pertains to this contagion will look a lot worse than it does today. I’d imagine the Dow Jones Index will likely shed another 5-8,000+ points during this period. Also, the global supply chain disruptions will kick into high gear as month-long lockdowns in various countries finally impact manufacturers and retailers across the world.
I haven’t put out too many new updates and articles over the past few weeks. Rather, I decided to take a step back to research and watch as this global contagion continued to unfold. However, I will be putting out more updates, videos, and articles over the next month as I believe most people are still unprepared for what’s coming.
Although, I have been a bit busy on Twitter recently. You can follow my TWEETS and REPLIES on Twitter here: SRSRocco Report Twitter Feed. When I posted this Tweet on March 15th, the price of oil was $31. I stated that the price would likely fall to $29 the next day… and it did. The relevant sentence in the tweet below is… WE DON’T COME BACK FROM THIS ONE.
