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@jameslavish - James Lavish
Treasury auctions can give us clues to the health or problems of the entire US financial system. But what are those clues and how can you tell? Time for a Treasury 🧵👇
@jameslavish - James Lavish
👋 Auction Terminology First, this is about auctions by the US Treasury, selling bonds to finance US public debt They have various maturities and names Let's walk through them...
@jameslavish - James Lavish
• T-Bills are shorter than 1yr • Notes are shorter than 10yrs • Treasury Bonds are longer than 10yrs • and Treasury Inflation Protection Securities (TIPS) and Floating Rate Notes (FRNs) have various maturities
@jameslavish - James Lavish
*Some slang clarification* These can all be referred to as 'bonds', but traders never refer to anything above 10-years as a 'note'
@jameslavish - James Lavish
Treasury auctions occur regularly, and ~300 public auctions are held each year You can see here, the US Treasury has auctioned about $11.2T of bonds in 2022, so far... Big business. One that needs a lot of demand to keep this whole debt charade going.
@jameslavish - James Lavish
Let’s clarify some definitions and rules to better understand what happens during an auction First, to participate directly, a bidder must have an established account Institutions use TAAPS (Treasury Automated Auction Processing System), individuals use a TreasuryDirect account
@jameslavish - James Lavish
Individuals can only place *non-competitive* bids, where they agree to accept whatever discount rate (yield) is set by the auction Institutions can place either non-competitive or *competitive* bids, where the bidder specifies an interest rate they are willing to accept.
@jameslavish - James Lavish
Institutions can also trade in advance of an auction, and then settle with each other when the auction happens This is called the *when-issued* market and is pretty important to our discussion, so we’ll talk more about that in a bit Back to the auction itself...
@jameslavish - James Lavish
Once an auction begins, the Treasury first accepts all non-competitive bids and then auctions off the remainder of what it's looking to raise This is where competitive bidders are unsure whether they'll be filled at their price The process is called a *Dutch auction*
@jameslavish - James Lavish
For example: Say the Treasury wants to raise $100 million in 10-year Notes with a 4% coupon And say it receives $10 million of non-competitive bids The Treasury first accepts all these non-competitive bids and reduces the amount left for the Dutch auction to $90 million
@jameslavish - James Lavish
If it then receives the following competitive bids: • $25 million at 3.88% • $20 million at 3.90% • $30 million at 4.0% • $30 million at 4.05% • $25 million at 4.12% The bids with the lowest yield will be accepted first and then ascend up until the auction is filled.
@jameslavish - James Lavish
Here, the Treasury needs to raise $100 million It first accepts $10 million of non-competitive bids, then all competitive bids up to 4.0% ($75 million), then $15 million of the 4.05% bids for $90 million total So, those who bid 4.05% would receive half of their orders filled.
@jameslavish - James Lavish
At auction's end, all bidders receive the same yield at the highest accepted bid In this case, $100 million of Treasuries were auctioned off at 4.05% On the face of it, this looks pretty bad, as the Treasury had to offer a higher yield to raise its target amount.
@jameslavish - James Lavish
But how bad? And how can we tell? Good questions and the answer—per usual with Wall Street—lies in the expectations of pricing Let’s turn to the metrics of an auction next to find out how.
@jameslavish - James Lavish
🤨 The Good, the Bad, and the Ugly *Bid to Cover Ratio* One of the first things traders look at is the Bid to Cover ratio (often referred to as BTC) A simple statistic, this is just the total amount of bids received divided by the amount of bonds sold at an auction.
@jameslavish - James Lavish
In the case above, the total bids amounted to $140 million and the auction was for $100 million of Notes, so the BTC ratio would be 1.4x
@jameslavish - James Lavish
Like many stats, what we're often looking for is changes from prior periods Is the BTC ratio rising or falling? And how rapidly? If market liquidity is drying up, this would be a good first indicator. If it drops low enough, it’s a major red flag More on that in a minute.
@jameslavish - James Lavish
Looking at the release of stats from last week’s US 10-year Note auction, we can see at the bottom, in the footnotes, that this auction had a 2.37 BTC ratio
@jameslavish - James Lavish
And looking at recent 10-year Treasury Note auctions, we see this is largely in line with the BTC we have been seeing, so no red flags here. (h/t Bloomberg Professional)
@jameslavish - James Lavish
The High Yield Another, usually much more important, metric to keep an eye on is the *stop price*, aka the *high yield* (see in press release above)—the actual yield received by bidders in the auction Two things we're looking for here...
@jameslavish - James Lavish
Remember how we said these securities trade in a when-issued market before and leading up to an auction? This creates what is called the *snap price* It sets the price expectations for an auction and is a critical piece of information for investors.
@jameslavish - James Lavish
First, was the auction overbid or underbid? In overbidding, the stop (high yield) is lower than the snap (when issued yield), and this is usually seen as a solid auction With underbidding, the stop is higher than the snap, indicating a weak auction.
@jameslavish - James Lavish
To put it simply, the snap (when-issued) tells us how the bond traded leading up the auction, and the stop (high yield) tells us how strong the auction was itself.
@jameslavish - James Lavish
The Auction Tail Another thing we’re looking for with the high yield, and a bond-fan favorite is called the *auction tail* The tail is the high yield minus the bond’s when-issued yield If there is no measurable tail, we say that the auction finished *on the screws*
@jameslavish - James Lavish
A negative tail means that the auction went better than expected, with higher-than-expected demand But positive tail tells us the auction did not go well because the yield realized in the auction exceeded market expectations, meaning weaker-than-expected demand.
@jameslavish - James Lavish
Bottom line, the tail measures unanticipated Treasury demand shifts before auction The larger the tail, the worse the auction And if we ever see a tail in the 4, 5, or 6bp range, this would be considered disastrous in the bond world and mean things are breaking in US Treasuries
@jameslavish - James Lavish
OK, so now we know that a low BTC could be a red flag, an underbid auction can be cause for some concern, and a big tail is a big no-no But what exactly does it mean when a Treasury auction fails?
@jameslavish - James Lavish
😵 Total Fail Going back to the BTC Ratio, you may wonder what happens if Treasury holds an auction and receives fewer bids than face value of the securities they're selling This would mean the BTC falls below 1, and the Treasury failed to raise as much money as they expected.
@jameslavish - James Lavish
In the bond world, this is a failed auction and nothing short of catastrophic for the US Treasury So you may ask, with dwindling demand for USTs and active selling from Japan and China, is there a possibility of a failed auction soon? Why yes. Yes there is.
@jameslavish - James Lavish
But there are a couple of fixes to prevent this from happening, at least yet See, US commercial banks are still flush with capital, as the Fed is receiving over $2.3T of reverse repo purchases daily This is extra cash that banks sell to the Fed overnight to be paid interest.
@jameslavish - James Lavish
If you haven’t read it yet, I wrote a whole 🧠Informationist Newsletter about the repo and reverse repo market You can find it here, for free👇 https://jameslavish.substack.com/p/repos-reverse-repos-and-the-mystery?r=8di03&utm_campaign=post&utm_medium=web
@jameslavish - James Lavish
One fix is the Fed adjusting commercial bank SLR requirements to let them hold more bonds in lieu of cash or cash-like instruments Or, the Treasury could issue more short term notes and fewer bonds, allowing all this reverse repo money to be used in the auctions instead.
@jameslavish - James Lavish
But once that $2.3T runs out, all bets are off, and QE infinity is on.
@jameslavish - James Lavish
💰USTs vs. Hard Money Even though risk assets and hard monies like gold, silver, and #Bitcoin have been taking it on the chin with Fed tightening policy and the contraction of the money supply, these are safe places for long term capital preservation, IMO.
@jameslavish - James Lavish
That said, I would not pile into any one of these hard monies all at once I also would not have 100% of my investments in any one of them But I would start buying some at these levels if I had none yet.
@jameslavish - James Lavish
To be clear, this is not for a trade for me. This is for a long term investment and preservation of capital in the likely event that we see a major pivot by the Fed back to quantitative easing at some point in the next 12 to 18 months.
@jameslavish - James Lavish
That, and the highly likely long-term event that the UST is fully unseated as the global reserve currency, and all hard monies benefit from it In the meantime, I’ll be watching these Treasury auctions closely for clues of a pending liquidity crisis And now you can, too.
@jameslavish - James Lavish
This thread is a summary of a recent issue of 💡The Informationist, the free newsletter that simplifies one financial concept for you weekly. You can join 18K+ readers here: http://jameslavish.com https://t.co/xZ8kb953tU
@AllVentured - AllThingsVentured
1/ The rally in stocks since October has been made possible by massive liquidity injections by the BOJ, PBOC, and TGA drawdowns. Let's look at these liquidity sources going forward: BOJ - This liquidity is tapped out. They can't buy more JGBs if they already own them all. https://t.co/umRym2VJWW
@AllVentured - AllThingsVentured
2/ TGA is the next easiest and totally calculable. ~$300B more of drawdowns (liquidity injections) due to debt ceiling then also tapped out. https://t.co/kporfv4Eou
@AllVentured - AllThingsVentured
3/ PBOC is the wildcard and likes to go against the grain. Could they continue this unprecedented pace of injection? Possibly. Are they likely to? I tend to agree with the mean reversionists: https://t.co/Odiehvjcwd
@AllVentured - AllThingsVentured
4/ What does this all mean for risk assets? Hard to say before a the debt ceiling gets raised in the US as the TGA drawdown is a massive injection and could offset a likely fall off in injections from BOJ and PBOC, but there is a bookend to this source: https://t.co/Uc3O6TNQ9k
@AllVentured - AllThingsVentured
5/ So come August or September (at the latest) the debt ceiling will get raised and the treasury will come out with massive issuance which is a massive liquidity withdrawal on top of the Feds $95B/m of QT. This is going to be a MAJOR problem for asset prices. #liquiditycliff
@AllVentured - AllThingsVentured
6/ This is a public service announcement to know what you are buying here. Yes, the tape looks amazing, and yes inflation has softened, but you are also buying an embedded assumption that the Fed cancels QT and comes in concurrent with the #liquiditycliff to monetize the debt.
@AllVentured - AllThingsVentured
7/ Otherwise we are going to get to test out what unprecedented liquidity drain does to asset prices. Will the FED and other central bankers eventually step in? ABSOLUTELY. Will they intervene before the crash in asset prices? You decide.
@AllVentured - AllThingsVentured
8/ But remember, price drives narratives. Especially if this market levitates higher, talking heads will make up all kinds of reasons to explain it when it's really just TGA liquidity. In this scenario, VIX drops lower, and the Fed has no cover to proactively pivot to QE.
@AllVentured - AllThingsVentured
9/ The higher markets go and the more participants are lulled into complacency and higher leverage by a falling VIX and the "new bull market" or even "new paradigm" narrative, the more violent the #liquiditycliff will be when it hits.
@mtmalinen - Tuomas Malinen
Past week I promised a (long) thread on global #liquidity and so, here goes! I have been analyzing the current state global liquidity since early November. Then I warned on possibility of an outright collapse of market liquidity. 🧵1/25 https://mtmalinen.substack.com/p/global-liquidity-collapse-approaches
@mtmalinen - Tuomas Malinen
Basically, I re-iterated our original warning from October 2018, when we had discovered that: 1. Global outside-US dollar denominated debt has risen to a record. 2. The role of non-bank institutions on providing funding has increased. 2/
@mtmalinen - Tuomas Malinen
3. The composition of international credit has shifted from bank loans to debt securities. These straight-forwardly implied that: "The increased role of non-bank institutions in providing credit means that an increasing proportion of international finance comes..." 3/
@mtmalinen - Tuomas Malinen
"...from unregulated sources. Effectively, this means that these institutions, including money market funds, investments banks, etc., have unwittingly assumed even bigger risks in their lending practices than commercial banks." 4/
@mtmalinen - Tuomas Malinen
"This also means that when the downturn comes, the share of non-performing and/or defaulted loans will grow higher than before." I continued by analyzing the data from the Bank for International Settlements (BIS) on the composition of global liquidity (data updated to Q3). 5/
@mtmalinen - Tuomas Malinen
It showed a relatively major and historical change in the composition of global liquidity from loans of commercial banks to debt securities as the main source. This implied that: 6/
@mtmalinen - Tuomas Malinen
1) Because a higher share of global credit provision is on the hands of unregulated banks, this means that they have, almost surely, taken bigger risks in their lending activities making them prone to losses and to rapid withdrawing of lending, when the downturn hits. 7/
@mtmalinen - Tuomas Malinen
2. Corporations have been turning more on the capital markets in their search for funding. Rising yields imply that especially the ‘zombified’ corporations may (are likely to) get into serious trouble, when then next downturn hits (basically here already), hitting liquidity. 8/
@mtmalinen - Tuomas Malinen
3. The banking sector took, what looks like a mortal hit, during the Corona lockdowns, as we correctly assumed. Alas, the onset of another global banking crisis in 2020 was covered (hidden) by the authorities, implying that it can re-ignite, basically, at any moment. 9/
@mtmalinen - Tuomas Malinen
Still, the year-end passed by without any serious hiccups in the financial markets. What happened? Was all the 'doom-and-gloom' unfounded? Had the financial system miraculously mended itself? No. 10/
@mtmalinen - Tuomas Malinen
I was forced to dig deeper on murky world of global financial flows to see, whether I had been wrong with my dire predictions. I needed to understand, why the year-end passed and 2023 started with such an ease in the credit markets. This yielded an 'epiphany'. 11/
@mtmalinen - Tuomas Malinen
We discovered in early 2017 that China had driven the global business cycle since 2009. We also discovered that China had been responsible for vast majority of creation of new money (essentially) liquidity for the same period of time. 12/
@mtmalinen - Tuomas Malinen
For reasons unclear to us, we failed to understand the effect of this to global market liquidity. 🤷♂️ Well, every once and a while, everyone misses something. 😁 However, what we did not discover back then was how cyclical or even seasonal Chinese liquidity injections were. 13/
@mtmalinen - Tuomas Malinen
In early February, I published this figure, which shows the global money supply of the five major industrial nations/areas. It shows that the financial market rout of Sept/Oct was no coincidence nor a surprise. 14/
@mtmalinen - Tuomas Malinen
Between September and October, 2022, the world economy suddenly lost over $500 billion worth of liquidity, which is the biggest drop on record (since 2000). November, however, saw a nearly matching increase. What happened? @dlacalle_IA @DiMartinoBooth @BradHuston 15/
@mtmalinen - Tuomas Malinen
Firstly, central banks reacted. The BoE and the BOJ stepped back into the bond markets, but there was, also joint actions of central banks. For example, like from a 'strike of wand', the BoJ, BoE, Fed and the PBoC started to increase their foreign exchange reserves. 16/
@mtmalinen - Tuomas Malinen
The foreign exchange reserves can include foreign currencies (including foreign currency swaps), bonds, treasury bills, gold, and other government securities. Whatever the increase of FX-reserves consisted of, they surely contributed to the increase in global money supply. 17/
@mtmalinen - Tuomas Malinen
But there was more. China (i.e. the PBoC) flooded the global financial system with money (liquidity) in November. Currently, China is dominating the landscape of global money supply. 18/
@mtmalinen - Tuomas Malinen
The PBoC makes gargantuan injections and drains of liquidity to and from the global financial system. The September/October crash occurred because the draining of Chinese liquidity coincided with the liquidity-drain of all other central banks (QT, etc.). 19/
@mtmalinen - Tuomas Malinen
Moreover, QT:s of the Federal Reserve, the ECB and the BoE are likely to continue draining global money supply. This makes markets more vulnerable to the actions of China, unless western central banks constantly increase money through "other means", like swap-agreements. 20/
@mtmalinen - Tuomas Malinen
Other option would be commercial banks matching this drain though increased lending. However, because these "other means" of central banks are de facto temporary and because, e.g., banks in the U.S. are tightening lending standards rapidly and... 21/
@mtmalinen - Tuomas Malinen
...because global bank lending activity has been in decline (see above), this implies that at some point the fate of the global financial system will be almost totally subjected to the ‘whims’ of the PBoC. 22/
@mtmalinen - Tuomas Malinen
And, because the Chinese liquidity-injections seem to be on a declining trend (see above), the financial system may experience a cataclysmic draining of liquidity during the next few months "by accident". This would occur in a situation: 23/
@mtmalinen - Tuomas Malinen
Where the Chinese “draining” would coincidence with a rolling back of the temporary support measures of other central banks, continuing QT and, in the worst-case, a notable decline in bank lending. Such a shock may very well be approaching.👇 24/ https://mtmalinen.substack.com/p/the-sorcery-of-central-bankers
@mtmalinen - Tuomas Malinen
I have and will continue to analyze and forecast the developments in global liquidity in my newsletter. I urge those who want the get the full-view to check it out (paywall), but I will also continue summarizing my findings here, with a lag. /End https://mtmalinen.substack.com/p/an-update-on-global-market-liquidity
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@NotOpCue - Not Op Cue
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@NotOpCue - Not Op Cue
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@NotOpCue - Not Op Cue
🔎 @YahooFinance: "This scheme essentially merges the @federalreserve & @USTreasury into one organization. So, meet your new Fed chairman, @RealDonaldTrump." 🔎 Q Drop #3904: "Patriots in Control of the Federal Reserve System" 💊 https://humorousmathematics.com/post/developing-revelations-the-bountiful-nesara-national-economic-security-reformation-act
@Ir0nbelly - Ir0nbelly
RIP Federal Reserve!!! This is Huge!!!! "This scheme essentially merges the Fed and Treasury into one organization. So, meet your new Fed chairman, Donald J. Trump." https://finance.yahoo.com/news/feds-cure-risks-being-worse-110052807.html #WWG1WGA #QAnon #EndTheFed #Freedom
@NotOpCue - Not Op Cue
Biggest Confirmation @realDonaldTrump Is Chairmen Of @FEDeralreserve & @USTreasury: US Debt Clock Switch Money Creation From "US Monetary Base" To "US Treasury Dollars" 4/10/20 = D/J/T = Donald J. Trump @WaybackMachine Confirmed: 4/9/20 vs. 4/10/20 💊 https://humorousmathematics.com/post/developing-revelations-the-bountiful-nesara-national-economic-security-reformation-act
@NotOpCue - Not Op Cue
The New Financial System: ✅GESARA ✅Q White Hat Military Alliance ✅GCR ✅RV ✅ABDC's ✅QFS ✅Q Phones (Starlink) ✅Gold Standard ✅ISO 20022 ✅Basel III/IV ✅Bretton Woods 3 ✅Protocol 19 & 20 ❌Khazarian Satellites ❌Fiat $ ❌Unregulated Crypto 💊 https://www.humorousmathematics.com/post/developing-revelations-the-bountiful-nesara-national-economic-security-reformation-act
@NotOpCue - Not Op Cue
Derek Johnson (@rattletrap1776) is a mil vet that has explained how @RealDonaldTrump is the current military installed wartime US Commander-In-Chief (CIC) as per supporting EOs, federal directives & laws. Via Blueprint Outline: http://TheDocuments.Info 💊 https://humorousmathematics.com/post/developing-revelations-the-bountiful-nesara-national-economic-security-reformation-act
@NotOpCue - Not Op Cue
House Resolutions relating to gold/silver introduced by @RepAlexMooney make it hard to ignore the consistent incline of gold & silver prices for the last 20 yrs straight. 5 Yr Gold 🔼 +52% 5 Yr Silver 🔼 +53% 20 Yr Gold🔼 +532% 20 Yr Silver 🔼 +470% 💊 https://www.humorousmathematics.com/post/developing-revelations-the-bountiful-nesara-national-economic-security-reformation-act
@NotOpCue - Not Op Cue
"Guarantee Letter" Email From @USTreasury's @USOCC June 16, 2020 Regarding an audit performed by the @INTOSAI_SC_CA & @ICSID. Referring to a coming GCR, arrival of a currently running QFS, in accordance with the International Quantum Initiative Act. 💊 https://humorousmathematics.com/post/developing-revelations-the-bountiful-nesara-national-economic-security-reformation-act
@NotOpCue - Not Op Cue
The Real Reason For The 9/11 Planned Demolition Was To Block The Enactment By Announcement of NESARA Law, Signed Into Law By Then President Bill Clinton On October 10, 2000 💣🧨💣🧨💣🧨💣🧨💣🧨💣🧨 October 10, 2000 @POTUS @BillClinton had no interest in signing NESARA into law due to his Deep State allegiance. However, under orders from U.S. military generals, the elite @USNavy Seals and Delta Force stormed the @WhiteHouse and under gunpoint forced @BillClinton to sign NESARA. During this time @SecretService and @WhiteHouse security personnel were ordered to stand down, disarmed, and allowed to witness this event under a gag order. From its very inception @GeorgeHWBush, the corporate government, major banks, and the Carlyle group (@OneCarlyle) strongly opposed NESARA. To maintain secrecy, the case details and the docket number were sealed and revised within the official congressional registry, to reflect a commemorative coin and then again it was revised even more recently. This is why there are no public Congressional Records and why a search for this law will not yield the correct details until after the reformations are made public. Members of congress will not reveal NESARA because they have been ordered by the U.S. Supreme Court Justices to deny its existence or face charges of treason punishable by death. The next step is to announce NESARA to the world, but it’s not an easy task. Many powerful groups have tried to prevent the implementation of NESARA. The NESARA law requires that at least once a year, an effort be made to announce the law to the public. Three then current U.S. Supreme Court judges control the committee in charge of NESARA’s announcement. These Judges have used their overall authority to secretly sabotage NESARA’s announcement. In 2001 after much negotiation the Supreme Court justices ordered the 107th Congress to pass resolutions approving NESARA. This took place on September 9, 2001. On September 11, 2001 at 10 AM Eastern Daylight Time, Alan Greenspan was scheduled to announce the new @USTreasury Bank system, debt forgiveness for all U.S. citizens, and abolishment of the IRS (@IRSnews) as the first part of the public announcements of NESARA. Just before the announcement at 9 AM, @GeorgeHWBush ordered the demolition of the World Trade Center’s Twin Towers to stop the international banking computers on Floors 1 and 2 in the North Tower from initiating the new U.S. Treasury Bank system. Explosives in the World Trade Center were planted by operatives and detonated remotely in Building 7, which was demolished later that day in order to coverup their crime. Remote pilot technology was used in a flyover event to deliver a payload of explosives into the Pentagon (@DeptofDefense) at the exact location of the White Knights in their new Naval Command Center who were coordinating activities supporting NESARA’s implementation nationwide. With the announcement of NESARA stopped dead in its tracks, @GeorgeHWBush decapitated any hopes of returning the government back to the people. For the past 10 years, life in the USA, and numerous other countries, has been dictated by the staged terrorist attack and its repercussions. Seldom does a day go by that we do not hear mention of 9/11. The truth about 9/11 was that the Pentagon (@DeptofDefense) and @MOSSADil privately contracted a military engineer to design nuclear atomic fission/fusion bombs which were laid out in advance on an entire closed off floor in each of the WTC buildings. This insider information was provided to me directly via the military engineer himself, veteran whistleblower Clarence Pate who has since been in hiding living off grid after numerous assassination attempts on him and his wife. To accomplish implementation of his design they used an Austrian art group known as "Gelatin" that was infiltrated by Israeli bomb specialists. By May 1, 2000 they received a temporary construction permit for their alleged project called the "B-Thing" which was to create a balcony off the 91st floor of WTC1. B-Thing could have very well stood for bomb thing, for all we know. The boxes seen in the photo are all labeled with "BB18" which corresponds to a type of fuse holder parts that could have been used for constructing the planned demolition explosives setups. The primary target was the NESARA administrative/enactment paperwork in the WTC buildings with a secondary purpose of using this false flag event to fuel the unnecessary war on terror. ↙️↙️Read & Share The Full Article↘️↘️ 🔍"Developing Revelations: The Bountiful NESARA (National Economic Security & Reformation Act)" 💊 https://www.humorousmathematics.com/post/developing-revelations-the-bountiful-nesara-national-economic-security-reformation-act 💊 https://giveit.link/OperationQ
@AlexBerenson - Alex Berenson
1/ In 2008, the @federalreserve began an unprecedented bailout of Wall Street and banks. The bailout was supposed to be temporary. Except that the Fed's balance sheet - basically money it has created to backstop banks - is now nine times - or $8 trillion -more than it was then...
@AlexBerenson - Alex Berenson
2/ $8 trillion is an unfathomably large number - $23,000 for every man, woman, and child in the United States, four months of GDP. And whenever the Fed even tries to unwind it, to get the banks off the backstop, Wall Street goes berserk...
@AlexBerenson - Alex Berenson
3/ For a while, no one except a few populists (mostly on the left, though increasingly on the right too) paid much attention to this incredible subsidy to the richest people in the world - on Wall Street and Silicon Valley -which both feasted on cheap capital...
@AlexBerenson - Alex Berenson
4/ Why? Because it didn't seem to matter to the real economy. Why? Because inflation was still low. And as long as inflation was still low, the Fed could brush off complaints it was worsening inequality...
@AlexBerenson - Alex Berenson
5/ And encouraging systemic risk-taking by flooding banks with too much cheap capital. But the bill always comes due. Always. And it’s due now. The core US inflation rate exploded in 2021 and despite what the White House wants to pretend there is little sign it’s retreating.
@AlexBerenson - Alex Berenson
6/ So the Fed is FINALLY trying to cut its balance sheet and raise rates - to pull money out of the system since inflation is a monetary phenomenon. Only it's stuck. Banks are so addicted to cheap cash that even the Fed's relatively small moves so far have caused a crisis...
@AlexBerenson - Alex Berenson
7/ A crisis that has led the Fed not just to stop its efforts to restore balance to the system BUT TO REVERSE THEM BY OFFERING YET ANOTHER SUBSIDY TO BANKS, this time for bonds ruined by interest rates: "These assets will be valued at par." https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312a.htm
@AlexBerenson - Alex Berenson
8/ Again the Fed is giving banks a bailout for short-term stability, just like it did in 2008. Only we are 15 YEARS ON and the bailout hasn't gone away. And the only people who benefit in the long run are the superrich, who can take advantage of the economic distortions here.
@AlexBerenson - Alex Berenson
9/ Where and how does all this end? I don't know. But it WILL end. Even the Fed cannot prop up the banking industry forever.
@peruvian_bull - Peruvian Bull
Peruvian Bull Meta Thread: A compilation of all my best work. The central banks are trapped in a black hole of their own design. They will soon be forced to choose which to save- their currencies or the system itself. The Dollar Endgame Thesis. 🧵🔥👇 https://www.youtube.com/watch?v=f0yIATTy0J8
@peruvian_bull - Peruvian Bull
The Federal Reserve has trapped the Treasury beyond the event horizon. The Financial Gravity is now overwhelmingly strong 👇
@peruvian_bull - Peruvian Bull
The United States has become a superpower due to hegemonic influence of the Dollar. However, this can become an existential risk. 👇
@peruvian_bull - Peruvian Bull
The US has weaponized the Dollar to be a secret Excalibur. To punish enemies far and wide. However, this power cannot last forever... 👇
@peruvian_bull - Peruvian Bull
The Federal Reserve has stolen the American Dream. Only the wealthy have benefited. 👇
@peruvian_bull - Peruvian Bull
@peruvian_bull - Peruvian Bull
There's an accelerating withdrawal of money throughout the banking system. The Fed has created a Singularity which is ripping apart the banks. 👇
@peruvian_bull - Peruvian Bull
A new financial crisis is brewing. There is an accelerating withdrawal of money throughout the entire system. The Dying Banks and the Singularity. A Thread 🧵👇
@peruvian_bull - Peruvian Bull
The sanctions against Russia have wounded them. But could this be a bridge to far for the World Reserve Currency? 👇
@peruvian_bull - Peruvian Bull
The Japanese have wandered far into the oceanic depths. Have they finally encountered a monster even the mighty BoJ cannot defeat? 👇
@peruvian_bull - Peruvian Bull
Dissection of SVB's financials just prior to collapse. What if they're not an anomaly?👇
@peruvian_bull - Peruvian Bull
Republicans and Democrats are edging default. If the US actually failed to pay its Treasury bonds, the results would be disastrous 👇
@peruvian_bull - Peruvian Bull
The drums of economic war have begun to beat. The cracks are widening in the dollar based global monetary system ... 👇
@peruvian_bull - Peruvian Bull
The Treasury is accelerating beyond the Event Horizon. The debt issuance is going parabolic. 👇
@peruvian_bull - Peruvian Bull
Argentina is falling apart. Exponential inflation is here 👇
@peruvian_bull - Peruvian Bull
@peruvian_bull - Peruvian Bull
Could the Fed be repeating the same mistakes as the Bank of Amsterdam before the collapse of the Guilder? 👇
@peruvian_bull - Peruvian Bull
Not finance related, but Ayahuasca is a powerful medicine for transformation 👇
@peruvian_bull - Peruvian Bull
Deep in the monetary black hole, hides the Singularity. It could change everything 👇
@peruvian_bull - Peruvian Bull
THE SINGULARITY: There exists a hidden flaw in the monetary system, deep into the Black Hole... that could spell disaster for fiat currencies. A THREAD 👇⚡️ https://substackfwd.xyz/?url=https://dollarendgame.substack.com/p/the-singularity
@peruvian_bull - Peruvian Bull
The Fed has created a Financial Illusion greater than any other. What is left of Economic Reality? 👇 https://t.co/aH5g1QDL2Z
@peruvian_bull - Peruvian Bull
The Simulacrum: what if our financial markets are an illusion- and the abstraction has overtaken reality? The Fed has broken the Financial Matrix. A THREAD 🧵🔥👇 https://t.co/nSVDmtEHra
@peruvian_bull - Peruvian Bull
The financial system is not some monolith upon which all transactions are made. It's far more complex (and interesting) 👇⚡️ https://t.co/39rFFnHmIW
@peruvian_bull - Peruvian Bull
Layered Money The financial system doesn't work how you think it does. A THREAD 🧵👇⚡️
@peruvian_bull - Peruvian Bull
The SEC's incompetence is staggering. Are they complicit in the financial crimes of the people they regulate? 👇 https://t.co/ds7xMKoa0l
@peruvian_bull - Peruvian Bull
The SEC is a criminal organization. The true story of their epic failure to prosecute the largest fraud of all time: Bernie Madoff. A Thread 🧵⚡️👇
@peruvian_bull - Peruvian Bull
There is a movement to direct register the float of an entire company. Barely anyone in the financial world knows about this 👇 https://t.co/m3yOY5OMz0
@peruvian_bull - Peruvian Bull
PowerPoint on Gamestop and DRS- A THREAD 👇🧵⚡️ (1/31) https://t.co/s7dViDTEXw
@peruvian_bull - Peruvian Bull
Did the Saudis make a secret deal selling oil for gold? ANOTHER revealed this controversial theory in 1997-could it still be in place?
@peruvian_bull - Peruvian Bull
ANOTHER: The controversial anon blogger in 1997 who revealed an astounding gold-for-oil deal hidden in the markets that shaped geopolitics for the last few decades. A THREAD 🧵⚡️👇
@peruvian_bull - Peruvian Bull
$GME almost broke the financial system, until they panicked and turned off the buy button. Dive in 👇🤯 https://t.co/9WKlENasN5
@peruvian_bull - Peruvian Bull
3 YEARS AGO TODAY, JAN 28th 2021: Price was going parabolic, and then Robinhood turned off the BUY BUTTON on $GME. What was revealed would shock the financial world- and the story still isn't over! A THREAD 🧵🔥👇 https://t.co/47rH6RoFVV
@peruvian_bull - Peruvian Bull
China's deflationary crisis has been spreading to equities, and authorities will utilize the inevitable liquidity injections to save the day. Are things going from bad to worse for the Asian behemoth? 👇⚡️ https://t.co/K5BV3vXg3K
@peruvian_bull - Peruvian Bull
Crisis in Shanghai: Stock markets are getting hit hard in China, indicative of a vicious deleveraging cycle. CPI print was NEGATIVE again in December. What will they do to stem the bleeding? A THREAD 🧵👇⚡️ https://t.co/CwI10QJXgA
@peruvian_bull - Peruvian Bull
Was $GME on the way to being cellar-boxed by malicious market makers before January 2021? Their playbook for bankrupting companies 👇 https://t.co/y3ug9i83kE
@peruvian_bull - Peruvian Bull
CELLAR BOXING: A post made in March 2004 laying out the entire naked shorting scam- how Market Makers profit from destroying companies. This is how they steal your wealth! $GME $AMC $MMTLP A THREAD 🧵🔥👇
@peruvian_bull - Peruvian Bull
The Chinese shadow banks are falling like dominoes. Are their real estate woes big enough to bring China down? 👇 https://t.co/0A4ToXZURK
@peruvian_bull - Peruvian Bull
China Crumbles: Xi's economic miracle is running into serious problems. Now the property market contagion is spreading to the shadow banking sector, and authorities are panicking on what to do. A THREAD: 🧵👇🔥 https://t.co/wNT8lKPnVC
@peruvian_bull - Peruvian Bull
Regional banks are heavily exposed to the commercial property market. Is the downturn just beginning? 👇 https://t.co/bwU10M7CHd
@peruvian_bull - Peruvian Bull
Shades of 2008? Warning signs are brewing in the commercial property market, and contagion is already beginning to spread to Europe. Are we seeing the CRE version of the Financial Crisis? A THREAD 🧵🔥👇
@peruvian_bull - Peruvian Bull
The Bank of Japan is stuck beyond the Event Horizon. The recent rate hike only confirms it 👇 https://t.co/3pjudSCKJV
@peruvian_bull - Peruvian Bull
The BoJ is Trapped: The Bank of Japan just raised rates for the first time since 2007. Is Ueda sleepwalking into a currency crisis? A THREAD 🧵👇⚡️
@peruvian_bull - Peruvian Bull
The arguments for infinite liquidity are nonsensical. Don't believe the dogma that unlimited naked shorting and excessive derivatives are positive outcomes for markets 👇 https://t.co/0u9KqOnEME
@peruvian_bull - Peruvian Bull
Gold's recent rip could be a sign that decades of Western manipulation of bullion is finally coming to an end. But is this rally an omen of something far worse happening in global macro? ⚡️👇 https://t.co/p9JY4DnAKt
@peruvian_bull - Peruvian Bull
The Gold Endgame Begins: Gold is ripping to new all-time highs, and China could be behind the move. Is the Western gold market manipulation finally reaching its finale? A THREAD 🧵👇🔥 https://t.co/MpZ6a9ZysN
@peruvian_bull - Peruvian Bull
Unemployment, Payrolls, and CPI all have problems. And the quality of the data seems to be getting worse 👇 https://t.co/DZthbyrl2E
@peruvian_bull - Peruvian Bull
The Potemkin Economy: More and more news reports come out concerning the booming economy- but underneath the surface, things are not as they seem. Can we even trust the veracity of the data anymore? A THREAD 👇⚡️🧵
@peruvian_bull - Peruvian Bull
A stellar Twitter Spaces on the Japanese Yen Crisis with informative rants from @acrossthespread and @DarioCpx Probably the best spaces we've ever done 👇👇 https://t.co/3wXhHNEcGv
@peruvian_bull - Peruvian Bull
@acrossthespread @DarioCpx Japan is currently trying to ride both sides of the impossible trilemma, and their currency is blowing out. Another step in the Dollar Endgame 👇👇👇
@peruvian_bull - Peruvian Bull
Tokyo Drifting Into A Currency Crisis The Bank of Japan intervened twice last week as JPY crossed the redline set in September 2022. What lies in store for the Japanese Yen? A THREAD 🧵👇🔥 https://t.co/qbNkGaqM0W
@KeaweWong - Keawe Wong 凯王
100-year-old Henny Kissinger went to China for what reason? It's not about US debt, not about the trade war, not even about Taiwan. In this thread, we find out what Kissinger and Xi discussed behind closed doors, something that will affect us all. #1/10
@KeaweWong - Keawe Wong 凯王
The biggest threat to the world is not China, but $31.4 trillion US debt. US bonds price will crash inevitably and nuke many countries' economies. Hundreds of millions of jobs and trillions of dollars in pensions will disappear. Why wouldn't Kissinger ask China to help? #2/10
@KeaweWong - Keawe Wong 凯王
When Xi Jinping started his 1st term, he was advised that the Chinese economy couldn't withstand the US bonds crash. China's deleveraging campaign was launched in 2013. It sent the two largest real estate developers to bankruptcy in 2021. Did Xi make a deadly mistake? #3/10
@KeaweWong - Keawe Wong 凯王
During my first visit in 2018, everyone in China was in a state of euphoria. Businesses borrowed like crazy to expand. Housing prices were sky-high. Jack Ma was further expanding his empire by giving young Chinese free loans. It was a disaster waiting to happen. #4/10
@KeaweWong - Keawe Wong 凯王
By popping its own financial and real estate bubbles, in a controlled manner, the Chinese government defused an economic time bomb. But Western experts say Xi is driving China into the brink of collapse, right? #5/10
@KeaweWong - Keawe Wong 凯王
I went shopping for a new condo last week. My agent told me that, yes, local govts had to step in and fund most unfinished building projects. And things weren't great for the last 3 years. But she's busy again. Home buyers are taking advantage of lower housing prices. #6/10
@KeaweWong - Keawe Wong 凯王
Here's a gorgeous 100 square meters condo with 3 bedrooms and 2 bathrooms for 1.6 million RMB. But I digress. Back to Kissenger. $7/10
@KeaweWong - Keawe Wong 凯王
If a 100-year-old man is going to go on a plane for 14 hours, he'll need a medical team along with him. Kissenger jeopardized his health to travel to China for what reason? It's got to be something about his own legacy. #8/10
@KeaweWong - Keawe Wong 凯王
China has spent the past decade insulating itself from the inevitable US bonds crash. It won't be as enthusiastic about saving the US as in 2008. The US economy is near its end. The only exit is war. Kissinger travelled to Beijing to discuss the possibility of war. #9/10
@KeaweWong - Keawe Wong 凯王
Kissinger's trip to Beijing has only one purpose – to discuss how to minimize damage when (not if) a war breaks out between China and the US. I hate being so doom and gloom. But here is a Chinese phrase – 危机 Whenever danger lurks, opportunity awaits. #10
@KeaweWong - Keawe Wong 凯王
@alfonsomujicajr Thanks for reading it 🙏
@BaldingsWorld - Engagement Director Balding 大老板
Twitter China Galaxy Brains continue to churn out hot takes and think pieces wondering why Communists won't suddenly go free market and why Beijing won't make it rain. I've pointed out their broke and communist. Now let's make it interesting and include Evergrande financials 1/n
@BaldingsWorld - Engagement Director Balding 大老板
As noted, Evergrande has 1.7 TRILLION RMB in current liabilities and 9 BILLION in cash on hand. If you don't have a Harvard MBA able to decipher such complex data: that's bad. This is like having $100k in the bank and a $2 million balance on the over due credit card 2/n
@BaldingsWorld - Engagement Director Balding 大老板
Evergrande assets are of course in unsold apartments but let's focus for now on a tale of the tape to provide some framework for these numbers and how it impacts the larger question of macro policy and China not having money. By ANY banking standard, Evergrande is COMPLETELY 3/n
@BaldingsWorld - Engagement Director Balding 大老板
Insolvent and these loans need to be written down to basically 0. This impacts bank liquidity because loans aren't being repaid. With me so far? So now let's get into the good part. China has not begun to grapple with Evergrande and developer bad debts and what this means 4/n
@BaldingsWorld - Engagement Director Balding 大老板
How do we know? According to official Chinese statistics, the TOTAL non-performing loan stock was under 3 TRILLION RMB at the end of 2022. Let's assume this is true: Evergrande is nearly 60% of all NPLs in ALL of China. We know that isn't true 5/n https://www.statista.com/statistics/1171742/china-non-performing-loan-stock/
@BaldingsWorld - Engagement Director Balding 大老板
Let's frame this another way. ICBC is the biggest bank in the world with more than $5 trillion USD in assets. Their capital base amounts to 4.3 trillion RMB. For simple thought exercise purpose, if Evergrande debt was written down to 0... 6/n https://v.icbc.com.cn/userfiles/Resources/ICBCLTD/download/2023/2022CapitalAdequacyReport20230508.pdf
@BaldingsWorld - Engagement Director Balding 大老板
As it should be, this would swallow 40% of ICBC total capital base. It would eliminate 50% of their Tier 1 capital. This would essentially wipe out the largest bank in the world. Let me emphasize, while I am sure that ICBC has some business dealings with Evergrande 7/n
@BaldingsWorld - Engagement Director Balding 大老板
I do not know their full exposure to Evergrande and am ONLY using this as a simple example. So ONE Chinese developer can effectively wipe out the largest bank in the world. So let's hit what this means for the macro points. First, the banking statistics on things like NPL's 8/n
@BaldingsWorld - Engagement Director Balding 大老板
Are complete and utter garbage. Even years ago, Chinese banking analysts were estimating the true NPL ratio at upwards of 10%. At this point, that would likely be too conservative. Second, the banks do not have capital, they do not have liquidity, they are effectively broke 9/n
@BaldingsWorld - Engagement Director Balding 大老板
It isn't just demand what capital. Cash restrictions by banks are popping up more and more and we know small mid-size banks are broke. They aren't getting repaid and don't have the capital. Third, this is why Beijing isn't engaging in stimulus. Forget what it would go to 10/n https://t.co/06AOWk2R1V
@BaldingsWorld - Engagement Director Balding 大老板
Or how it would be used: if you want to argue Beijing should engage in material stimulus (i.e. not increasing from 5% to 7% spending growth) where is this money coming from? Banks got nothing. International investors don't have that amount of capital or interest 11/n
@BaldingsWorld - Engagement Director Balding 大老板
So where is this money coming from? Where? 12/n https://t.co/A60Smd5fas
@BaldingsWorld - Engagement Director Balding 大老板
So when you hear that "Beijing just needs to do X" to return things to normal understand the individual events you hear about and how this impacts the macro-BS you are being sold.
@WallStreetSilv - Wall Street Silver
The Fed is paying $723 million PER DAY to commercial banks on reverse repos and interest on reserves. Back a few years ago, the Fed used to be profitable and sent it's profits to the US Treasury. But in recent years, in order to keep everything from collapsing, the Fed has been forced to create more and more programs to support the house of cards. This has resulted in this crazy system where the Fed is losing $723 million per day to hold it all together.
@RealEJAntoni - E.J. Antoni, Ph.D.
$723 million in daily interest curtesy of the Fed sterilizing $4.9 trillion...
@jameslavish - James Lavish
The Reverse Repo Facility Lots of talk about how it's dwindling fast and may soon be empty...but does it really matter? Yes, it matters. A whole lot more than you may think. Time for a Fed 🧵👇
@jameslavish - James Lavish
🎯 Repo vs Reverse Repo What are they, and what're their differences? Put simply, they are two overnight lending markets run by the Federal Open Market Committee (FOMC) All purchases and sales (open market operations) are made by the NY Fed Open Market Trading Desk (the Desk)
@jameslavish - James Lavish
The Repo A repo is basically a repurchase agreement between two parties The term can be used in many different types of transactions, but we most often hear it used to describe overnight transactions of US Treasuries.
@jameslavish - James Lavish
See, when a bank needs cash to cover short term obligations, it can sell USTs to the Fed (in return for cash) agreeing to buy them back just 24 to 48 hours later at a slightly higher price This is called a Repo or 'Repurchase Agreement'.
@jameslavish - James Lavish
The difference between the amount of cash the bank receives and the amount it pays back is calculated to be the 'discount rate', or the cost of ‘overnight’ borrowing from the Fed It looks like this: https://t.co/mMSl0WtUDG
@jameslavish - James Lavish
So, if there is a lack of liquidity in the system, banks may be looking to loan their US Treasuries to the Fed for cash to cover short-term needs Got it.
@jameslavish - James Lavish
But what if there's too much cash in the system, and banks who are looking to generate interest on that cash aren't able to buy any more USTs, because they're at their internal and/or Fed-mandated limits? Well, that's where the *Reverse* Repurchase Agreement comes into play.
@jameslavish - James Lavish
The Reverse Repo Much like the repo transaction, where a bank sells US Treasuries to the Fed, in a *Reverse Repo*, the bank buys US Treasuries from the Fed But why would they do this?
@jameslavish - James Lavish
Simple. When a bank has too much cash on its balance sheet, it can utilize the reverse repo to generate a rate of return on that cash in the overnight market In essence, the bank *parks* its cash at the Fed.
@jameslavish - James Lavish
And so, like a mirror image of the repo, the Reverse Repo looks like this: https://t.co/NJKm720KfC
@jameslavish - James Lavish
An important key here is that the NY Fed sets the Reverse Repo Rate And as you can see here, the rate is currently 5.30% Remember this number, we will come back to it in a bit. https://t.co/PodJOt5U1H
@jameslavish - James Lavish
🔍 Filling the RRF Another thing you may have noticed recently is that we are hearing precisely nothing about the Repo market lately Why? Because virtually nobody is using it. https://t.co/YxRodee6Zw
@jameslavish - James Lavish
The reason for this is that the major banks are not strapped for cash, but rather swimming in it And so, all the focus and action has been in the Reverse Repo markets But how did this happen? Why are these banks swimming in, stuffed to the gills with, all this cash?
@jameslavish - James Lavish
You got it QE (almost infinity) in 2020 and 2021 See, when the Treasury and the Fed teamed up to 'inject liquidity' into the markets, they hit the banks with something of a cash tidal wave.
@jameslavish - James Lavish
Turns out that when you print and purchase over $5.8T of securities from banks and put those securities on your own balance sheet in return for floods of cash... https://t.co/TEEfxWcaFr
@jameslavish - James Lavish
...you wind up creating massive excess cash balances at the banks, who then in turn, wind up eventually parking it back at The Fed in the Reverse Repo Facility. Look at what also happened between 2021 and the end of 2022: https://t.co/oNnn2PaQaQ
@jameslavish - James Lavish
The Fed then pays the bank the current Fed Fund influenced Reverse Repo Rate as a yield on those balances Which, as you can see the Reverse Repo Operations Schedule above, is 5.30% (annualized) yield this week What a deal!
@jameslavish - James Lavish
But that $2.4T of Reverse Repo Facility balances has been falling recently and is now down quite a bit. But why? Where's all the excess cash going?
@jameslavish - James Lavish
✍️ Draining the RRF Again, unless you've been completely ignoring all news and media (good for you, seriously), then you've likely also noticed that there's been quite a bit of talk about the expanding US deficit and ballooning US debt this year.
@jameslavish - James Lavish
This phenomenon is called the Debt Spiral, and it's apparent mathematically that we have already entered one If you want to know more about that you can read all about it in a thread posted over a year ago, right here: https://x.com/jameslavish/status/1562078782453792768?s=20
@jameslavish - James Lavish
Bottom line, the US is spending too much compared to the amount of productivity and taxes it is (read: its citizens and companies are) generating, and this excess spending is causing the need for the Treasury to borrow more and more... ...and more.
@jameslavish - James Lavish
So, they've been covering the deficit with auction after auction of bonds, just papering over the spending problem. https://t.co/RRfIHnTzdu
@jameslavish - James Lavish
But because interest rates are now significantly higher than when the Treasury started to flood the market with USTs, they've been leaning hard on the short end of the yield curve Notice the steep pickup in T-Bill issuance this year, surpassing even the shock of March 2020: https://t.co/zqaVwR99T2
@jameslavish - James Lavish
The Treasury has pivoted to short-term T-Bill auctions for two reasons 1) To avoid locking into long-term high interest rates which would exacerbate the deficit and interest expense 2) They can tease capital back out of the Reverse Repo with yields slightly higher than 5.3%
@jameslavish - James Lavish
So, how are they doing with that plan? It seems swimmingly well In fact, the Treasury has drained ~$1.5T from the Reverse Repo Facility in just the last few months. https://t.co/ncPorAlOB5
@jameslavish - James Lavish
The Treasury's Q4 refunding plan reiterated they would continue this, and they're OK with staying well above a normal ratio of ~20% T-Bills and 80% Bonds In fact, the Treasury has effectively inverted this ratio, auctioning ~65% T-bills and ~35% Bonds this past year.
@jameslavish - James Lavish
Using the Treasury estimated $1.5T+ of upcoming auctions between now and the end of the first quarter of 2024, it seems the Reverse Repo will soon be drained But if the Treasury keeps the same pace of auctions as the last couple of months, the RRF could be drained by January.
@jameslavish - James Lavish
Either way, it appears that is the direction the Treasury is headed, and the RRF will, in fact, soon be back to zero Then, the only backstop is investors continuing to move cash into money markets because of attractive yields But when rates start to fall, then what?
@jameslavish - James Lavish
🧠 Where will the Treasury Turn? With the gov't running $2T annual federal deficits, the Treasury simply cannot stop issuing debt And this is *before we hit a recession* and the deficits *increase*.
@jameslavish - James Lavish
Where will the Treasury turn for even *more* capital? Can they just issue longer term bonds instead?
@jameslavish - James Lavish
If you've been following me, you know that the last Treasury 30-yr bond auction was abysmal, signaling a steep drop-off in demand and confidence in long-term US Treasuries If you've not yet read about that, you can find a thread on it right here: https://x.com/jameslavish/status/1724541356113264691?s=20
@jameslavish - James Lavish
TL;DR: international and institutional demand fell off a cliff this past auction, and the Treasury may have difficulty growing the sizes of auctions necessary to meet demand when they need to move further out on the yield curve.
@jameslavish - James Lavish
When the Reverse Repo Facility is drained and the Treasury can no longer use that excess capital to fund additional debt, they may have to turn to more drastic measures, such as...
@jameslavish - James Lavish
• Adjusting Capital Requirements The Fed and regulatory agencies could lower the capital requirements for banks This means banks would need to hold less capital against certain assets, freeing up more funds for investment, including in longer-term Treasury bonds.
@jameslavish - James Lavish
• Modifying Collateral Rules The Fed could alter the rules regarding what types of collateral can be used in various Fed lending facilities, which might encourage more purchases of Treasury bonds.
@jameslavish - James Lavish
• Tweaking Regs Regulatory changes could be made that *require* financial institutions to hold more long-term Treasuries I.e., changes could be made to the liquidity coverage ratio (LCR) requirements to encourage or require holding longer-term government securities.
@jameslavish - James Lavish
Additional options may include some sort of stealth injection of capital into banks or the markets in order to ensure sufficient liquidity for debt auctions Think: four letter acronyms like the BTFP or similar programs they can and I expect they will implement.
@jameslavish - James Lavish
Then, of course, we have the upcoming 2024 Treasury Regular Buyback Program What this is and how it will be used remains to be seen, but this could act as a quasi-yield curve control or *stealth QE program* We will see...
@jameslavish - James Lavish
Any way you cut it, the RRF lifeline is dwindling and soon ending Your guess as to where the Treasury turns and what exactly they end up doing is as good as mine, but I watching Treasury auctions and the debt markets carefully.
@jameslavish - James Lavish
Because one thing we can be absolutely sure of... The government is not going to stop or even slow down spending any time soon, and they will eventually have little choice but to print more money.
@jameslavish - James Lavish
And then? The Reverse Repo Facility will just be filled right back up again. What a deal, indeed.
@jameslavish - James Lavish
This thread is a summary of a recent issue of 💡The Informationist, the free newsletter that simplifies one financial concept for you weekly. You can join 25K readers here: http://jameslavish.com https://t.co/Ad4cmlVj29
@BossBlunts1 - The Butcher of Wall Street Marcel Kalinovic
CHINA'S 2ND LARGEST REAL ESTATE DEVELOPER #EVERGRANDE FACES DISSOLUTION IN BANKRUPTCY COURT TOMORROW, DECEMBER 4TH‼️ GLOBAL BANKS HOLD NEARLY $1 TRILLION IN #BONDS AND LOANS OF EVERGRANDE R.E. COMPANY AND THEIR FAILED ELECTRIC VEHICLES DIVISION. IF BONDHOLDERS ON DEC 4TH DONT ACCEPT EG'S POOR SOLUTION OF TAKING EQUITY IN THE INSOLVENT COMPANY, EVERGRANDE WILL BE FORMALLY DISSOLVED AND ALL REMAINING ASSETS OF THE HEAVILY INDEBTED RE DEVELOPER WILL BE SOLD OFF EN MASSE LEAVING AS LITTLE AS 0% TO 5% REPAYMENT TO DEBTORS😆 🤣 JUST FKING DIE ALREADY YOU PONZI SCHEME POS COMPANY‼️ FOR THOSE UNAWARE, EG ONLY REMAINED SOLVENT DUE TO THE LITERAL PONZI IN WHICH MORE NEW INVESTORS WOULD NEED TO BUY APARTMENTS FROM THEM IN ORDER TO FUND THOSE THAT HAD ALREADY BEEN ORDERED AND PAID FOR IN THE PAST. THIS HAS ALREADY COLLAPSED, AND NO CHINESE PERSON IS STUPID ENOUGH TO INVEST ANOTHER #RMB INTO THEIR SCAM. #ISDA BANKS WILL BE FORCED TO WRITE OFF NEARLY $1 TRILLION IN LOSSES FROM THAT 1 DEVELOPER ALONE, SHOULD THIS OCCUR. #AMC #GME #VIX #UVXY #SPY #TSLA #MINERS #GOLD #SILVER #METALS
@BossBlunts1 - The Butcher of Wall Street Marcel Kalinovic
🚨BREAKING NEWS🚨 1. China reduces capital gains tax on stock trading by 50% to prevent market collapse. 2. Evergrande down 87% on first day of resuming trading. 3. Chinese government orders state banks & funds to buy stocks to boost failing markets. 4. Global banks and crypto exchanges like Tether hold massive numbers of Evergrande bonds as ISDA contract collateral at the original historical value. 5. Evergrande filed chapter 15 bankruptcy protection to prevent international banks from pursuing repayment of nearly $1 TRILLION in losses. 6. Upon bankruptcy case completion whenever that may be, these bonds & commercial notes will become 100% worthless, no longer allowing ISDA members (the world's largest banks and funds) to use them as collateral. 7. They can't sell the bonds because no fund is willing to buy them. 8. Margin calls across heavily shorted asset classes are highly likely. #amc #silver #gold #hymc #pslv #creditdefaultswaps #CDOs #meme #stocks #metals 9. Blue chips, real estate, and crypto highly likely to collapse to fund their need for collateral. 10. This is not financial advice, just educational information. Do your own due diligence. Follow me @bossblunts1 for more, and my upcoming stock brokerage firm @LitXchangeLLC as we bring you the first ever stock broker for retail, by retail in the coming months ‼️ Sign up here to become a beta tester & LET'S GET LIT🔥http://litxchange.com #FuckDarkpools
@DarioCpx - JustDario 🏊♂️
#JustDarioDaily 🚨 2024 - THE YEAR WHEN THE "HIDE TILL MATURITY" TRICK HITS THE MATURITY WALL AND BREAKS? 🤷🏻♂️ 🚨 During 2023, we have discussed so often how (ridiculously insolvent) banks have made extensive use of "Hold To Maturity" accounting to the point that it is now more appropriate to rename it "Hide Till Maturity" (https://x.com/dariocpx/status/1728786228211015966?s=46&t=Hz7-qku8ZNVPw6L9nBJOZA). Dump any asset with a market value implying a steep loss in the HTM books, and the loss is "gone". However, this trick has two significant weaknesses: 1 - If you are forced to sell the underwater assets in HTM books before maturity, then the loss turns from "paper" into "real". 2 - If the asset matures, hence ceases to be eligible for HTM accounting, and the principal isn't repaid in full, then the paper loss becomes a real one again. In 2023, the FED took care of the first weakness with the #BTFP (non-bailout 😉) that effectively allowed banks in liquidity crisis to borrow against the nominal value of their US Treasuries rather than the market one, dodging a forced selling that would have likely triggered a domino of regional bank bankruptcies. As I explained in a post almost 3 months ago (https://x.com/dariocpx/status/1714455707003830741?s=46&t=Hz7-qku8ZNVPw6L9nBJOZA), big banks too are benefiting from the #BTFP, which is why the only scenario in which this program isn't extended this coming March is the one where the #FED led by Jerome Burns goes totally out of its mind. 🙄 The second weakness, greatly ignored by #FOMO #stocks investors, not only is about to become a major issue but is also a problem that the #FED and other Central Banks cannot tackle, avoiding the "bailout" shame. Good luck putting together another official financial system bailout in a big election year, not only in the #US but also in other G7 countries like #Japan and the #UK. ⚠️ BEWARE - #FED CUTTING RATES DOESN'T FIX A BORROWER'S INSOLVENCY PROBLEM BECAUSE ITS PROBLEM IS NOT THE COST OF *FUTURE* DEBT BUT THE DEBT *ALREADY* ACCUMULATED. In 2024, you will have the US Treasury Department competing in the open market to raise Trillions of $USD (https://x.com/dariocpx/status/1723825931503194398?s=46&t=Hz7-qku8ZNVPw6L9nBJOZA), at the same time when 5+ Trillion $USD [Picture 1] of private corporate debt (bond + loans) matures, and, as if this wasn't already enough, a lot of this private debt is going to be impossible to refinance because no one wants to be that last bag holder of a zombie company without the guarantee of a publicly sponsored TARP-like bailout fund. Simplifying all in a sentence: the "hide till maturity" trick is about to hit the (debt) maturity wall, literally speaking. 🫣 Which sector is the one likely to implode first? Commercial Real Estate. The National Bureau of Economic Research estimates just released in December [Picture 2] portray a situation beyond horrible and now hard to ignore for Banks like they did before (post in quote below). According to the NBER, 14.3% of CRE loans are in NEGATIVE EQUITY status. Many of the remaining ones are expected to face cash flow and refinancing issues due to the high Loan-To-Value in place (average 80%) and almost double debt costs in the current interest rate environment. At ~14% default rate, US banks already face more than 100bn$ of losses according to the NBER [Picture 3]. How to solve the issue then if #Fed rate cuts are useless here? The NBER suggests: "A near-term solution could consider a market-based recapitalization of the U.S. banking system" [Picture 4]. Translated: BANKS NEED A BAILOUT 🙄 We know that CRE is only the tip of the iceberg of the financial system problems. Credit Cards debt, buy now pay later consumer loans, student debt, and on and on. The list is pretty long, and none of these issues can be fixed with either a rate cut or money printing because capital is all that matters to sustain credit losses and avoid insolvency materializing into bankruptcy. Perhaps 2024 will be another irrationally exuberant #bullish year for #stocks, but once the party ends, because for sure it will, the “debt hangover” this time around will be brutal.
@DarioCpx - JustDario 🏊♂️
⚠️The great paradox of CRE lending: while owners are freaking out, banks are chilling 🫣 Q2 US bank earnings reported so far paint such a rosy picture of CRE loan risk. Yes, they admit there will be an uptick in losses (maybe), but banks barely show any concern. So why are CRE landlords panicking, not being shy with the press, describing the situation as "apocalyptic" or "a Cat 5 Hurricane"? 🤔 This is how the BIS, the "central bank of central banks," defines CRE loan risk: "the prospects for servicing the loan materially depend on the cash flows generated by the property securing the loan rather than on the underlying capacity of the borrower to service the debt from other sources." According to this (flawed) metric, as long as the property has enough tenants to cover the interests, then the loan wouldn't be considered problematic. This valuation approach applies to "Close-end residential loans" (CERL) where the borrower is typically a corporate landlord that rents the properties. Hence, these assets are as well materially dependent on the ability of these to generate enough income to cover interests. Here is the mind-blowing fact: despite what happened in 2008, banks still need to appraise the principal value of real estate collateral only if they are the principal occupant of the property. 🙄 Remember what triggered the 2008 GFC? Yes, interest-only loans... 🤯 So when will CRE ($2.9T) and CERL ($2.3T) start to be a problem for US banks? Most of these loans are "non-recurring," meaning the landlord can hand over the keys to the lender and walk away. While, as of now, CERL properties' vacancy rates are still at historical average ( $BREIT investors can take a sigh of relief), CRE vacancy rates are increasing fast and currently at 18.6%, a level seen last time during the CRE glut of the early '90s. This is an aggregated number, though. If we split it into Cat A, Cat B, and Cat C CRE office buildings, according to CRE office landlords, the vacancy for the last two categories is already at 50% and 70% in some prime locations like NYC, LA, and SF, with many Cat C buildings already completely empty, badly in need of heavy renovations, and practically worthless. Then it shouldn't come as a surprise that big landlords like Brookfield and Starwood started to default on their CRE loans and hand over the properties to banks. Why are CRE landlords so catastrophic? Because the trend is spreading to Cat A buildings with sub-lease availability climbing fast, signaling tenants' intention to downsize as soon as their agreements expire (unless they walk away earlier than that). Accounting for the current sublease rates reported by CBRE, the real vacancy rate of CRE is already beyond 25% in aggregate 😳 When the banks get hold of a property, they need to start assessing its "value," but again here no problem on the surface since prices are holding up pretty well... in aggregate! What about Cat B and Cat C? The latest transactions reported a drop in prices already up to 35% in the first category and up to 60% for the second one 🥶 during the GFC, CRE property prices declined ~30% at the bottom of the crisis... now the crisis didn't even start! ⚠️ Considering the average LTV for a CRE loan is ~75%, banks are already "losing" on their principal, and this is only the beginning 🥵 It's impossible to make forecasts at this stage, but banks (and regulators) are dangerously ignoring the risk banks will end up holding a huge amount of Cat B and Cat C worthless CRE. Isn't this what's exactly happening in China? Look at how things are going there, with even state-backed developers defaulting on their debt (#Wanda and #Greenland), and #stocks already trading at the same levels as during the GFC 🚨 Add to this banks' mounting liquidity problems, with FHLB advances already at ATH beyond GFC levels and an ongoing deposits hemorrhage, and you have the perfect setup for the mother of all banking crises. 🤯 Suggested read: https://nymag.com/press/2023/07/the-panic-and-pivot-of-manhattans-office-megalandlords.html
@DarioCpx - JustDario 🏊♂️
🚨BREAKING: THE #FED JUST PULLED THE PLUG TO BANKS #BTFP LIFE SUPPORT🚨 1 - I was wrong, I never thought they had the guts to do it 2 - Read my post below from months ago to understand how critical is the #BTFP to keep the whole financial system together Fasten your seatbelts! https://t.co/39DOOewK62
@DarioCpx - JustDario 🏊♂️
My comment on this news 👇🏻
@DarioCpx - JustDario 🏊♂️
#JustDarioDaily 🚨WITHOUT THE #FED #BTFP, BANKS WILL NOW HAVE A HARDER TIME TO “HIDE TILL MATURITY” THEIR LOSSES 🤷🏻♂️🚨 I started the year writing about how in 2024 the practice used by banks of hiding their losses in Hold to Maturity books (hence “hide till maturity”) would have come to an end [Post Below]. However, I was wrong there, because I wrote this: “As I explained in a post almost 3 months ago (x.com/dariocpx/statu…), big banks too are benefiting from the #BTFP, which is why the only scenario in which this program isn't extended this coming March is the one where the #FED led by Jerome Burns goes totally out of its mind.” Well.. As per the #FED press release that just came out at 7pm EST today (Picture 1), either our dear Jerome Burns finally realized what it means to be a Central Banker, or he lost his mind and unintentionally just rug pulled half of the US banking sector. There is a potential third justification for the #FOMC action though: okay, we are in a US election year, and a bull market is good for the incumbent president, but looking at what’s happening with $NVDA, imagine if this idiocy pops before November from a much higher market cap, and Biden ends up being forced to bail out hedge funds, fraudsters, and gamblers singing “Kumbaya!” all together on this stock right now. 🙄 Please let me know in the comments what do you thinks is the reason that pushed the #FED to do what they just did. Nevertheless, the outcome is not going to change, and this is what’s coming. 🚩 THE #FED WILL STOP “LEAKING” LIQUIDITY As you can see in Picture 2, the #BTFP was effectively #FED QE in disguise, and it is not a coincidence that the #stocks bubble re-inflated once the net liquidity in the system resumed its climb. 🚩 THE #FED WANTS (TO TEACH) BANKS TO USE THE DISCOUNT WINDOW There are two reasons why banks don’t like to go (and beg) at the #FED discount window: 1 - Makes their liquidity issues manifest. 2 - The discount applied to the assets they want to pledge for liquidity (usually the best they can offer) will reveal the true value of their HTM books and, likely, their insolvency. Now here is where the #FED is making a big mistake. Many US Regional Banks right now have an insolvency problem, hence they need capital. Accessing liquidity at the discount window won’t have any impact on the radioactive defaults in their Loans books. Imagine my shock if they already have a new TARP plan drafted out at the #FED but they hope there won’t be a need to disclose it before November. 🚩 INVESTORS WILL NOW SCRUTINISE BANKS' BOOKS MORE SERIOUSLY So far this year, the US banks' earnings season has been horrible, to say the least. Ask anyone working in a bank how’s the mood there and what do they expect the business to go in the near future; while in #stocks, the morale is through the roof, bankers' one is through the floor. Despite this, bank #stocks have been doing okay since the Q4-23 earnings season started. Why? Because the #FED “got it covered” with its magic wand that could fix everything like, for example, empty shopping mall loans stuck in the books of a bank somewhere and now worth not even the cost of the material build that shopping mall to begin with. Management at banks like $BAC totally embraced this thinking to the point there is barely a trace of CRE crisis in their results 🙈: https://x.com/dariocpx/status/1746581808538689762?s=46&t=Hz7-qku8ZNVPw6L9nBJOZA Personally, I couldn’t believe my eyes 1 hour ago when the #FED announcement popped up on my screen, I even went to check if it could have been a deep fake or, like what happened to their #SEC cousins, the #FED too didn’t use a 2FA to protect their X account. But no, the official announcement was there on their website (Picture 3) and all it missed were 2 words at the end of it: “GAME OVER” 😐
@DarioCpx - JustDario 🏊♂️
#JustDarioDaily 🚨WITHOUT THE #FED #BTFP, BANKS WILL NOW HAVE A HARDER TIME TO “HIDE TILL MATURITY” THEIR LOSSES 🤷🏻♂️🚨 I started the year writing about how in 2024 the practice used by banks of hiding their losses in Hold to Maturity books (hence “hide till maturity”) would have come to an end [Post Below]. However, I was wrong there, because I wrote this: “As I explained in a post almost 3 months ago (x.com/dariocpx/statu…), big banks too are benefiting from the #BTFP, which is why the only scenario in which this program isn't extended this coming March is the one where the #FED led by Jerome Burns goes totally out of its mind.” Well.. As per the #FED press release that just came out at 7pm EST today (Picture 1), either our dear Jerome Burns finally realized what it means to be a Central Banker, or he lost his mind and unintentionally just rug pulled half of the US banking sector. There is a potential third justification for the #FOMC action though: okay, we are in a US election year, and a bull market is good for the incumbent president, but looking at what’s happening with $NVDA, imagine if this idiocy pops before November from a much higher market cap, and Biden ends up being forced to bail out hedge funds, fraudsters, and gamblers singing “Kumbaya!” all together on this stock right now. 🙄 Please let me know in the comments what do you thinks is the reason that pushed the #FED to do what they just did. Nevertheless, the outcome is not going to change, and this is what’s coming. 🚩 THE #FED WILL STOP “LEAKING” LIQUIDITY As you can see in Picture 2, the #BTFP was effectively #FED QE in disguise, and it is not a coincidence that the #stocks bubble re-inflated once the net liquidity in the system resumed its climb. 🚩 THE #FED WANTS (TO TEACH) BANKS TO USE THE DISCOUNT WINDOW There are two reasons why banks don’t like to go (and beg) at the #FED discount window: 1 - Makes their liquidity issues manifest. 2 - The discount applied to the assets they want to pledge for liquidity (usually the best they can offer) will reveal the true value of their HTM books and, likely, their insolvency. Now here is where the #FED is making a big mistake. Many US Regional Banks right now have an insolvency problem, hence they need capital. Accessing liquidity at the discount window won’t have any impact on the radioactive defaults in their Loans books. Imagine my shock if they already have a new TARP plan drafted out at the #FED but they hope there won’t be a need to disclose it before November. 🚩 INVESTORS WILL NOW SCRUTINISE BANKS' BOOKS MORE SERIOUSLY So far this year, the US banks' earnings season has been horrible, to say the least. Ask anyone working in a bank how’s the mood there and what do they expect the business to go in the near future; while in #stocks, the morale is through the roof, bankers' one is through the floor. Despite this, bank #stocks have been doing okay since the Q4-23 earnings season started. Why? Because the #FED “got it covered” with its magic wand that could fix everything like, for example, empty shopping mall loans stuck in the books of a bank somewhere and now worth not even the cost of the material build that shopping mall to begin with. Management at banks like $BAC totally embraced this thinking to the point there is barely a trace of CRE crisis in their results 🙈: https://x.com/dariocpx/status/1746581808538689762?s=46&t=Hz7-qku8ZNVPw6L9nBJOZA Personally, I couldn’t believe my eyes 1 hour ago when the #FED announcement popped up on my screen, I even went to check if it could have been a deep fake or, like what happened to their #SEC cousins, the #FED too didn’t use a 2FA to protect their X account. But no, the official announcement was there on their website (Picture 3) and all it missed were 2 words at the end of it: “GAME OVER” 😐
@DarioCpx - JustDario 🏊♂️
#JustDarioDaily 🚨 2024 - THE YEAR WHEN THE "HIDE TILL MATURITY" TRICK HITS THE MATURITY WALL AND BREAKS? 🤷🏻♂️ 🚨 During 2023, we have discussed so often how (ridiculously insolvent) banks have made extensive use of "Hold To Maturity" accounting to the point that it is now more appropriate to rename it "Hide Till Maturity" (https://x.com/dariocpx/status/1728786228211015966?s=46&t=Hz7-qku8ZNVPw6L9nBJOZA). Dump any asset with a market value implying a steep loss in the HTM books, and the loss is "gone". However, this trick has two significant weaknesses: 1 - If you are forced to sell the underwater assets in HTM books before maturity, then the loss turns from "paper" into "real". 2 - If the asset matures, hence ceases to be eligible for HTM accounting, and the principal isn't repaid in full, then the paper loss becomes a real one again. In 2023, the FED took care of the first weakness with the #BTFP (non-bailout 😉) that effectively allowed banks in liquidity crisis to borrow against the nominal value of their US Treasuries rather than the market one, dodging a forced selling that would have likely triggered a domino of regional bank bankruptcies. As I explained in a post almost 3 months ago (https://x.com/dariocpx/status/1714455707003830741?s=46&t=Hz7-qku8ZNVPw6L9nBJOZA), big banks too are benefiting from the #BTFP, which is why the only scenario in which this program isn't extended this coming March is the one where the #FED led by Jerome Burns goes totally out of its mind. 🙄 The second weakness, greatly ignored by #FOMO #stocks investors, not only is about to become a major issue but is also a problem that the #FED and other Central Banks cannot tackle, avoiding the "bailout" shame. Good luck putting together another official financial system bailout in a big election year, not only in the #US but also in other G7 countries like #Japan and the #UK. ⚠️ BEWARE - #FED CUTTING RATES DOESN'T FIX A BORROWER'S INSOLVENCY PROBLEM BECAUSE ITS PROBLEM IS NOT THE COST OF *FUTURE* DEBT BUT THE DEBT *ALREADY* ACCUMULATED. In 2024, you will have the US Treasury Department competing in the open market to raise Trillions of $USD (https://x.com/dariocpx/status/1723825931503194398?s=46&t=Hz7-qku8ZNVPw6L9nBJOZA), at the same time when 5+ Trillion $USD [Picture 1] of private corporate debt (bond + loans) matures, and, as if this wasn't already enough, a lot of this private debt is going to be impossible to refinance because no one wants to be that last bag holder of a zombie company without the guarantee of a publicly sponsored TARP-like bailout fund. Simplifying all in a sentence: the "hide till maturity" trick is about to hit the (debt) maturity wall, literally speaking. 🫣 Which sector is the one likely to implode first? Commercial Real Estate. The National Bureau of Economic Research estimates just released in December [Picture 2] portray a situation beyond horrible and now hard to ignore for Banks like they did before (post in quote below). According to the NBER, 14.3% of CRE loans are in NEGATIVE EQUITY status. Many of the remaining ones are expected to face cash flow and refinancing issues due to the high Loan-To-Value in place (average 80%) and almost double debt costs in the current interest rate environment. At ~14% default rate, US banks already face more than 100bn$ of losses according to the NBER [Picture 3]. How to solve the issue then if #Fed rate cuts are useless here? The NBER suggests: "A near-term solution could consider a market-based recapitalization of the U.S. banking system" [Picture 4]. Translated: BANKS NEED A BAILOUT 🙄 We know that CRE is only the tip of the iceberg of the financial system problems. Credit Cards debt, buy now pay later consumer loans, student debt, and on and on. The list is pretty long, and none of these issues can be fixed with either a rate cut or money printing because capital is all that matters to sustain credit losses and avoid insolvency materializing into bankruptcy. Perhaps 2024 will be another irrationally exuberant #bullish year for #stocks, but once the party ends, because for sure it will, the “debt hangover” this time around will be brutal.
@DarioCpx - JustDario 🏊♂️
⚠️ #CHINA #STOCKS POTENTIAL DUMP ALERT ⚠️ Very interesting how everyone on @X missed this news 😅 perhaps this explains why the urgent need to pump #stocks with emergency stimmies last week?🤷🏻♂️ Lock-up shares worth around 50.92 billion yuan (about 7.16 billion U.S. dollars) will become eligible for trading on China's bourses this week. From Today to Feb. 2, a total of 4.77 billion lock-up shares will start trading on the Shanghai and Shenzhen stock exchanges
@DarioCpx - JustDario 🏊♂️
#JustDarioDaily ⚠️ #CHINA WANTS INVESTORS AND THEIR MONEY BACK - WILL IT SUCCEED THIS TIME? ⚠️ #China and #HongKong #stocks were literally on the verge of free falling when the "national team" stepped in last week to the rescue. Clearly, the benefits of it were short-lived and yesterday the $HSI closed again below the 15,000 mark. Some #bullish hedge funds that went all-in on #china #stocks in December didn't survive (picture 1), talk about "smart" money… 🥲 I bet the situation must have been very serious for many (particularly leveraged) players out there if the government is stepping in, with its full weight, again. The real question is, will they succeed this time? 🤷🏻♂️ First of all, for all those thinking that ~300bn$ alone can prop up #stocks, put your hopes aside because ~300bn$ is peanuts. 🙄 An outright bid in the market will simply provide exit liquidity to all those big international asset managers that have been busy divesting away from #china (and they won't suddenly U-turn no matter what). However, if ~300bn$ will be capital to support a #TARP-like rescue effort then #china might have a chance to succeed. Here is the problem, #China tried a #TARP-like type of rescue in the past creating national AMCs companies (the top 4 are Cinda, Huarong, Great Wall, and China Orient) to deal with toxic debt from previous cycles. This not only didn't work according to the plans, but it created an even bigger problem that remained unresolved to the point these companies faced a serious liquidity issue in 2022 (Picture 2). What's the real reason the previous experience didn't work? Very simple, you cannot solve debt problems with even more debt in the same way you cannot extinguish a fire using gasoline 🤷🏻♂️ At this point, it should be clear why the market didn't believe the many "stimulus" announcements delivered so far: because every single time the solution proposed was more debt and no capital. The last announcement of this sort was literally 7 days ago 🙈(Picture 3) So what should all the $KWEB and $BABA bulls out there hope for? That these 300bn$ will be real capital. Here is where China can kill 2 🐦 with one 🪨. The Chinese government directly owns a vast amount of non-strategic companies, many of them well managed and profitable. They should consider the brave move of selling them, or at least a significant non-controlling share, to Chinese nationals with the condition they pay the acquisition by repatriating capital they held abroad. The next step would be to then use the 300bn$ raised to create a new vehicle that can issue 600bn$ of debt and buy out from the secondary market bonds and loans stuck in banks' Hold To Maturity books because at a distressed level "mark to market", but still with good chances to be repaid in the future (not necessarily at 100%) at a profit for the government. This will free up a lot of balance sheet and capital from lenders injecting at the same time a ton of liquidity in the system that wasn't printed out of thin air. As a consequence, these lenders will be able to lend money again and this time (hopefully) to creditworthy borrowers rebooting the economy. What's the Achilles heel of all the plan I described above? Banks' capital. Will Chinese banks have enough capital to absorb the losses in their books? In theory, yes, and considering the very low price to book (Picture 4 as an example for Bank of China, CCB, and ICBC #stocks listed in Hong Kong) their #stocks trade this move might well have zero if not positive impact (since it will remove a lot of uncertainty on the value of the remaining assets) on their share prices. Bottom line, if tomorrow the #PBOC will announce another plan to fix debt issues with more debt you can forget about any lasting effect on the country's markets. If the #PBOC will announce a (brave) plan as the one I described, then the country stands a chance to get investors (Chinese first and foreign later) to bring their money back into #China.
@Prolotario1 - Ariel
The Evergrande Liquidation: The Fall Out and Redemption MI6 created the CIA in the 1940s. The CIA controls the government and media. All 3 letter agencies answers to NASA. NASA reports back to Rome. All these intelligence agencies control the DUMBS from the 500 billion a year drug money. There are about 1400+ DUMBS worldwide. All of these DUMBS are financed with drug money and taxes. Guess what ties all of this together? The fiat USD. Guess who no longer uses fiat USD? The Middle East. Guess how many states are now passing bills to make precious metals legal tender? 43+ Once the liquidation of Evergrande starts hedge funds & big banks will collapse. How? Hedge Funds • Hedge funds with invested capital in Evergrande bonds, derivatives, or other financial instruments would face significant losses upon liquidation. This could lead to write-downs, impacting their performance and potentially triggering margin calls, forcing further asset sales. • Increased uncertainty around Evergrande's situation and the potential market contagion can lead to volatile trading conditions, impacting hedge funds' strategies and returns. • Some hedge funds specializing in distressed debt or turnarounds might see opportunities in acquiring Evergrande's assets at discounted prices, leading to potential gains later. Big Banks Regulatory scrutiny. Increased attention and potential regulatory investigations following Evergrande's collapse could lead to stricter lending requirements and financial regulations for big banks. Interconnectedness. The complex web of financial linkages between Evergrande and other institutions could amplify losses beyond the initial exposure. This could impact banks' liquidity and risk appetite Loan exposure. Major banks with significant loan exposure to Evergrande could face impairment charges and reduced profits if the company defaults. This can impact their capital ratios and potential lending capacity. Remember all of this is connected. From underground to the surface. You want new government? You want new banking system? You want new technology? You want new medical system? You want a new educational system? Guess what? You will not receive none of this until Evergrande defaults. Until the hedge funds default. Until the big banks default. Why? Because all of this is propped up by the fiat USD. Do you know what these financial institutions would have to do in order to open banks accounts with Basel 3 & ISO-20022 Compliant banks? They would have to prove the money is Clean & Clear. Which is something they will not be able to do. They will not be able to wash the money by money laundering and setting up fronts by using profit margins on inventory sheets that do not match the profit the business made. This is what the mafia used to do in the casinos. What will the banks try to attempt to prop up the market to survive Evergrande liquidation? Coordinated Buybacks: Major banks might collaborate to buy back Evergrande debt or related financial instruments in the secondary market. This could help stabilize prices and prevent a complete meltdown. However, this strategy requires significant financial resources and coordination. But where will they get the money? Asset Restructuring: Big banks might propose restructuring agreements with Evergrande, potentially involving debt-to-equity swaps, asset sales, or extensions on loan repayments. This could provide the company with temporary relief and avoid immediate liquidation, but it would come at the cost of diluting existing shareholder value and increasing bank exposure. Remember, the banks that will be affected by this are those that are not Basel 3 or ISO-20022 Compliant. They do not possess enough capital to survive another economic downturn that will happen as a result of Evergrande liquidation. So what will these banks attempt to do? Confiscate customer deposit in banks. Basically a Bail-Ins. Which will also cause a run on the banks. Which will also cause ATMS to shutdown. Which will also causes credit cards to not work. Which will also cause panic in the market place. People will realize they can not buy food, water, gas, or pay bills. Again once this happens this will be the transition to the new economy. Guess who will bring confidence back in the market once all this chaos ensues? The reinstatement of the Iraq Dinar. Do you see how the White Hats have this set up? They will two worlds with one stone. The underground bases. And the parasitic banks on the surface. All the alphabet agencies will cease to exist. Thus freeing up your government and remove all the blackmail from politics. I know this is all over the place. But this is the gist of what will happen. Why do you think Lindsey Graham wants the bomb Iran so bad? They are panicking big time.
@Prolotario1 - Ariel
In other words Sir Martin Wakefield Jacomb director for the Telegraph newspaper in 1986. He is also connected to MI6 and is involved with laundering MI6 drug money through a bank in England. Again, this is where ISO-20022 comes in. As all money will need to be Clean & Clear. Because ISO us an anti money laundering tool. Do you all see how the underground bases and the surface levels are connected? What ties them together? The fiat USD. Once you take that out of the equation due to the artificial value declining thus making "Real Money" sound again by making precious metals legal tender financial institutions will be stacking up on gold/silver. Not the fiat currency that no longer has value on the international markets. Jacomb was the director of the bank in England in 87 to 95 former head of the CIA William Casey was head of the Council of the media Network ABC. Many insiders refer to the ABC Network as the CIA Network. Something I have been trying to get across to many of you. This goes for most of mainstream news. Especially Fox 10 where Kari Lake worked for 22 years. Now do you see why all of sudden she is getting into politics? She is a Deep State asset. Which is why she took that 2 million secret donation from a company that was not legally registered in Arizona. But you mean to tell me she was sitting on a recording for a year and decided to release it now just to give this public persona that she can not be bought? Everything is connected people. Until the fiat dollar is officially removed we will not see the world we have been waiting to emerge as a result of this empire collapsing. Which will officially commence Monday. Ofcourse the banks will try to prop up the market but things will not work out the way they hope.
@DarioCpx - JustDario 🏊♂️
#JustDarioDaily 🚨WHY #CHINA MARGIN LENDING NIGHTMARE IS A BIG WARNING ⚠️ TO #US AND #EUROPE #STOCKS🚨 As you know, I am currently in mainland #China, so please forgive me if I am going to be extra careful about anything I write until next week 🙏🏻 Yesterday, #China #stocks suddenly started to free fall in what could have turned into a 1987 style crash if it wasn't for circuit breakers and the big support coming from the Chinese "national team". #Stocks indexes only started to bounce back after trading in about 25% of all listed companies in #China was suspended for the day. What could have triggered such panic selling? Last week, I warned about a potential big dump coming for #China #stocks due to the unlock of many controlling shareholders' shares post-IPO (see below) and it looks like that is what triggered Monday's mayhem in Chinese #stocks. In a practice very common in investment banking, many brokers lent money to company founders against their pre-IPO shares as collateral in order to secure the IPO mandate. However, what no one could have expected during the "everything is #bullish" years was that by the time the shares became tradable, all the collateral was underwater. Imagine brokers rushing to sell altogether as fast as possible to cover their margin lending losses in a market that is completely illiquid and you have the perfect recipe for a #stocks disaster. Considering that the selling happened in many #stocks that just IPOed, the crash was more acute because of the already low market cap and razor-thin liquidity. That triggered a chain reaction of margin lending unwinding across the board that only stopped once the circuit breakers were hit one after the other, forcing the selling to stop. As you can see from chart 1 here, not only are there still 1.55 trillion $CNY of margin loans outstanding, but traders (in particular the "Dumb & Dumbers" hedge funds) levered up big time to #BTFD from mid-September till December 2023 while #stocks kept grinding lower. All in all, what you are seeing right now happening between #China and #HongKong is a massive liquidation of #stocks collateral (that looks like far from ending). Now, do you think #China is an isolated case in the world? Of course not! Even if brokers' margin lending eased in western countries since the 2022 peak (see chart 2) and now at about ~400bn $USD in US, in reality, the "indirect" leverage kept growing, fuelling the #stocks bubble. I know I sound like a broken record here (https://x.com/dariocpx/status/1749237911743320418?s=46&t=Hz7-qku8ZNVPw6L9nBJOZA), but clearly, no one out there can still connect the consumer debt dot with $NVDA and other popular retail #stocks out there that keep running against logic and gravity. As I said in the title, what's happening in #China is a big warning to people out there still gambling wildly with borrowed money in both the #US and #Europe. Never forget that bubbles bursting make gains disappear, but debts do remain and, like many of our parents learned the hard way during the Dot-com bust, it can be very hard to recover after that.
@DarioCpx - JustDario 🏊♂️
⚠️ #CHINA #STOCKS POTENTIAL DUMP ALERT ⚠️ Very interesting how everyone on @X missed this news 😅 perhaps this explains why the urgent need to pump #stocks with emergency stimmies last week?🤷🏻♂️ Lock-up shares worth around 50.92 billion yuan (about 7.16 billion U.S. dollars) will become eligible for trading on China's bourses this week. From Today to Feb. 2, a total of 4.77 billion lock-up shares will start trading on the Shanghai and Shenzhen stock exchanges
@DarioCpx - JustDario 🏊♂️
JUST IN: #EVERGRANDE FINED 4.2 $CNY OVER SUSPECTED FRAUDULENT ISSURANCE OF CORPORATE BONDS ⚠️ Few questions here: 1 - How can they pay it 2 - If they can pay what’s left for creditors 3 - How many other companies meets the same criteria….. https://t.co/fjGcBesjJd
@balajis - Balaji
The banking system broke in 2023. They've just been hiding it in plain sight. And it's already far beyond 2008. https://t.co/Uk3yhV4rKH
@StealthQE4 - QE Infinity
The GFC bailout looks like just a blip on the radar vs what the Fed is doing today to support the banks with liquidity via loans/facilities. And we wonder why the market is up. This chart blew me away. https://t.co/AAUQuSgRqU
@peruvian_bull - Peruvian Bull
Banks have half a trillion in unrealized losses and the Fed will print every penny of it if any of the GSIBs actually fail https://t.co/IHjmA3G6bh
@peruvian_bull - Peruvian Bull
Chinese stocks going PARABOLIC, up 21% in 5 days! I already told you why: LIQUIDITY IS EVERYTHING. https://t.co/p4pfOLJ7qo
@MarioNawfal - Mario Nawfal
🚨🇨🇳 CHINA SCRAMBLES TO SAVE VANKE WITH $6.8B BAILOUT China is rushing to bail out China Vanke Co., the country’s second-largest property developer, with 50 billion yuan ($6.8B) to stop it from becoming the next Evergrande-sized disaster. The plan? 20 billion yuan in special bonds to buy up unsold properties and land, plus new bond sales, loans, and asset sales to cover $4.9B in maturing debt. With 982B yuan ($136B) in liabilities and a projected $6.2B loss in 2024, Vanke is now under Shenzhen government control, its CEO and chairman out the door. Moody’s just slapped it with a Caa1 rating, citing weak cash reserves despite stock and bond rallies. If Vanke collapses, it could crash China’s fragile housing market and shake confidence in other state-backed giants. Beijing clearly isn’t letting that happen—at least, not yet. Source: Bloomberg
@CBankingEditor - China Banking News
1/12 The Chinese central bank is unleashing an arsenal of monetary policy measures to deal with Trump-induced economic turmoil. The goals are also to drive Chinese technological innovation and boost lacklustre domestic consumption. A thread (🧵):
@CBankingEditor - China Banking News
2/12 Pan Gongsheng (潘功胜), the governor of the People’s Bank of China (PBOC) - China’s central bank - said the authority would launch 10 key monetary policy measures in the wake of the economic uncertainty unleashed by Donald Trump’s Liberation Day tariffs.
@CBankingEditor - China Banking News
3/12 Pan made the announcement at a press conference held by China’s State Council on 7 May, on the topic of “a raft of financial policies to support stable markets and stable expectations” (一揽子金融政策支持稳市场稳预期).
@CBankingEditor - China Banking News
4/12 The 10 measures run the gamut of monetary policy tools employed by the Chinese central bank, falling under the three categories of: 1. Quantitative policy. 2. Price policy. 3. Structured policy.
@CBankingEditor - China Banking News
5/12 Quantitative policy PBOC’s quantitative policy primarily involves the use of cuts to the required reserve ratio - determining the volume of deposits that commercial banks need to stow with the Chinese central bank. The higher the required reserve ratio, the fewer loans banks can make, while the lower it is, the greater their license to extend credit.
@CBankingEditor - China Banking News
6/12 Out of the 10 monetary policy measures outlined, two fall under the category of quantitative policy: - A 0.5 percentage point cut to the required reserve ratio, which is expected to unleash around 1 trillion yuan in long-term liquidity for the market. - Targeted cuts to the ratio for specific types of financial companies, with the goal of increasing purchases of durable goods.
@CBankingEditor - China Banking News
7/12 Pricing policy For PBOC, pricing policy mainly involves the use of reductions to its policy rates - which are the interest rates for the 7-day reverse repos and medium-term lending facilities (MLF) that serve as the main tools for its open market operations (OMO). Thanks for reading Sign up for free updates read by the World Bank and J.P. Morgan: http://www.chinabankingnews.com. Access a 50% discount on premium subscriptions: https://www.chinabankingnews.com/p/access-critical-intelligence-on-chinas
@CBankingEditor - China Banking News
8/12 Pan said three of PBOC’s ten measures would involve the use of monetary policy pricing. - A 0.1 percentage point reduction to PBOC’s policy rate. This in practice means reducing the rate for PBOC’s 7-day reverse repos from 1.5% to 1.4%. PBOC expects the move to drive a 0.1 percentage to the benchmark Loan Prime Rate (LPR). - A larger 0.25 percentage points reduction to the rates for structured monetary policy tools. - The rate on individual home loans made by China’s provident fund will also be reduced by 0.25%.
@CBankingEditor - China Banking News
9/12 Structured policy This will involve improvements to existing structured monetary policy tools that PBOC uses to direct credit to specific areas of the economy.
@CBankingEditor - China Banking News
10/12 It will also involve the creation of new policy tools, with the specific goal of supporting scientific and technological innovation, expanding consumption and shoring up financial access.
@CBankingEditor - China Banking News
11/12 Pan highlighted a total of five measures under the remit of structured policy: - A 300 billion yuan increase in the re-loan quota for science and technology innovations and technological upgrades. This will bring the quota from 500 billion yuan to 800 billion yuan. - The launch of a 500 billion yuan “services consumption and aged-care re-loan." - Increasing the re-loan quota to support agriculture and small enterprise by 300 billion yuan. - Optimisation of two existing monetary policy tools for supporting China’s capital markets. - The launch of a new bond risk sharing instrument to support science and technology innovation.
@CBankingEditor - China Banking News
12/12 Access the full briefing here: https://www.chinabankingnews.com/p/chinas-central-bank-fires-ten-arrows
@DalyAManagement - Daly Asset Management
$3.7 TRILLION just vanished from China's economy. 30,000 wealthy investors wiped out overnight. The hidden banking system that powered China's rise for 20 years is collapsing. Here's what Wall Street isn't telling you about the coming crash:🧵
@DalyAManagement - Daly Asset Management
Think of shadow banks as China's version of private lending. When regular banks wouldn't lend to risky property developers, these firms stepped in. They raise money from wealthy individuals and pitch: "We'll pay you 10% annually, guaranteed." For over a decade it worked:
@DalyAManagement - Daly Asset Management
China's property boom kept rolling. Developers borrowed billions to build more apartments. Shadow banks collected their fees and paid investors their promised returns. Everyone got rich. Until the music stopped:
@DalyAManagement - Daly Asset Management
The trouble started when China's property market imploded. Evergrande defaulted in 2021. Country Garden followed in 2023. Suddenly, the property developers couldn't repay their shadow bank loans. But shadow banks had already promised returns to millions of investors...
@DalyAManagement - Daly Asset Management
Zhongzhi Enterprise Group was one of China's biggest shadow banks. When investors came asking for their money back, executives discovered a $36 billion hole in the company's accounts. They had $64 billion in promises to investors. Only $28 billion in actual assets.
@DalyAManagement - Daly Asset Management
Zhongzhi had been using new investor money to pay returns to existing investors. Classic Ponzi scheme mechanics. In January 2024, the company filed for bankruptcy. 30,000 wealthy investors faced total wipeout.
@DalyAManagement - Daly Asset Management
Most people assumed Zhongzhi was a one-off disaster. Wrong. April 2025: Zhongrong International Trust, managing $108 billion, was declared insolvent. April 2025: State-owned AVIC Trust sought emergency help after missing payments. The worst part?
@DalyAManagement - Daly Asset Management
China's shadow banking sector manages $3.7 trillion. That's larger than the entire German economy. The funding mechanism that powered decades of Chinese growth is breaking down. But why is this a problem?
@DalyAManagement - Daly Asset Management
China is 20% of world GDP. If Chinese companies can't access the funding they need to grow, global demand for everything from commodities to consumer goods will crater. The ripple effects are just beginning. And think about what this means for your portfolio...
@DalyAManagement - Daly Asset Management
China's shadow banking system was the hidden engine funding the country's growth miracle. Property developers, local governments, and private companies all relied on shadow bank funding. Now that engine is breaking down permanently.
@DalyAManagement - Daly Asset Management
Beijing's response reveals how serious this is. They're refusing to bail out shadow banks. Government officials are telling wealthy investors: "You knew the risks." Translation: The Communist Party is willing to let China's elite lose trillions to avoid moral hazard.
@DalyAManagement - Daly Asset Management
Smart investors recognize this as a systematic wealth transfer. Money is moving from overleveraged shadow banks to cash-rich institutions that can acquire distressed assets. The question: Are you positioned for China's financial restructuring?
@DalyAManagement - Daly Asset Management
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@DalyAManagement - Daly Asset Management
If you found this helpful consider: - RTing the tweet below - Following me @DalyAManagement Thanks for reading.
@DalyAManagement - Daly Asset Management
$3.7 TRILLION just vanished from China's economy. 30,000 wealthy investors wiped out overnight. The hidden banking system that powered China's rise for 20 years is collapsing. Here's what Wall Street isn't telling you about the coming crash:🧵 https://t.co/CYT6uESR5d
@MarioNawfal - Mario Nawfal
🇨🇳 CHINA'S ECONOMY IS EATING ITSELF ALIVE AND XI WON'T ADMIT WHY Most countries worry about prices being too high. China has the opposite problem: prices are too low, and it's destroying the economy from within. Welcome to "involution," the economic death spiral where companies slash prices to gain market share, forcing everyone else to do the same. The result? Nobody gains market share, but everyone's profits collapse. You can now buy a BYD Seagull electric car for under $8,000. Sounds great until you realize why. There are 130 domestic car companies battling for survival. Solar panels and lithium batteries are in massive oversupply. Companies are fighting to the death because many were nurtured by local governments who backed too many players in the same industries. As profits crater, wages stall and jobs disappear. Cheap prices aren't a win when nobody can afford to buy anything. China faced this before a decade ago with steel and coal. The government simply shut down excess capacity. Problem solved. But this time it's trickier. The companies are privately owned, operate in high-tech sectors with shiny new facilities, and Xi Jinping is ideologically committed to China as a manufacturing powerhouse. The obvious solution? Boost demand, not curb supply. But that would require admitting the manufacturing obsession has limits. And Xi doesn't do introspection. Source: The Economist
@MarioNawfal - Mario Nawfal
🇨🇳 CHINA’S INNOVATION MIRACLE - BUILT ON WASTE AND WIFI Beijing can build anything... except productivity. Xi’s trillion-yuan industrial blitz turned China into the factory of the future: EVs, chips, quantum, AI - pick your acronym, they lead it. Yet the economy’s engine? Stalled. Total factor productivity has flatlined. For every BYD, there are a dozen zombie firms sucking subsidies. The state funds tech titans and their failures - like Silicon Valley without the exits. Industrial policy worked too well: every province builds the same factories, hoards the same talent, protects the same losers. It’s innovation by committee - impressive, unprofitable, unstoppable. The paradox: China can manufacture progress, but not efficiency. Tech grows; output doesn’t. Power shifts; value fades. Xi’s empire can mint billionaires and breakthroughs... just not productivity. Source: FT
@Tweet137188103 - The Individual
Massive over supply This is why centrally planned economies fail The market would stop a lot of the excess mfg. But their central government keeps it all producing Lower and lower prices are what you get. Deflation spiral, this a known phenomenon in the finance world and it’s not good
@NotOpCue - Not Op Cue
What Happened (@BillClinton) 9/11? 6000 Patents? Free Energy? Debt Forgiveness? USA Inc. Bankrupt In 2020! #GESARA #MedBeds #QFS Developing Revelations: The Bountiful #NESARA (National Economic Security & Reformation Act) https://humorousmathematics.com/post/developing-revelations-the-bountiful-nesara-national-economic-security-reformation-act https://link-tube.com/OperationQ
