DrStool Posted June 5, 2020 Author Report Share Posted June 5, 2020 23 minutes ago, potatohead said: I agree with you. In a financially overleveraged economy dependent on zero/low rates, a true move up in interest rates will put a lot of pressure on the real estate and construction sector which has been the main driver in many local economies. The housing market is headed for collapse, and the commercial RE market is already a catastrophe even without higher rates. Those are systemic economic problems that won't go away. The immediate problem for the financial market a far larger one. As it was in 2008, it's the Primary Dealers. They're on the hook again. Link to comment Share on other sites More sharing options...
Jorma Posted June 5, 2020 Report Share Posted June 5, 2020 The Fed isn't the only one with a rate problem. The PBOC has exactly the some problem. Well I have no clue about the leverage of the holders. https://asiatimes.com/2020/06/as-china-bonds-slump-yuan-strengthens/ Link to comment Share on other sites More sharing options...
aussiebear Posted June 5, 2020 Report Share Posted June 5, 2020 Life is slowly returning to normal here. Businesses are reopening, leisure centre is up and running (yay). The only covid cases we're getting in Western Australia are those people returning from overseas and they go into immediate hotel quarantine. We've run out of contaminated cruise ships but there was recently a livestock carrier with a stricken crew from the middle east. State borders are still closed and will remain that way for some time I suspect. Link to comment Share on other sites More sharing options...
DrStool Posted June 6, 2020 Author Report Share Posted June 6, 2020 I have repaired the board's email function, which apparently hasn't been working for the past 8-9 years. LOL Link to comment Share on other sites More sharing options...
Jorma Posted June 6, 2020 Report Share Posted June 6, 2020 Well here is one source for the money flowing into stocks. Taking this story at face value. In the span of two months, US$40 billion in reserves have been transferred to the kingdom’s Public Investment Fund (PIF), according to the government. https://asiatimes.com/2020/06/saudi-dips-into-reserves-for-stock-buying-spree/ Link to comment Share on other sites More sharing options...
DrStool Posted June 6, 2020 Author Report Share Posted June 6, 2020 The ECB's money also flows to Wall Street. Your a peein' banks can't get positive yields at home, so they buy US paper. That's a big problem when the bond market turns to shit. I kinda suspect China is a seller. Although that would be a little cutting off their nose to spite their face. I suppose it depends on their acquisition prices though. Link to comment Share on other sites More sharing options...
fxfox Posted June 6, 2020 Report Share Posted June 6, 2020 6 hours ago, DrStool said: The ECB's money also flows to Wall Street. Your a peein' banks can't get positive yields at home, so they buy US paper. That's a big problem when the bond market turns to shit. I kinda suspect China is a seller. Although that would be a little cutting off their nose to spite their face. I suppose it depends on their acquisition prices though. If EUR/USD rises European investors lose. So that would be a double whopper: You lose cause the asset goes down AND you lose cause the asset is priced in USD. I‘m not sure if everyone get‘s it: If the USD goes down USD priced assets get LESS attractive for investors outside the US. If Apple goes up 10% ut EUR/USD goes up 10% too, an European investors makes exactly ZERO. A falling USD is perceived as „risk-on“. In the circumstances we are right now I think it is in fact the perfect setup for a major clusterfuck. There will be less capital inflows from outside the US. Who will buy the bonds? I posted a long term monthly chart of the Bund Future the other day: I think it is quite likely it made a MAJOR top. That means the low for rates in Germany are in. The whales - conservative minded mega big issurance companies for example - will suqeeze the CB‘s and force them finally to hike rates. And then all hell will break lose. Link to comment Share on other sites More sharing options...
jp6 Posted June 6, 2020 Report Share Posted June 6, 2020 Here is a Long term Charts. I just don't think it can break out from channel drawn (1929 and 2000 top) Only thing it's very weak compare to S&P Link to comment Share on other sites More sharing options...
jp6 Posted June 6, 2020 Report Share Posted June 6, 2020 55 minutes ago, fxfox said: If EUR/USD rises European investors lose. So that would be a double whopper: You lose cause the asset goes down AND you lose cause the asset is priced in USD. I‘m not sure if everyone get‘s it: If the USD goes down USD priced assets get LESS attractive for investors outside the US. If Apple goes up 10% ut EUR/USD goes up 10% too, an European investors makes exactly ZERO. A falling USD is perceived as „risk-on“. In the circumstances we are right now I think it is in fact the perfect setup for a major clusterfuck. There will be less capital inflows from outside the US. Who will buy the bonds? I posted a long term monthly chart of the Bund Future the other day: I think it is quite likely it made a MAJOR top. That means the low for rates in Germany are in. The whales - conservative minded mega big issurance companies for example - will suqeeze the CB‘s and force them finally to hike rates. And then all hell will break lose. Most pro have currency insurance. I heard that Dollar Insurance is expensive so doesn't pay to invest in US Bond. Link to comment Share on other sites More sharing options...
fxfox Posted June 6, 2020 Report Share Posted June 6, 2020 3 minutes ago, jp6 said: Most pro have currency insurance. I heard that Dollar Insurance is expensive so doesn't pay to invest in US Bond. Yep. Hedging is expensive. Banks and such do it mainly because of risk controlling reasons, auditors demand it. For example you have exposure in an exotic currency you deal a NDF and set a FX Swap against it as a hedge. That costs. I‘m not sure, but it could be that for example most German insurerers are not allowed to buy bonds in foreign currency, simply because of risk tolerance reasons. Link to comment Share on other sites More sharing options...
fxfox Posted June 6, 2020 Report Share Posted June 6, 2020 Next friday is OpEx. The robinhooders are long. They will get shaved. The hard way. With an old, rusty, blunt knife. Link to comment Share on other sites More sharing options...
jp6 Posted June 6, 2020 Report Share Posted June 6, 2020 31 minutes ago, fxfox said: Next friday is OpEx. The robinhooders are long. They will get shaved. The hard way. With an old, rusty, blunt knife. scam week is from 15th Link to comment Share on other sites More sharing options...
fxfox Posted June 6, 2020 Report Share Posted June 6, 2020 6 minutes ago, jp6 said: scam week is from 15th You are correct: expiry on June 19th. Link to comment Share on other sites More sharing options...
Jorma Posted June 6, 2020 Report Share Posted June 6, 2020 The powers that be would like nothing better than for the call buyers to win big. MAGA. Punishments for bullish punters have been few and far between for years. Back in the day the ease of slighter was irresistible to the street but now I think they are pulling those punches for the greater good. Always upwards. Link to comment Share on other sites More sharing options...
jp6 Posted June 7, 2020 Report Share Posted June 7, 2020 Shorts are still looking for new lows.. Link to comment Share on other sites More sharing options...
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