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DrStool

The Hourly Chart is Bullish... What Else Is New? 7/17/20

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11 hours ago, DrStool said:

Ultimately, this will precipitate another crash. 

What will the Fed do then, if the propensity of the banks is to use the central bank money to pay down its debts. We don't know because it have never happened before, but my guess is systemic collapse, everybody goes broke, and somehow we start over from scratch, with the likelihood of an intervening dark age.  

You might add that „ultimately“ could mean „a long way off“ or „in decades“. There is quite a amount of stock market observers which don‘t understand the behaviour of the stock market since 1995 anymore. That‘s 25 years and roughly the complete investing circle of an individual. Not to be invested in stocks since 1995 means financial death.

What happened in March was in my view a gigantic bailout of Blackrock and Vanguard. They have become so systemic via the 401k mechanism due to ETFs and such that we have surpassed the point since years where it could be allowed that they fail. Even if Blackrock and Vanguard would be the biggest debitors in the world they would never have to pay it back. If they had to, the world would collapse, cause the complete (upper—) middle class of western societies would lose all its retirement savings.

The mistake was to let become Vanguard and Blackrock become so systemic. Now it is too late. Although I think it was not his intention, but John Bogle created a monster. We all have to live with the unintended consequences.

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There's no factual basis for your argument. 

And no. I don't mean decades. The evidence of deleveraging is appearing now. At this point, I would call it hints, but it's real, and if it continues in this direction, it won't take long.  October has a nice ring to it, but could be September, or it might not happen at all. My job is to watch the data and report what I see. That's what I do.  

There are hints that the big boys are beginning to delever.

I'll be posting a US banking  update later today. This is from a couple weeks back: 

Primary Dealers Deleverage and Grow Cautious

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Sometimes our job calls for us to speculate on what might happen.  We want to be ready for anything. But the speculation is always based on evidence. There has to be a fact that plants the seed. Otherwise, it's a mindless waste of time.  

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