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Late Start for Market Rollover 8/26/22

DrStool

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fxfox Dean of Stock Proctology

fxfox

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Speaking about someone who is really effed: Madame La Guardia.

The FED can handle it somewhat, but the ECB… is absolutely trapped. Once it lost the path of old Buba policy that was the beginning of the end. Now the Club Med has taken over and will lead Europe into the abyss.

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DrStool Dean of Stock Proctology

DrStool

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6 minutes ago, fxfox said:

Speaking about someone who is really effed: Madame La Guardia.

The FED can handle it somewhat, but the ECB… is absolutely trapped. Once it lost the path of old Buba policy that was the beginning of the end. Now the Club Med has taken over and will lead Europe into the abyss.

The dollar is king. With the Fed doubling QT next week, it will rise faster, and the consumer inflation numbers should start to come down pretty fast as it does.

But it will take months. Asset prices will lead the disinflation of consumption goods and services by deflating outright at a rapid pace. This will get the Fed's desired result of bringing down CPI and PCP.  It will also crash the economy, explode the deficit and bring a tsunami of new Treasury supply that will crush bond prices and send yields through the roof. By the time the Fed resumes QE, it will be too late for leveraged longs in stocks and bonds. 

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PullMyFinger Bachelor of Stock Proctology

PullMyFinger

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4 minutes ago, DrStool said:

The dollar is king. With the Fed doubling QT next week, it will rise faster, and the consumer inflation numbers should start to come down pretty fast as it does.

But it will take months. Asset prices will lead the disinflation of consumption goods and services by deflating outright at a rapid pace. This will get the Fed's desired result of bringing down CPI and PCP.  It will also crash the economy, explode the deficit and bring a tsunami of new Treasury supply that will crush bond prices and send yields through the roof. By the time the Fed resumes QE, it will be too late for leveraged longs in stocks and bonds. 

What about any emerging market countries that issued debt in dollars rather than their home currencies? Seems that a surging dollar makes those debts a lot more expensive. So we may want to throw in some defaults and civil unrest into the mix as well. 

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fxfox Dean of Stock Proctology

fxfox

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2 minutes ago, PullMyFinger said:

What about any emerging market countries that issued debt in dollars rather than their home currencies? Seems that a surging dollar makes those debts a lot more expensive. So we may want to throw in some defaults and civil unrest into the mix as well. 

EM‘s are ABSOLUTELY effed. Sri Lanka was only the beginning.

The US will come out of it ok or lets say „so la la“, but EM‘s and Europe… oh my. If this all goes long enough the whole concept of the European Union comes under stress and threat to break up.

See Germany: We are speaking about a highly industrialized country which will maybe not have enough electricity in the conning winter. That‘s what happens when you vote former Maoists aka The Green Khmer into office.

 

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