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The Big One is Coming 5/4/23

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The tectonic plates of the financial sphere are heaving. The fault lines are growing. Fissures are widening. Cracks are spreading. The pressure is growing in the substrata, and magma is boiling to the surface here and there, and there, and there.

The big one is coming. A financial earthquake the likes of which the world hasn’t seen in 96 years. We know where the epicenter will be. It will be on Wall Street. We just don’t know when. But the time is growing shorter. Non-subscribers, click here for access.

Subscribers, click here to download the report.

We can study the underlying forces, but the best meters of the building pressures are the markets themselves, both bonds and stocks. As lenders become increasingly panicked, they will call in their lines. Borrowers, highly leveraged dealers, banks, and hedge funds will be forced to liquidate. The quake will be upon us in an instant. Non-subscribers, click here for access.

We saw all this developing more than a year ago. It was simply a matter of paying attention to the Fed’s Primary Dealer data and its banking system data. There was absolutely no mystery, and no doubt that it was coming. Non-subscribers, click here for access.

I pointed out in April of last year that the Fed had decided to stop publishing the banks’ unrealized losses on for sale securities. Whenever the Fed stops publishing a line of data that it could easily continue to publish there’s only one reason. They don’t want us to see it anymore. Non-subscribers, click here for access.

But it was already out there, and we used it to extrapolate the losses to the vast bulk of their securities holdings, where no mark to market is required. We recognized then that the system was insolvent, that if the banks were forced to sell their assets, they would be equally forced to recognize losses. I warned that that could result in contagion. Non-subscribers, click here for access.

If anything, at the time, I wasn’t worried enough about just how bad this could become. I wasn’t thinking about bank runs, particularly online instaruns. Now, I am. Because there’s nothing to stop these instant bank runs. Large depositors who are not covered by deposit insurance can, and do, move all their money in an instant when they smell trouble. The contagion is starting and there’s nothing the Fed or the Treasury can do to stop a serial meltdown. Non-subscribers, click here for access.

The markets have been remarkably sanguine about all this. But that that is in the process of changing. The debt ceiling is causing distortion right now as institutions shift the funds out of the durations where the greatest risk of default is perceived, and into those seen as less risky.
Non-subscribers, click here for access.

Subscribers, click here to download the report.

KNOW WHAT’S HAPPENING NOW, before the Street does, read Lee Adler’s Liquidity Trader risk free for 90 days! Act on real-time reality! 

 

As for the intraday look, the ES, 24 hour S&P futures took a little dip yesterday. But alas, the dip buyers have been few and nothing much is happening this morning. While a 5 day cycle projection of 4065 was hit in the after session yesterday evening, downtrend channels remain in force. In fact, there's a new potential crash channel which would be active if they take out 4049 today. I would expect a bounce from there first.  

If they bounce instead, the areas to watch for resistance would be 4095, 4110 and 4120. 

-y4-b

A plus tard et bonne journee! 

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Thank you Doc.

I find it interesting that we have only one response so far.

i'm currently long stocks so i take that as a very bad sign.

Having fun with gold though.  Hope you all are too.

 

 

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THE CENTRE CANNOT HOLD

The only thing to stop the bank rot now (and probably only temporarily) is for the FED to print 2 trillion and basically introduce TARP 2.0 to recapitalize the banks.

i.e. a PIVOT

Probably through a preference share issue. 

Longer term the US Government needs to balance their budget at the same time. 

Of course the 2 trillion print will crash the dollar.

Asset prices were doomed as soon as the FED stopped printing in April 2022.

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As I exit stage left I'm going to drop this...

1407749641_BearInstructionManual-4.0-May42023.jpg.fa08d9ba5e2d3895be2691e5f0ba3222.jpg

I added key short term support levels in the SPX and the metals.  I sense a change in the latter, be on your toes.  Also had to revise the XOI for the 3rd time!  I looked over that chart good...if you slice through 1600, then I do believe 1400 will hold for a time.

Best of luck to everyone...I'll see you sometime down the road.

The CoinGuy

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