Hi readers
It's amazing to see how everyone is so divided in there beliefs, when it comes to how the Fed is pumping money into the financial system.
Problem we have is that the banks are moving that money straight back into the Fed, equaling a zero sums game.
How this is playing out.
First of all Fed doesn't buy Stock's.
Stocks are propped up by leverage debt or margin debt.
2008 mark 2 is playing out to a tee.
So banks are packaging up loans and moving them over to the mortgage brokers who are then selling the debt to the Fed as mortgage back securities.
Banks this time around are keeping an arms length, but its the same shit different smell as they say.
Investment banks have started calling in Margin loans and while they are first calling in professional money the retail money will be at the tail end.
How it works?
Say a hedge fund or a family fund who has invested $500 million through the investment bank.
The investment bank then offers a margin facility to that fund of $400 million.
So then if you do that to say 5000, clients then you can see how the market makes new highs.
Now a fund I know runs $69 billion has a margin facility of $50 billion, has been asked to close out his margin facility and has continued to closed out positions in his fund. Others also who are smaller have been told the same to reduce there margin debt and consider there portfolio.
End of this week free money finishes in the United States, loans will need to start being paid. So property investors will need to find money to pay those mortgages.
Renters will have one more month of grace before they need to start paying rents again, and as for the deferrals which are outstanding well it will be interesting to see.
The investments banks came out some weeks ago warning of trouble ahead but people follow price and charts and didn't take what they said seriously.
That was more of a warning to the professionals to start liquidating slowly, as not to stop the train. Little do I know that it takes a good couple week to liquidate positions and not move the market.
So lets see what plays out of the next 6 weeks.
In regards to the Crypto market I only hold my STMX and 24,000 EWT which are long term the rest I washed out.
As for commodities grains prices are very strong for this time of year while metals are doing nothing as expected.Lumber has collapsed and oil is holding its gains well.
The biggest use for gold is jewellery, wedding and last I checked not many have been occurring but production is continuing, anticipate gold to fall
The above is based of astrological aspects
