Toppy Tuesday – Again? – Phil Davis
Today I can take the day off because we’re there again, back to S&P 3,900 with Dow 31,500, Nasdaq 13,250 and Russell 2,270 all down from their previous two on Tuesday. Why Tuesday? Because the Monday markets are very low volume and easy to handle with mergers and acquisitions rumors and upgrades from analysts as well as the Happy Talk government and, of course, a healthy dose of 401K deposits from the Friday payroll..
This allows “THEM“to profit on a weekly basis and overburden long-term savers for their positions as they trickle down their retirement accounts. In fact, Randers pointed out last week that the weekend’s performance of the S&P 500 (when nobody negotiates) accounted for about 25% of all earnings over the past 10 years.
Even “better”, overnight trading (when no one is watching) accounted for OVER 50% of total market gains. So nights and weekends are where all the real money is made, apparently.
This is why short selling on Tuesday has been a good thing for us – on Tuesday people trade and when there is volume in the market it usually goes down because there is not much. real buyers – certainly not at these high prices! Guo Shuquing agrees with me and he is the boss of the Communist Party at the People’s Bank of China. Guo (Last name) said this morning: “We are really worried that the foreign financial asset bubble will one day burst“Guo is also chairman of the China Banking and Insurance Regulatory Commission – sort of right-wing Elizabeth Warren..
Investors, hedge fund managers and former central bank officials have also expressed concerns, as Wall Street trades near record highs even as the United States continues to grapple with the effects of the coronavirus pandemic . Guo echoed those fears, adding that the twists and turns in the US and European markets do not reflect the underlying economic challenges the two regions face as they attempt to recover from the brutal pandemic recession.
Guo’s remarks rocked markets in the region. The Shanghai Composite (SHCOM) and Hong Kong’s Hang Seng Index (HSI) were both trending higher ahead of Guo’s speech, building on the Wall Street rally on Monday. But the two indexes reversed their course soon after. The Shanghai benchmark fell 1.2%, while the Hang Seng fell 1.3%. Of course, it was Tuesday for them too!
Mr. Guo’s main concern was the possibility of a sharp drop in house prices in the world’s second-largest economy. Over the past decades, buy an apartment in a big city is considered a foolproof investment by many Chinese. According to calculations based on central bank data, about a fifth of Chinese banks’ lending books are home loans. And most bank loans in China – even beyond the housing market – are secured by real estate, which makes stable house prices a foundation for the country’s financial stability. Chinese banks had 3.02 trillion yuan, or $ 470 billion, in bad debt last year and a total of 8.8 trillion yuan between 2017 and 2020, roughly the equivalent of the total. of the previous 12 years combined.
You think we don’t have these problems in the United States but, a year later, where did $ 9 TRILLION in Fed money go? Our own Fed has very quietly bailed out our own banks, and they are doing so without any oversight from Congress. Starting September 17, 2019 – months before a case of COVID-19 was reported globally – the Federal Reserve turned its money tap on to Wall Street trading houses. On October 23, 2019, the Fed announced it was increasing these loans to $ 690 billion PER WEEK. Again, that was months before any COVID-19 report anywhere in the world.
Within six months, the Fed had made a total of $ 9 trillion in loans to Wall Street trading houses, according to its own spreadsheets, without knowing which Wall Street companies were getting most of that money. . It’s over a year later and Americans still have no idea what triggered this so-called “repo credit crisis” or which Wall Street companies were in trouble or remain in trouble.
The only difference is that we don’t have Communist Party Presidents honest enough to warn us that there is a crisis, do we?
- The Federal Reserve, as usual, has outsourced this money tap to the New York Fed, which is literally owned by some of the biggest banks on Wall Street. We wrote back when the New York Fed was making these massive repo loans that this action was unprecedented in Federal Reserve history for the following reasons:
- No Wall Street crisis has been announced to the public to explain these massive loans and cash buybacks;
- Not a single hearing has been held by Congress on the matter;
- No official elected by the American people authorized these loans;
- The loans are not made to commercial banks (which could lend money again to stimulate the US economy). The loans go to the New York Fed’s primary traders, which are Wall Street equity and bond trading houses that count hedge funds among their biggest borrowers; (See the list below. There is only one bank among the 24 primary dealers.)
- Most of the primary dealers are units of foreign banks whose share prices are in free fall. The Fed grants these loans at an interest rate of around 2% – an interest rate that these companies could hardly get on the open market;
- These same foreign banks are counterparties to the derivative transactions of US mega banks – suggesting that this is yet another bailout from the derivatives mess on Wall Street, like in 2008;
- The Dodd-Frank Financial Reform Act of 2010 was supposed to curb this exact type of abuse by the New York Fed and, in effect, it states that Congress must be informed of which banks are receiving the money to be sure he’s not. , once again, to bankrupt financial institutions as in the last crisis;
- The Government Accountability Office (GAO), when published its audit Fed bailouts from 2007 to 2010 berated the Fed for failing to document the reasons it was throwing billions of dollars at Wall Street and foreign banks. The GAO report notwithstanding, the New York Fed is back to its old tricks;
- The New York Fed is owned by its member banks in its region. Representatives of these banks sit on its board of directors. It is therefore too confrontational to be in charge of this rescue money tap which is ultimately supported by the US taxpayer in the event of the New York Fed defaulting;
- The New York Fed is the regulator of the largest bank holdings in the United States. But his failure as a regulator is why those same banks had to be bailed out in 2008 and, apparently, again now. This system has no semblance of checks and balances;
- The parent organizations of five of its major merchants have admitted criminal charges brought by the US Department of Justice for fraud against the investing public. Bailing out Wall Street criminals and businesses with serial stories of wrongdoing perpetuates moral hazard and, therefore, more wrongdoing and bailouts.
The House Financial Services Committee announced it will hold a hearing on March 23 titled: “Monitoring Treasury Department and Federal Reserve Pandemic Response.”