Stock Market Collapse Starts Tomorrow

[Brian4Liberty]

Fauci keeping monkees now I take it .

The secret is, Fauci himself is a monkey.

[Pauls' Revere]

It doesn't make me wonder at all. My GME-related research has essentially confirmed how the markets are rigged. Citadel, for example, routes orders to their dark pool at the press of a button. Doing that means the dark pool routed order flow never registers on the lit market indexes. It's like the orders never happened, from an index price or single symbol movement perspective. Then, the NYFed trading desk (biggest whale in existence) dips into the ESF and uses the taxpayer money in it to buy huge chunks of index futures and whatever else is on the menu. Of course those purchases are routed to the lit markets, which signals everyone else's algos to follow suit. It's how you get ridiculous ramps like yesterday. On the other hand, the NYFed has to sell those purchases back into the market (they don't engage in buy and hold generally, except for 13(3) SPV and QE/MBS stuff, only plunge protection measures, perception games and FOMC policy) which exasperates market reactions like today as they sell yesterday's ramp back into the markets. It's really quite simple though it happens at the speed of light.

Yep.

[Pauls' Revere]

The Fed's $2.7 trillion mortgage problem

https://www.axios.com/2022/05/18/fed-mortgage-portfolio

If you took out a mortgage over the last couple of years, there's a good chance the holder of that loan is America's central bank — a consequence of its monetary stimulus efforts throughout the pandemic.

Why it matters: The Fed will face a series of political and economic headaches as it attempts to move away from subsidizing home lending by shrinking its portfolio of mortgage-backed securities.

The problem: Extracting itself from this market risks crashing the housing industry and creating intense political blowback for incurring financial losses.
By the numbers: Back in February 2020, the Fed owned $1.4 trillion in mortgage-backed securities, and the number was falling rapidly. But when the pandemic took hold, the central bank began a new round of bond purchases (known as "quantitative easing"), swelling that number to $2.7 trillion.

The policy contributed to ultra-low mortgage rates that stimulated home buying and refinancing activity until recently.
State of play: Now, as the Fed seeks to tighten monetary policy to combat inflation, it wants to shrink that portfolio. It may turn out to be easier said than done.

The Fed says that by September it will reduce the mortgage portfolio by up to $35 billion per month. Emphasis on "up to."
In fact, the numbers will probably undershoot that.

The reason: For now, the Fed is just looking to let its holdings shrink as securities get paid off. But with mortgage rates way up in recent months, people have little incentive to sell their home or refinance a mortgage — so these mortgages are likely stay on the Fed's books longer.
That will leave the Fed with unappealing options. It could simply accept that it will continue to have an outsized role in the housing market and a bigger balance sheet than it might prefer.

Or it could begin selling the securities on the open market — a possibility that the minutes of its March policy meeting said could happen down the road.
What they're saying: "Let's get the program we've got underway and up to speed, but then once we've got it underway, I think it'll be worth taking a look at what is happening to the mortgage-backed [securities] on our balance sheet," Thomas Barkin, president of the Federal Reserve Bank of Richmond, tells Axios.

"I'm certainly open to a targeted and disciplined way to sell into the market if we're not headed toward the primarily Treasury balance sheet that we've said we want," he said.
Yes, but: That will create its own problems. If the Fed sells mortgage securities that pay low rates at a time when prevailing rates are much higher, it will incur big financial losses that reduce the funds the central bank returns to the Treasury.

In that scenario, expect officials to face tough questions from Capitol Hill to explain why they've lost billions of dollars on behalf of the American people.
Plus, the selling would likely push mortgage rates up further, at a time the housing industry is already starting to groan under the pressure of rising rates. Homebuilders, real estate agents, and other influential industry groups will make their unhappiness known to elected officials.
The bottom line: The Fed's pandemic actions fueled a housing boom. As it tries to withdraw that support, it could be bad news for housing — and the Fed's standing on Capitol Hill.

[Madison320]

The Fed's $2.7 trillion mortgage problem

https://www.axios.com/2022/05/18/fed-mortgage-portfolio

If you took out a mortgage over the last couple of years, there's a good chance the holder of that loan is America's central bank — a consequence of its monetary stimulus efforts throughout the pandemic.

Why it matters: The Fed will face a series of political and economic headaches as it attempts to move away from subsidizing home lending by shrinking its portfolio of mortgage-backed securities.

The problem: Extracting itself from this market risks crashing the housing industry and creating intense political blowback for incurring financial losses.
By the numbers: Back in February 2020, the Fed owned $1.4 trillion in mortgage-backed securities, and the number was falling rapidly. But when the pandemic took hold, the central bank began a new round of bond purchases (known as "quantitative easing"), swelling that number to $2.7 trillion.

The policy contributed to ultra-low mortgage rates that stimulated home buying and refinancing activity until recently.
State of play: Now, as the Fed seeks to tighten monetary policy to combat inflation, it wants to shrink that portfolio. It may turn out to be easier said than done.

The Fed says that by September it will reduce the mortgage portfolio by up to $35 billion per month. Emphasis on "up to."
In fact, the numbers will probably undershoot that.

The reason: For now, the Fed is just looking to let its holdings shrink as securities get paid off. But with mortgage rates way up in recent months, people have little incentive to sell their home or refinance a mortgage — so these mortgages are likely stay on the Fed's books longer.
That will leave the Fed with unappealing options. It could simply accept that it will continue to have an outsized role in the housing market and a bigger balance sheet than it might prefer.

Or it could begin selling the securities on the open market — a possibility that the minutes of its March policy meeting said could happen down the road.
What they're saying: "Let's get the program we've got underway and up to speed, but then once we've got it underway, I think it'll be worth taking a look at what is happening to the mortgage-backed [securities] on our balance sheet," Thomas Barkin, president of the Federal Reserve Bank of Richmond, tells Axios.

"I'm certainly open to a targeted and disciplined way to sell into the market if we're not headed toward the primarily Treasury balance sheet that we've said we want," he said.
Yes, but: That will create its own problems. If the Fed sells mortgage securities that pay low rates at a time when prevailing rates are much higher, it will incur big financial losses that reduce the funds the central bank returns to the Treasury.

In that scenario, expect officials to face tough questions from Capitol Hill to explain why they've lost billions of dollars on behalf of the American people.
Plus, the selling would likely push mortgage rates up further, at a time the housing industry is already starting to groan under the pressure of rising rates. Homebuilders, real estate agents, and other influential industry groups will make their unhappiness known to elected officials.
The bottom line: The Fed's pandemic actions fueled a housing boom. As it tries to withdraw that support, it could be bad news for housing — and the Fed's standing on Capitol Hill.

I agree except I don't think the Fed is going to follow thru. The Fed's balance sheet is just under 9 trillion. How much you want to bet it reaches 10 trillion before it reaches 8 trillion?

[oyarde]

Ya , I think the fed lowering the balance sheet wont be much of an attempt for awhile.

[GlennwaldSnowdenAssanged]

The Fed's $2.7 trillion mortgage problem

https://www.axios.com/2022/05/18/fed-mortgage-portfolio

If you took out a mortgage over the last couple of years, there's a good chance the holder of that loan is America's central bank — a consequence of its monetary stimulus efforts throughout the pandemic.

Why it matters: The Fed will face a series of political and economic headaches as it attempts to move away from subsidizing home lending by shrinking its portfolio of mortgage-backed securities.

The problem: Extracting itself from this market risks crashing the housing industry and creating intense political blowback for incurring financial losses.
By the numbers: Back in February 2020, the Fed owned $1.4 trillion in mortgage-backed securities, and the number was falling rapidly. But when the pandemic took hold, the central bank began a new round of bond purchases (known as "quantitative easing"), swelling that number to $2.7 trillion.

The policy contributed to ultra-low mortgage rates that stimulated home buying and refinancing activity until recently.
State of play: Now, as the Fed seeks to tighten monetary policy to combat inflation, it wants to shrink that portfolio. It may turn out to be easier said than done.

The Fed says that by September it will reduce the mortgage portfolio by up to $35 billion per month. Emphasis on "up to."
In fact, the numbers will probably undershoot that.

The reason: For now, the Fed is just looking to let its holdings shrink as securities get paid off. But with mortgage rates way up in recent months, people have little incentive to sell their home or refinance a mortgage — so these mortgages are likely stay on the Fed's books longer.
That will leave the Fed with unappealing options. It could simply accept that it will continue to have an outsized role in the housing market and a bigger balance sheet than it might prefer.

Or it could begin selling the securities on the open market — a possibility that the minutes of its March policy meeting said could happen down the road.
What they're saying: "Let's get the program we've got underway and up to speed, but then once we've got it underway, I think it'll be worth taking a look at what is happening to the mortgage-backed [securities] on our balance sheet," Thomas Barkin, president of the Federal Reserve Bank of Richmond, tells Axios.

"I'm certainly open to a targeted and disciplined way to sell into the market if we're not headed toward the primarily Treasury balance sheet that we've said we want," he said.
Yes, but: That will create its own problems. If the Fed sells mortgage securities that pay low rates at a time when prevailing rates are much higher, it will incur big financial losses that reduce the funds the central bank returns to the Treasury.

In that scenario, expect officials to face tough questions from Capitol Hill to explain why they've lost billions of dollars on behalf of the American people.
Plus, the selling would likely push mortgage rates up further, at a time the housing industry is already starting to groan under the pressure of rising rates. Homebuilders, real estate agents, and other influential industry groups will make their unhappiness known to elected officials.
The bottom line: The Fed's pandemic actions fueled a housing boom. As it tries to withdraw that support, it could be bad news for housing — and the Fed's standing on Capitol Hill.

I do not think the pandemic fueled a housing boom. I think prior to the pandemic costs of building materials had already soared. That was one of the first things I noticed. OSB went from $8 a sheet to $30 almost overnight. I don't think houses are overvalued based on the costs of goods to build a house or repair one. Interest rates have been at record lows for many years. 2-3% interest was crazy stupid low and it effected real investors from lending. Rates on savings have been in the toilet for probably 20 years. This is not a new or a COVID pandemic problem. This is a pandemic problem of its own that started probably back in the days of Clinton with housing for all. The issue I see the consumer facing is that inflation and higher prices only make the government richer. The value of everything goes up and people pay more sales tax on everything they buy. The value of your home increases and you pay more property tax. The consumers wage cannot keep up with the rising costs. The government beast is never satisfied. Their rhetoric will be they need to raise taxes/mill rates even higher because even though their coffers should be overfilling because they take in double the sales tax they were a year ago because items have doubled in price, their expenses have gone up and they don't ever have enough money to function.

[Madison320]

I do not think the pandemic fueled a housing boom. I think prior to the pandemic costs of building materials had already soared. That was one of the first things I noticed. OSB went from $8 a sheet to $30 almost overnight. I don't think houses are overvalued based on the costs of goods to build a house or repair one. Interest rates have been at record lows for many years. 2-3% interest was crazy stupid low and it effected real investors from lending. Rates on savings have been in the toilet for probably 20 years. This is not a new or a COVID pandemic problem. This is a pandemic problem of its own that started probably back in the days of Clinton with housing for all. The issue I see the consumer facing is that inflation and higher prices only make the government richer. The value of everything goes up and people pay more sales tax on everything they buy. The value of your home increases and you pay more property tax. The consumers wage cannot keep up with the rising costs. The government beast is never satisfied. Their rhetoric will be they need to raise taxes/mill rates even higher because even though their coffers should be overfilling because they take in double the sales tax they were a year ago because items have doubled in price, their expenses have gone up and they don't ever have enough money to function.

To make it worse hardly any smaller houses (1000-1500 sq ft) have been built in the last 30 years.

I think there's going to be a big trend converting giant single family homes to multi famility.

[GlennwaldSnowdenAssanged]

To make it worse hardly any smaller houses (1000-1500 sq ft) have been built in the last 30 years.

I think there's going to be a big trend converting giant single family homes to multi famility.

That might be the case but not without the city benefiting. Zoning laws restrict the type of house so there will need to be hearings, fees, and variances in order to change the zoning. Then neighbors will have a chance to object but that will be like anything else. The sleazy palm greasing tycoon that knows all the politicians will be able to do anything they want but the simple citizen that wants to convert his 7000 square foot place into a 4 plex will be restricted by zoning laws and turned down.

[Pauls' Revere]

Government shouldn't be subsidizing housing any more than it subsidizes education.

[Krugminator2]

\

3 Month Treasury yield - 1.067%
10 Year Yield - 2.747%


Market sentiment, breadth and what they yield curve is saying about the economy looks like all systems go for the market to go up over the intermediate term.

[Brian4Liberty]

\

3 Month Treasury yield - 1.067%
10 Year Yield - 2.747%


Market sentiment, breadth and what they yield curve is saying about the economy looks like all systems go for the market to go up over the intermediate term.

Zippy used to post a lot of charts.

So now it’s time to talk bottoms. Are we there? Sentiment alone will not determine this bottom.

[Madison320]

3 Month Treasury yield - 1.067%
10 Year Yield - 2.747%


Market sentiment, breadth and what they yield curve is saying about the economy looks like all systems go for the market to go up over the intermediate term.

I don't believe in technical analysis but I think you may be right because it looks like the Fed is starting to back off its rate hikes. I think there could be a relief rally as the markets sense an end to the hikes. But eventually they'll start going back down if the Fed doesn't turn the cheap money back on. Especially the printing.

[Brian4Liberty]

I don't believe in technical analysis but I think you may be right because it looks like the Fed is starting to back off its rate hikes. I think there could be a relief rally as the markets sense an end to the hikes. But eventually they'll start going back down if the Fed doesn't turn the cheap money back on. Especially the printing.

I am concerned that we have gone into a downward spiral. Mainly due to energy costs. They effect the entire economy like a huge tax increase. People buy less, revenue decreases, at the same time business costs go up, leading to layoffs and less profits that can be put back into spending. There have been some disappointing earnings reports.

[Madison320]

I am concerned that we have gone into a downward spiral. Mainly due to energy costs. They effect the entire economy like a huge tax increase. People buy less, revenue decreases, at the same time business costs go up, leading to layoffs and less profits that can be put back into spending. There have been some disappointing earnings reports.

Have you ever heard of the analogy that inflation is like adding drops of dye into a bathtub of water? At first the drops make the water at the entry point really dark and then it slowly spreads to the rest of the bathtub. The entry point to the inflation we've been creating is the stock markets and housing markets. Now it's slowly spreading to the rest of the economy, finally everyday consumer prices.

Also I think there's something else about that analogy that doesn't get mentioned. The initial point where the dye is placed is very dark at first but then it gets lighter as the dye spreads. I think that's what's happening with inflation. It hits the stock and housing markets first and makes them go up but then as it spreads to the rest of the economy those markets actually come down. I think that's what we're seeing. The markets are coming DOWN as grocery prices are going UP. Further proof of this is a book I read about hyperinflation. The author lived thru 3 hyperinflations, 2 in argentina and 1 in chile. He said that not all prices rose. I know he said that home prices collapsed and I think he said stock prices did also.

[Krugminator2]

Zippy used to post a lot of charts.

So now it’s time to talk bottoms. Are we there? Sentiment alone will not determine this bottom.

You had three 90% down volume days in a ten day stretch in May. That is an objective way of quantifying panic selling or climax that has held up to historical scrutiny. You had a 90% up volume day on May 13th which shows demand. And a yesterday and today were back to back 80% up volume days.

https://s3.us-east-1.amazonaws.com/d...ll-markets.pdf

The rally might fail but I think this is textbook A+ setup to be long the market.

[Brian4Liberty]

You had three 90% down volume days in a ten day stretch in May. That is an objective way of quantifying panic selling or climax that has held up to historical scrutiny. You had a 90% up volume day on May 13th which shows demand. And a yesterday and today were back to back 80% up volume days.

https://s3.us-east-1.amazonaws.com/d...ll-markets.pdf

The rally might fail but I think this is textbook A+ setup to be long the market.

Did you buy anything this week?

[Brian4Liberty]

Have you ever heard of the analogy that inflation is like adding drops of dye into a bathtub of water? At first the drops make the water at the entry point really dark and then it slowly spreads to the rest of the bathtub. The entry point to the inflation we've been creating is the stock markets and housing markets. Now it's slowly spreading to the rest of the economy, finally everyday consumer prices.

Also I think there's something else about that analogy that doesn't get mentioned. The initial point where the dye is placed is very dark at first but then it gets lighter as the dye spreads. I think that's what's happening with inflation. It hits the stock and housing markets first and makes them go up but then as it spreads to the rest of the economy those markets actually come down. I think that's what we're seeing. The markets are coming DOWN as grocery prices are going UP. Further proof of this is a book I read about hyperinflation. The author lived thru 3 hyperinflations, 2 in argentina and 1 in chile. He said that not all prices rose. I know he said that home prices collapsed and I think he said stock prices did also.

Absolutely. The inflation is flowing away from Wall St, and flooding the low areas.

[Krugminator2]

Did you buy anything this week?

I am very leveraged long.

In my opinion and only my opinion, thinking in essentials is better. Washed out breadth and sentiment, steep yield curve and 90% down days followed by either 90% up day and/or two consecutive 80% up days is all that matters. Everything else is noise. I think this is pocket aces. No guarantees. No law against stocks dropping from here. But in my opinion one of the better opportunities in the last couple of years.

[oyarde]

Did you buy anything this week?

My usual , Gold , silver , tools and ammo

[oyarde]

Rumors are CEO salaries are up 17 percent on avg . So I'm thinking any stocks you hold in a co where the CEO got a 17 percent raise , profits should be up 17 percent this yr .

[Brian4Liberty]

U.S. stocks extended losses midway through trading, with the Nasdaq Composite dropping more than 300 points on Friday.

The Dow traded down 0.99% to 32,919.61 while the NASDAQ fell 2.61% to 11,995.68. The S&P also fell, dropping, 1.66% to 4,107.48.

https://markets.businessinsider.com/...ump-1031508983

[Krugminator2]

https://markets.businessinsider.com/...ump-1031508983

94% of Nasdaq stocks and 98% of the tech XLK were above their 10 day moving average after yesterdays close. The short term bias was heavy to the downside/sideways. You just had one of the strongest breadth thrusts that only happen a couple of times a decade. The next couple of months are solidly biased to the upside.

To see how this works, here is a magic trick. XLE is the energy sector ETF. 100% of its components are currently above the 10 day moving average. It might keep going up but it will likely give back any gains. of the next couple of weeks and then there will be a Business Insider or Marketwatch article talking about inflation fears easing or recession or Russia.

[Brian4Liberty]

Stock Market Today: Dow Jones, S&P 500 Continue To Slide; Coinbase Stock Plunges Amid Sharp Pullback In Bitcoin Price

On Monday, the Dow Jones Industrial Average is down by over 500 points as investors continue to feel the fallout from higher-than-expected inflation and also rate hikes. The consumer price index (CPI) was up by 8.6% year-over-year for May and could force the Federal Reserve to get even more aggressive with interest rates to help cool the red hot inflation. Many investors will also be closely following the Fed’s latest policy-setting meeting later in the week. There could also be a rate decision set for Wednesday. The S&P 500 has fallen back into bear market territory as major indexes came off at their worst week since January 2022.

Tech stocks like Nvidia (NASDAQ: NVDA) and Amazon (NASDAQ: AMZN) are down today along with the broader market on fears of a looming recession and more aggressive Federal Reserve action, on top of rising inflation as mentioned earlier. On the other hand, FuboTV (NYSE: FUBO) today announced that it has expanded further into free-ad supported television, launching new FAST channels from Trusted Media Brands.

Among the Dow Jones leaders, shares of Apple (NASDAQ: AAPL) are down by 2.49% today while Microsoft (NASDAQ: MSFT) is also down by 2.33%. Meanwhile, Disney (NYSE: DIS) and Nike (NYSE: NKE) are trading lower on Monday. Among the Dow financial leaders, Visa (NYSE: V) is down by 2.93% while JPMorgan Chase (NYSE: JPM) is also down by 1.94%

Shares of EV leader Tesla (NASDAQ: TSLA) are down by 6.38% on Monday. Rival EV companies like Rivian (NASDAQ: RIVN) are also down by 5.50%. Lucid Group (NASDAQ: LCID) is down by 8.32% today. Chinese EV leaders like Nio (NYSE: NIO) and Xpeng Motors (NYSE: XPEV) are trading lower today as well.
...
https://www.nasdaq.com/articles/stoc...ges-amid-sharp

[Brian4Liberty]

Stock plunge puts S&P 500 on track to enter a bear market: What investors need to know

The bear is back.

The S&P 500 on Monday was on track to confirm what many investors have been saying for months: The large-cap benchmark is in the grips of a bear market.

Stocks suffered sharp losses Monday after major benchmarks saw their worst week since January. Much of the weakness was attributed to the Friday reading of the May consumer-price index, which surged to 8.6% year-over-year -- a 40-year high. Investors fear the Federal Reserve will have to raise rates even more aggressively than already expected, risking recession in their effort to tame inflation.

A close below 3,837.25 would mark a 20% pullback from the S&P 500's Jan. 3 record finish, meeting the traditional definition of a bear market, according to Dow Jones Market Data. The S&P 500 was down 3.6% near 3,760 with a little over 30 minutes to go in the trading session.
...
https://www.morningstar.com/news/mar...s-need-to-know

S&P 500 closed at 3,749.63...

[Brian4Liberty]

And still nothing is being done to reduce oil prices...

The radical left has been driven insane by the cult of climate change, and their cult is now in the mass suicide stage.

[Krugminator2]

And still nothing is being done to reduce oil prices...

The radical left has been driven insane by the cult of climate change, and their cult is now in the mass suicide stage.

To see how this works, here is a magic trick. XLE is the energy sector ETF. 100% of its components are currently above the 10 day moving average. It might keep going up but it will likely give back any gains. of the next couple of weeks and then there will be a Business Insider or Marketwatch article talking about inflation fears easing or recession or Russia.

Pretty big selloff in energy stocks, XLE (along with everything else). Perhaps looking to the future of lower energy prices.

This is a more brutal market than the dotcom bust and 2008. Just no let up. Both of the other bear markets had a number of double digit rallies. This has been six months of almost pure liquidation with two small rallies that got smashed almost instantly.

[oyarde]

The great slide is underway it appears. Since WWII its taken the avg s & p bear market 27 months to get back positive with the avg descent being 33 percent.

[sam1952]

And so far precious metals has not been a haven. Platinum and palladium both look to continue to slide.

[Madison320]

And still nothing is being done to reduce oil prices...

The radical left has been driven insane by the cult of climate change, and their cult is now in the mass suicide stage.

The main driver of rising oil prices is the printing and borrowing over the last 12 years and neither party wants to fix that because it would require massive cuts in government spending.

[oyarde]

The main driver of rising oil prices is the printing and borrowing over the last 12 years and neither party wants to fix that because it would require massive cuts in government spending.

be nice to at least see some elected officials talking about cutting spending on defense , food stamps , foreign aid etc i mean i know they are too scared to talk about medicaid etc but there is plenty of other places to start