S&P/ASX 200 (ASX:XJO) - XJO - Bear Posts only (Factors which might cause the markets to fall), 72434347, page-14664 - HotCopper | ASX Share Prices, Stock Market & Share Trading Forum

Originally posted by kacy ↑

$10 Trillion in New US Treasuries will be Issued this Year to cover gov debt (as explained in the video below).

This poses the question: Where is all this money going to come from? There are only two options:

1) Interest rates have to go up to make gov. bonds attractive to investors.

2) The fed recommences QE and buys the bonds with printed money.

Option 1 will kill the economy and the banks by making loans and repayments unaffordable. It also causes a debt spiral (and a bankrupt US gov.) because the gov. can't afford to repay the interest and this will explode the debt over time.

Option 2 will be highly inflationary. If inflation restarts (likely) the fed will have to stop printing money and raise rates again to stop the inflation. It is also hard to see how the fed can commence QE in 2024 - unless there is a crisis that stalls the economy, crashes the market, bankrupts businesses and borrowers - and means the fed has to put interest rates back to zero and print more money to restart the economy?

Can a crisis like this commence during an election year with a fed that is pro-Biden?

Plan A: Maybe not? If inflation drops to the target rate the fed could cut rates just before Yellen issues new short term bonds. This will cause the yield curve to invert further by causing long term rates to go down and short term rates to go up and kick the can further down the road (2025 crash?).

Plan B: Maybe yes? The ducks are lining up! China is crashing, the rest of the world is in recession, bad commercial real estate loans are due, the market is topping out, conflicts & higher costs are happening, fed's BTFP ending, fed can't cut rates with unemployment low & GDP high, etc. So, they might think they can have the crisis now and recover before the election, which is 9 months away?

It is possible they have not decided yet between Plan-A & Plan-B? But we should find out soon!

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As usual, Joe explains it so well even a BBB "should " be able to understand it. I really do wonder what their take is on it?

Apart from the demand pull/push side of the inflation cion, bond yields are the other side. So what will the US do? They are either trying to engineer a deflationary event as per the 40 year inflation cycle charts (see 9:00 mark), or they are going to down the same path as Japan, and keep spending like drunken sailors, and execute more QE.

How much longer can the unsustainable madness continue? Lets compare Japan 1986 to America 2023. Is the USA having its 1986 Japan moment? Both economies have high quality tech/engineering and innovation.

Remember "the markets can stay irrational longer than you can stay solvent" The Nikkei was ~39000 at its peak in 1990, then 6750 in 2005.

Originally posted by Ewebute ↑

Interesting posts. Spooky

History never repeats itself right... *s*

Observations from today....

- Major amount of value after 4pm closing at match and later. Only about $8.5b so nothing major as such.
- The Mid to Top end both had major increases in volume and their average prices dropped across the board.
- Options market went a little silly especially on CBA Calls (which I think relate to the big end writing those). Positioning without showing their hands?
- I mentioned before that options generally go towards one share in particular but many across the majors (as below - maybe with expiry date?)
- A substantial amount of other options value on the call side (writes?), but BHP exception with lots of Puts. Maybe being expiry date today people taking their BHP put profits?
- XSJ starting to tip upwards relative to the XJO index. Heading towards safety?

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@Ewebute
Imo, Dont over analyse it too much. Mon/Tue was just a quick drop to the daily 20SMA on the NDX futures, momentum will probably resume again. ASX punters still buying stonks like no tomorrow. For how long? Meh, see above post.