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It is spread out over six months and roughly matches the amount of debt issued in late January through March when the debt ceiling was raised. QE is running at about 55 to 95 billion dollars per month, probably enough to absorb the supply in Japan and Europe at the low end but still not enough to absorb the US supply at the higher end of the range. About a third of the debt has already been issued and been absorbed by the liquidity in the system without much impact. Last time this occurred, the market sold off before entering a period of favorable demand-supply where there was 90 billion dollars of debt being paid down by the Treasury and the stock market rallied.
In my opinion this is the iceberg along with stocks bought on margin and currency war with China.
I don't pretend to understand how so many interlocking factors play out in the real-world economies of the world but I know that there was plenty of mon in 2008--2009 but would I be correct to say there was little. ""Liquidity" which compounded the RE bubble bursting and Lehman's crashing and other negatives in the economy??
Doesn't look good to me
We never use margin but we are very conservative
This is how I understood part of the impetus for the the 08-09 crash was triggered to grow and grow
People had to sell and sell from what I understood to meet margin calls
And not just people but institutions and funds had people pulling their interests and had to sell to meet those demands...
Like watching a the ball in the Mousetrap game...
The more equity shares and bond shares went into the market w/o having anyone willing to buy, the lower the price point
Am I wrong in making that statement?
Super influx of selling was stronger than any desire to buy because people anticipated lower prices yet...
Doesn't look good to me
We never use margin but we are very conservative
This is how I understood part of the impetus for the the 08-09 crash was triggered to grow and grow
People had to sell and sell from what I understood to meet margin calls
And not just people but institutions and funds had people pulling their interests and had to sell to meet those demands...
Like watching a the ball in the Mousetrap game...
The more equity shares and bond shares went into the market w/o having anyone willing to buy, the lower the price point
Am I wrong in making that statement?
Super influx of selling was stronger than any desire to buy because people anticipated lower prices yet...
THe impetus for the 08-09 crash was mortgage backed securities which is another topic. If you haven't already, watch the movie, The Big Short, which I found enlightening.
However, the stock market selling was exacerbated by margin calls and margin balances are at record levels. Interest rates on margin loans can increase in relation to the federal funds rate. These factors heighten risk; so long as the market keeps rising no problem but the downside risk is magnified in relation to stock bought on margin due to forced selling in a down market.
Europeans and Japanese pay to hold cash or own 10-year German government bonds, which means that every pension fund and insurer will fold in a finite time horizon. They responded by exporting more, saving more, and buying American assets that still pay a positive, if low, real yield.
Hedging the foreign exchange risk in this half-trillion-dollar per year business has exhausted the balance sheet of the global banking system. That explains a large part of the jump in the US 10-year note yield to 3.2% last Friday from 2.85% in early September. Hedging the foreign exchange risk in these massive flows created a derivatives mountain, and it has started to spew smoke and lava.
THe impetus for the 08-09 crash was mortgage backed securities which is another topic. If you haven't already, watch the movie, The Big Short, which I found enlightening.
However, the stock market selling was exacerbated by margin calls and margin balances are at record levels. Interest rates on margin loans can increase in relation to the federal funds rate. These factors heighten risk; so long as the market keeps rising no problem but the downside risk is magnified in relation to stock bought on margin due to forced selling in a down market.
Yes--I saw "The Big Short" (and rest most of the book) and also saw/liked "Margin Call" which I thought was really better in some ways--not as confusing for one thing to many viewers...
Kevin Spacey was good and as sympathetic as someone doing what he did could be---
Especially Jeremy Irons in role similar to what Jaime Dimon's would be
And yes--I know that mortgage backed securities (without really any security value and highly inflated mortgages value) were the root cause--but the forced and fevered selling of shares created a domino effect
Am I correct in thinking that the margin balance total are about 3X what the positive/offsetting amounts are?
Bad weather in my area is making my wi-fi problamatic (thanks ATT)
Took while to get through that article--
So if foreign banks and investors can't profitably buy Treasuries, and the Fed is selling what they bought during QE periods--but Munchin is having to print more to keep up with the trillion dollar debt--what is the most likely real world effect?
Is it really likely that rates would go UP if there are fewer buyers?
And the chart that shows the imbalance of trade w/the US I find confusing to some extent
S Korea I would think would be on positive side w/all the electronic exports but guess the stronger economy creates a demand for US goods...
Does it make sense to think that international fund that is oriented to the countries in the more negative range would be more vulnerable than one that is more focused on a single country--
Like India or Mexico--especially now that the new NAFTA has been done--
We have global REIT that has not done particularly well which I think we should sell and perhaps lighten our International fund...
I see today the breakdown of the channel at 2863 occurred that will lead to correcting most or all of the rally since March. Here is another perspective.
The market has swiftly fallen to the 2820 area where the March-April trendline is currently placed. I'm not sure if it has much validity since the market has never come close to it since.
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