Monday, September 29, 2014

Backdoc From KTFA: "Market Reactions"

Backdoc From KTFA: "Market Reactions"

09/29/2014

  
backdoc » September 29th, 2014, 2:45 am

THESE ARE MY OWN THOUGHTS AND OPINIONS

MARKET REACTIONS

GOOD MORNING,GOOD AFTERNOON,GOOD EVENING,AND GOOD NIGHT.

AS EVERYONE IS WAITING FOR WHAT SEEMS TO BE THE WONDERFUL BENEFITS OF ACTIVATING THE PRIVATE SECTOR IN IRAQ. I WANTED TO LEAVE YOU WITH A DISCUSSION ON WHAT MAY HAPPEN IN THE NEAR TERM CONCERNING WORLD MARKETS AS WELL AS SOME FUTURE POSSIBILITIES.

BY NO MEANS AM I GIVING ANYONE TRADING ADVICE HERE BUT POSSIBLY SOME AWARENESS OF WHAT OUR MARKETS MAY LOOK LIKE GOING FORWARD
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AS I’VE MENTIONED BEFORE WE CAN’T KNOW WHERE WE ARE GOING IF WE DON’T REALIZE WHERE WE’VE COME FROM.

WELL, FOR STARTERS WE HAVE GOVT.S AROUND THE WORLD THAT HAVE ENORMOUS DEBT. AND AWAIT CURRENCY SWAPS TO TAKE VALUE IN LEW OF DEBT REPAYMENT FOR PAST DEBTS.

IN ADDITION WE HAVE A FEW VERY BIG BANKS THAT ARE SITTING ON TRILLIONS OF CREDIT DEFAULT SWAP DERIVATIVE DEBT.

AS A RESULT THE FED NEEDED TO ENGINEER A PLAN TO BUY TIME FOR BANKS TO HEAL OPERATIONALLY AFTER THE HOUSING BUST. THEREFORE BEN BERNANKE WAS BROUGHT IN TO THE FED TO TRY A MASSIVE CURRENCY DEBASING PROGRAM CALLED MONETARY EASING.

AS I’VE MENTIONED SEVERAL TIMES THIS MONEY PRINTING PLAN CALLED QUANTITATIVE EASING WAS IMPLEMENTED. THE FED WOULD ESSENTIALLY PRINT MONEY AT THE TUNE OF 85 BILLION DOLLARS PER MONTH.

THEY ALSO CALL THIS A FORM OF MARKET STIMULUS. SINCE 2008 WE HAVE SEEN THIS QE STIMULUS CONTINUE UNTIL RECENTLY WHEN THE FED HAS DECIDED TO SLOW THE PRINTING DOWN TO A HALT WHICH ENDS IN OCTOBER. WHY OCTOBER? MMMMM

AS A RESULT OF QE, THE DOLLAR WAS DEVALUED CAUSING THE STOCK MARKET TO RISE SINCE IT TAKES MORE DEVALUED DOLLARS TO PAY FOR A SHARE OF STOCK.

SIMPLY PUT, THIS WAS A FORCED FORM OF INFLATION.

DURING THIS PERIOD OF QE, LENDING RATES FROM THE FED TO THE BANKS WERE KEPT ESSENTIALLY TO ZERO GIVING BANKS TIME TO REBUILD OPERATIONAL CAPITAL RESERVES.

REALIZE THAT THE SERIOUS DERIVATIVE DEBT IS STILL ON THE BOOKS OF SOME OF THE BIG BANKS BALANCE SHEETS HIDDEN FROM THE PUBLIC SINCE BANKS HAVE THE RIGHT TO DO SO. FINDING OUT WHERE THEY REALLY ARE IS POSSIBLE BUT VERY DIFFICULT!

NEW LAWS LIKE THE VOLCKER RULE FORCES THESE BANKS TO UNWIND THESE DEBT POSITIONS BY AUGUST OF 2015 AS I UNDERSTAND; AND EXCEPTIONS MAY BE MADE FOR SOME BANKS TO DO IT OVER MORE TIME IF NEEDED TO PREVENT FAILURE.

BANKS IN THE FUTURE ARE NOT ALLOWED TO SPECULATE ON TRADING POSITIONS BUT WILL BE ALLOWED TO HEDGE RISK FOR PROTECTION BASED ON THE BANKS’ OVERALL RISK. THIS WILL HELP PROTECT CONSUMERS FROM BANKS DOING TRADING WITH BASICALLY AN UNLIMITED RISK!

SO NOW YOU KNOW WHERE WE HAVE COME FROM, BUT NOW WHERE ARE WE GOING? WELL, HISTORY TELLS US A LITTLE TO HELP US. IN THE PAST, WHEN A ROUND OF QE HAS BEEN CONCLUDED, WE HAVE SEEN A SIGNIFICANT MARKET SELLOFF IN THE STOCK MARKET. THIS OF COURSE IS JUST THE OPPOSITE SCENARIO AS WHEN THE MARKET IS UNDERGOING QE.

WHEN THE QE STOPS, THE DOLLAR BECOMES MUCH STRONGER. AS WE SEE THE FED ANNOUNCE THE END TO QE, HAVE WE SEEN A CHANGE ON THE DOLLAR VALUE? ABSOLUTELY !!

CURRENTLY WE ARE HOPING TO SEE THE DOLLAR INDEX RISE IN THE NEXT TWO TRADING DAYS TO 86 !! THE DOLLAR HAS REVERSED 4 YEARS OF DEVALUATION IN A VERY SHORT TIME! ,WOW!, AMAZING!

A STRONGER DOLLAR PUTS PRESSURE ON GOLD PRICES TO HEAD LOWER AS WELL AS OIL AND ALL COMMODITIES. HAVE WE SEEN THAT RECENTLY? YES!

SO, WILL WE SEE THIS TREND CONTINUE? MMMM

IF THE DOLLAR CONTINUES TO STRENGTHEN I SAY YES!

WE NEED TO THINK ABOUT THESE ISSUES IF YOU WANT TO KNOW WHERE TO INVEST YOUR BLESSINGS RIGHT? RIGHT!

WHAT ELSE MIGHT CAUSE THE DOLLAR TO STRENGTHEN? WELL, IF YOU THINK THE U.S. TREASURY IS HOLDING DINAR IN THEIR FOREIGN CURRENCY ACCOUNT THEN A REVALUED DINAR WOULD ADD MEGA POWER TO THE DOLLAR.

THE QUESTION I HAVE HERE IS WILL THAT NEW FOUND VALUE IN THE DINAR BE REVEALED IN THE TREASURY RECORDS OR WILL THEY HIDE IT?

THIS OF COURSE HAS NOTHING TO DO WITH THE INTERNATIONAL RATE OF THE DINAR TO THE PUBLIC! JUST AN IN HOUSE TREASURY ISSUE.

MOST LIKELY THE WAY IT MIGHT SHOW ITS’ SELF IS BY A BALANCED BUDGET IN WASHINGTON AND OVERALL DEBT REDUCTION!!

MOST OF US BABY BOOMERS REMEMBER WHEN THE CLINTON ADMINISTRATION BALANCED THE BUDGET AFTER THE GULF WAR AND A SUCCESSFUL KUWAIT RESTRUCTURE OF THEIR CURRENCY! MMMM

OK, LET’S TALK TRADING A BIT. SOME MARKET DYNAMICS I’M LOOKING AT CURRENTLY ARE INTERESTING!

THINK OF IT LIKE BAKING A CAKE!

WE ARE PUTTING TOGETHER A RECIPE. WE HAVE A RISING DOLLAR DUE TO THE END OF QE. WE HAVE LOW VOLUME IN THE STOCK MARKET. WE HAVE A BOND MARKET THAT HAS BEEN IN A SELL OFF FOR SOME TIME.

WE HAVE RECENTLY HEARD THE FED SAY THAT THEY MAY HAVE TO CHARGE EXIT FEES TO SELLERS OF BONDS! AND NOW, TO MAKE THINGS WORSE, THE WORLDS LARGEST BOND MANAGER, BILL GROSS WHO MANAGES 400 BILLION DOLLARS WORTH OF BONDS IS LEAVING PIMCO AFTER HIS CO CEO MUHAMED EL-ERIAN LEFT A FEW MONTHS EARLIER.

MMMM WHY ARE THEY RUNNING FROM BONDS NOW? WHY BEFORE OCTOBER? MMMM

REALIZE THAT THE FED HAS BEEN THE BIGGEST BUYER OF BONDS DUE TO QE. MMMM CHINA HAS BEEN A SELLER FOR A FEW YEARS NOW CONTRARY TO WHAT MOST THINK. THEIR BALANCE IS AROUND 1.2 TRILLION OR LESS NOW!

I’M CONCERNED THAT THE BULL MARKET IN BONDS IS COMING TO AN UGLY END. IF SO, WE HAVE ALREADY SEEN THE CRACKS IN THE ICE DUE TO WHAT I’VE MENTIONED ABOVE. THE MACRO DYNAMICS I BELIEVE ARE PLAYING A BIG PART OF THIS AS WELL.

AS CHINA AND THE BRICS OFFER AN ALTERNATIVE TO THE DOLLAR AS THE RESERVE CURRENCY IN THE WORLD AND RECENT TRADE DEALS LIKE THE RUSSIAN,CHINA,VIETNAM 400 BILLION GAS DEAL DEFINITELY ADD FUEL TO THIS PROBLEM.

THE PROBLEMS FOR THE DOLLAR AS THE RESERVE CURRENCY SEEMS TO BE GETTING WORSE. WOW !

IT SEEMS TO ME AN EVENT, OR A CATALYST MAY CAUSE A MORE SERIOUS SELLOFF IN OUR BOND MARKET. THIS, ALONG WITH A RISING DOLLAR WILL PUT SERIOUS PRESSURE ON THE STOCK MARKET TO SELLOFF.

THIS RECIPE CONTINUES TO GET MORE COMPLICATED!

WITH THE DOLLAR RISING, IT MAKES IT EASIER FOR FOREIGN COMPANIES TO STEAL U.S. BUYERS FOR THINGS LIKE CARS ECT., SO U.S. EXPORTS WILL BE CHALLENGED.

OK, LET’S TRY TO PULL OUR DISCUSSION TOGETHER.

1. FOR STARTERS, OCTOBER IS USUALLY A MONTH WHEN THE STOCK MARKET SELLS OFF TYPICALLY.

2. QE ENDS

3. GEORGE SOROS THE MOST SUCCESSFUL CURRENCY TRADER IS 17% SHORT, (THIS MEANS HE WILL MAKE MONEY IF THE STOCK MARKET DECLINES)THE U.S. STOCK MARKET WITH HIS PORTFOLIO.

4. BOND MARKET IN TROUBLE

5. DOLLAR INDEX SKYROCKETING AND HAS REVERSED 4 YEARS OF DECLINE RECENTLY

6. THE DOLLAR’S RESERVE STATUS BEING CHALLENGED

7. KEY PLAYERS IN THE INDUSTRY ARE LEAVING THE BOND MARKET

8. WE HOPE A PENDING CHANGE IN THE VALUE OF THE DINAR IN OCTOBER OR SOONER!

9. WITH QE ENDING, WHAT WOULD BE A CATALYST TO MOVE THE MARKETS FORWARD IN A CHALLENGING ECONOMY?

10. AND FINALLY WE SEE THE U.S. FISCAL YEAR CONCLUDE IN SEPTEMBER AND BEGIN ITS’ NEW YEAR IN OCTOBER.

MMMM DO YOU THINK THE U.S. NEEDS TO KNOW HOW MUCH MONEY THEY HAVE, PRIOR TO COMPLETING THEIR BUDGET? MMMM

IT IS ONLY MY HUMBLE OPINION THAT WE ARE ABOUT TO SEE SOME SERIOUS MARKET MOVEMENTS IN THE U.S. BONDS, STOCKS, AND CURRENCIES IN THE NEAR TERM!!

SO WHERE WILL GROWTH GO LONGER TERM? GLAD YOU ASKED!

WELL, WITH ESTIMATES FROM THE IMF AND WORLD BANK IT LOOKS TO BE MOVING TO VIETNAM AND IRAQ!

I HAVE FORMULATED MY OWN STRATEGIES IF WE CONTINUE TO SEE EVENTS CONTINUE TO UNFOLD AS I LAY OUT HERE BUT IF THINGS CHANGE THIS SCENARIO WE JUST CHANGE OUR STRATEGY!

I HOPE SOME OF THESE THOUGHTS HELP YOU ALL IN YOUR SOON TO BE NEW RESPONSIBILITIES!!! DOC

THESE ARE MY OWN THOUGHTS AND OPINIONS
http://www.dinarrecaps.com/our-blog/backdoc-from-ktfa-market-reactions

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