Friends!
Yesterday, already late in the evening, the Federal Reserve together with the US Treasury Department issued a statement regarding support measures for banks.
The most important thing from the statement is that the Federal Reserve has resumed credit lines for banks. Loans will be provided against treasuries, mortgage and agency securities assessed at par value.
What does this mean?
In essence, the Federal Reserve is winding down the QT market liquidity reduction program and returning everyone's favorite QE money printing program.
In this regard, it would be unwise for the Federal Reserve to raise interest rates further. We believe that the Federal Reserve will make a statement about this in the near future.
If this is so, then the "golden" time for gold is beginning.
Is the crisis over? Alas, no, it is just beginning...
Yesterday, already late in the evening, the Federal Reserve together with the US Treasury Department issued a statement regarding support measures for banks.
The most important thing from the statement is that the Federal Reserve has resumed credit lines for banks. Loans will be provided against treasuries, mortgage and agency securities assessed at par value.
What does this mean?
In essence, the Federal Reserve is winding down the QT market liquidity reduction program and returning everyone's favorite QE money printing program.
In this regard, it would be unwise for the Federal Reserve to raise interest rates further. We believe that the Federal Reserve will make a statement about this in the near future.
If this is so, then the "golden" time for gold is beginning.
Is the crisis over? Alas, no, it is just beginning...
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⚡️The Swiss National Bank reports that UBS has acquired Credit Suisse.
We warned about this, we believe that the next ones could be the German Deutsche Bank $DBKGn and the French Societe Generale SA $SOGN.
The situation is especially difficult for the German Bank, which has serious problems with the quality of its credit assets
We warned about this, we believe that the next ones could be the German Deutsche Bank $DBKGn and the French Societe Generale SA $SOGN.
The situation is especially difficult for the German Bank, which has serious problems with the quality of its credit assets
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Managed crisis. Where is the safe haven?
The current situation of the US and European banks was not a surprise for the Fed and the ECB. Each financial institution has risk management departments, as well as the Fed itself. And believe me, the Fed knew about the situation with the banks long before it began. Therefore, the regulator's reaction was quick and prepared.
There is an assumption that these bankruptcies of the banks were made by the regulators intentionally in order to reverse their monetary policy and not appear weak in the face of inflation, which cannot be overcome. After all, next year there are elections in the USA and they need to emerge victorious.
To bankrupt any bank in the world, it is enough to simply make a strong negative information injection, after which the depositors will do their job. Banks do not keep cash in equal proportion to the assets of their clients. Usually this amount is no more than 20%. Accordingly, if in a short period of time, depositors take more than 20% of the assets, the bank instantly becomes bankrupt. Unfortunately, that's how it works.
A year ago, the Fed said that it was going to make a "soft" landing of the economy. A "soft" landing is understood as a situation in the economy when it is gradually slowing down, which leads to a smooth decline in prices.
A year later, we can see that the "soft" landing is not going according to plan - the economy is not slowing down as the Fed expected.
In such a situation, a year before the elections, it is necessary to make a quick, controlled crisis in order to instantly land the economy and emerge victorious before the elections. Now we are beginning to see the beginning of such a controlled crisis.
How to protect yourself from it?
Gold! Gold has a unique situation now.
Firstly, it is a protective asset during a banking crisis. Secondly, it is a protection against inflation. We believe that the Fed will not dare to raise the interest rate above 5%, so further data on high inflation will give a good impetus to gold.
And thirdly, the technical picture is favorable to gold. There is a strong cup and handle pattern that started back in 2011. A break of the key $2100 level could open the way to $2800-3000.
Last Monday we opened a position in JNUG at $31.49, today-tomorrow we plan to close it. We are waiting for the gold price to roll back to the 1900-1920 area, where we are going to enter the position again. Also, you can use the allocation to gold mining stocks (for example, $NEM and $GOLD)
The current events confirm our opinion that gold is the best asset of 2023
The current situation of the US and European banks was not a surprise for the Fed and the ECB. Each financial institution has risk management departments, as well as the Fed itself. And believe me, the Fed knew about the situation with the banks long before it began. Therefore, the regulator's reaction was quick and prepared.
There is an assumption that these bankruptcies of the banks were made by the regulators intentionally in order to reverse their monetary policy and not appear weak in the face of inflation, which cannot be overcome. After all, next year there are elections in the USA and they need to emerge victorious.
To bankrupt any bank in the world, it is enough to simply make a strong negative information injection, after which the depositors will do their job. Banks do not keep cash in equal proportion to the assets of their clients. Usually this amount is no more than 20%. Accordingly, if in a short period of time, depositors take more than 20% of the assets, the bank instantly becomes bankrupt. Unfortunately, that's how it works.
A year ago, the Fed said that it was going to make a "soft" landing of the economy. A "soft" landing is understood as a situation in the economy when it is gradually slowing down, which leads to a smooth decline in prices.
A year later, we can see that the "soft" landing is not going according to plan - the economy is not slowing down as the Fed expected.
In such a situation, a year before the elections, it is necessary to make a quick, controlled crisis in order to instantly land the economy and emerge victorious before the elections. Now we are beginning to see the beginning of such a controlled crisis.
How to protect yourself from it?
Gold! Gold has a unique situation now.
Firstly, it is a protective asset during a banking crisis. Secondly, it is a protection against inflation. We believe that the Fed will not dare to raise the interest rate above 5%, so further data on high inflation will give a good impetus to gold.
And thirdly, the technical picture is favorable to gold. There is a strong cup and handle pattern that started back in 2011. A break of the key $2100 level could open the way to $2800-3000.
Last Monday we opened a position in JNUG at $31.49, today-tomorrow we plan to close it. We are waiting for the gold price to roll back to the 1900-1920 area, where we are going to enter the position again. Also, you can use the allocation to gold mining stocks (for example, $NEM and $GOLD)
The current events confirm our opinion that gold is the best asset of 2023
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Day X
Today we will learn the decision on the Fed interest rate. This meeting, along with the May meeting, will be key to determining the further dynamics of the market this year.
Now the market is pricing in a 0.25% increase in the interest rate with 85% probability.
The technical picture is that today's decision and, especially, J. Powell's speech will greatly influence the market in the near future. The current meeting is also different in that the market does not know what rhetoric (hawkish or dovish) the Fed will choose. Previously, this has always been in demand, but not now. The Fed will try to be neutral today, but if this fails, then we can expect either strong growth or a strong fall.
It cannot be ruled out that we can see a very strong growth to a level above $ 4,300.
But let us repeat once again, this does not mean that we have already seen the bottom of the market and we can make a long-term purchase. No, we are likely to see a so-called "bullish" trap on the daily timeframe.
Such a development cannot be ruled out. Therefore, we are now 70% in cash and are waiting, first of all, for gold to roll back to the $1900 mark, where we will enter $JNUG. We will try to participate in the rally (if there is one) and not fall into a trap. But first, it is worth listening to J. Powell. We will always have time to earn our 10-20%
Today we will learn the decision on the Fed interest rate. This meeting, along with the May meeting, will be key to determining the further dynamics of the market this year.
Now the market is pricing in a 0.25% increase in the interest rate with 85% probability.
The technical picture is that today's decision and, especially, J. Powell's speech will greatly influence the market in the near future. The current meeting is also different in that the market does not know what rhetoric (hawkish or dovish) the Fed will choose. Previously, this has always been in demand, but not now. The Fed will try to be neutral today, but if this fails, then we can expect either strong growth or a strong fall.
It cannot be ruled out that we can see a very strong growth to a level above $ 4,300.
But let us repeat once again, this does not mean that we have already seen the bottom of the market and we can make a long-term purchase. No, we are likely to see a so-called "bullish" trap on the daily timeframe.
Such a development cannot be ruled out. Therefore, we are now 70% in cash and are waiting, first of all, for gold to roll back to the $1900 mark, where we will enter $JNUG. We will try to participate in the rally (if there is one) and not fall into a trap. But first, it is worth listening to J. Powell. We will always have time to earn our 10-20%
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Continued🔽
Many have read the forecast of a certain economist Harry Dent, who predicted that the market would fall by 80-90% in June.
In fact, he did not take these numbers out of his head. He looked at the current volume of purchased CDS, which is over $ 60 trillion. Accordingly, in case of default, all buyers will need to reimburse this amount, which is exactly equal to the volume of the market decline by 80-90%.
The main buyers of CDS are the central banks of Japan and China, which hold the largest share of government bonds. It is especially noteworthy that the Bank of Japan, which had a large share of bonds in 2008, did not buy these default swaps then. Perhaps they know something or this is just hedging the risk. We will find out very soon.
The main seller of CDS on the market is now JP Morgan, which has a large inflow of funds from regional banks and increased payments from CDS buyers. Today JP Morgan will publish a report that should be very positive. However, if the US Treasury defaults on its bond payments, JP Morgan could instantly go bankrupt, like many other banks.
The famous phrase "Sell in May and go away" may be more relevant than ever this year.
Many have read the forecast of a certain economist Harry Dent, who predicted that the market would fall by 80-90% in June.
In fact, he did not take these numbers out of his head. He looked at the current volume of purchased CDS, which is over $ 60 trillion. Accordingly, in case of default, all buyers will need to reimburse this amount, which is exactly equal to the volume of the market decline by 80-90%.
The main buyers of CDS are the central banks of Japan and China, which hold the largest share of government bonds. It is especially noteworthy that the Bank of Japan, which had a large share of bonds in 2008, did not buy these default swaps then. Perhaps they know something or this is just hedging the risk. We will find out very soon.
The main seller of CDS on the market is now JP Morgan, which has a large inflow of funds from regional banks and increased payments from CDS buyers. Today JP Morgan will publish a report that should be very positive. However, if the US Treasury defaults on its bond payments, JP Morgan could instantly go bankrupt, like many other banks.
The famous phrase "Sell in May and go away" may be more relevant than ever this year.
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Google will fork out
Today there were rumors that Samsung smartphones will soon have a new default search engine - Bing from Microsoft. On this news, $GOOGL falls by 3.5%.
We wrote about this in February and we believe that the main beneficiary will be $AAPL
Apple will definitely not sit on the sidelines and watch as the best search engine is sold to its main competitor. They will squeeze all the money out of Google so that their search engine will be their default.
Today there were rumors that Samsung smartphones will soon have a new default search engine - Bing from Microsoft. On this news, $GOOGL falls by 3.5%.
We wrote about this in February and we believe that the main beneficiary will be $AAPL
Apple will definitely not sit on the sidelines and watch as the best search engine is sold to its main competitor. They will squeeze all the money out of Google so that their search engine will be their default.
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Capitalism and Oligopoly
The 20 largest stocks by market cap account for 29.17% of the S&P500 index's weight. However, they accounted for 7.08% of the index's 7.55% total return.
This means that, although these companies are a small minority, they have a big impact on the overall stock market performance this year.
This is the main difference between the market's behavior and past crises. Currently, the gap in capital between the top 20 companies and the rest is very high. They have a huge reserve of cash in their accounts, which they will need to invest somewhere at some point. For example, in the buyback of their shares, as $GOOGL announced yesterday
And this will be a widespread action!
And then, shortly before the end of the crisis, the top 20 companies will massively buy up small companies for next to nothing, and in areas not even related to their core business. This will be one of the main indicators when it will be possible to start buying for a long period.
The 20 largest stocks by market cap account for 29.17% of the S&P500 index's weight. However, they accounted for 7.08% of the index's 7.55% total return.
This means that, although these companies are a small minority, they have a big impact on the overall stock market performance this year.
This is the main difference between the market's behavior and past crises. Currently, the gap in capital between the top 20 companies and the rest is very high. They have a huge reserve of cash in their accounts, which they will need to invest somewhere at some point. For example, in the buyback of their shares, as $GOOGL announced yesterday
And this will be a widespread action!
And then, shortly before the end of the crisis, the top 20 companies will massively buy up small companies for next to nothing, and in areas not even related to their core business. This will be one of the main indicators when it will be possible to start buying for a long period.
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Crypto investors waiting for the next bull run
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Guys! Ripple won the appeals court in Florida! This means that all charges against the company are dropped!
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Friends, hello everyone! I am opening a chat for everyone available. Join us, we will participate in joint work with COUB, where an interesting project for monetization of our community awaits us. I will post an announcement soon!
https://t.me/cryptochatbull
https://t.me/cryptochatbull
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