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Reverse REPO Market Brewing Financial Crisis Black Swan Danger

Stock-Markets / Financial Crisis 2021 Jul 29, 2021 - 05:20 PM GMT

By: Nadeem_Walayat

Stock-Markets

Financial Crisis 2.0 - You Don't Know How Big of a Bubble Your in until AFTER it BURSTS

A handful of stocks are driving the indices higher, Apple worth $2.3 trillion, Microsoft $2 trillion, Amazon $1.8 trillion, Google 1.8 trillion, Facebook $1 trillion even that over priced pile of poop Tesla came close to being valued at $1 trillion, we are definitely in a bubble, you only need to go onto youtube and watch the to the moon videos of Cathy Wood, literally everything's going to go to the moon because her barely out of puberty Quants decree it to be so. This is clearly a major warning sign of a unsustainable trend when indices are ruled by such a small clique of tech stocks where the greatest similarity is with the dot come bubble in terms of the valuation of stocks that actually produce revenues unlike the largely worthless dot com's of that time.


Financial Crisis 2.0 - You Don't Know How Big of a Bubble Your in until AFTER it BURSTS

REPO Market Brewing Financial Crisis Black Swan Danger

The REPO market, where banks are buying short-term treasuries on an epic scale, on face value this can be explained that the banks are reluctant to lend and so Banks awash with cash are parking their excess deposits with the central banks so that they do not have to increase their capital reserves to cover the excess deposits as the following graph illustrates which is the opposite to the financial crisis when the banks were short on liquidity due to a run on the banks that were seeing liquidity / deposits withdrawn on an epic scale.

Where the mainstream press is concerned this is nothing to worry about and in fact they see it as the banks being an in healthy position, excess cash unlike the financial crisis when there was a run on the banks

Which to me reeks a lot like the mantra going into the financial crisis of a housing market soft landings etc.

So what's the problem if the banks have too much cash, why could it trigger a black swan crash event?

Because just like the financial crisis it is sucking liquidity OUT of the financial system that fractional reserve banking and then the shadow banking system magnify mani-fold. Maybe somewhere between X20 to X40 the reversed REPO amount.

You can see the hidden impact in the financial system as we see a sharp drop off in the commercial loans, as businesses are not borrowing ahead of what? A recession?

Its akin to a run on the banks underway that is sucking money out of the banks for reasons that won't become apparent until after the fact. I could guess at reasons by looking back at what the bankster's did last time i.e. sliced and diced mortgage backed securities and selling CDO's that they could not honour, which they likely have been upto similar tricks of the trade since, hence the demand T-Bills as collateral in what is happening in the the reverse repo market we are probably seeing the early warning signs of Financial Crisis 2.0. A panic rush to hold T-Bills for what ? Not for the 0.05% interest rate! It could be to slice and dice collaterised debt obligations with the Tbills required to give junk bonds a Triple BBB rating.

Anyway sucking money out of the banking system is not good for ASSET PRICES. It is DEFELATIONARY i.e. every asset that has responded to rampant money printing since covid began could now see itself undone in a far shorter period of CRASH time. For at a time of lack of liquidity then which assets do you think will be first to be sold? That's right the most liquid assets, that's your Apples, Google's, Facebook's, and Amazon's.

Stocks, crypto's, bonds, housing, and maybe even gold , everything that has been inflated and leveraged could now quickly deflate in a market panic event when the cookie finally starts to crumble, perhaps when the CDO's and other derivatives markets start to seize up demanding liquidity to be raised from elsewhere..

So whilst currently everything is relatively calm with stocks trading near all time highs, the reality maybe that we are at precipice of a tipping point that could soon snowball into a full blown market panic event with likely economic consequences, of which the reverse repo markets could be the canary in the coal mine because we won't know exactly the hell the banking crime syndicate has upto behind the scenes until AFTER the event! But I can guess that just as the Financial crisis of 2008 was built on bets on top of bets on top of bets then so will it be so this time.

This analysis is an excerpt from my recent extensive analysis evaluating the prospects for a Financial Crisis 2.0 - Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! the whole of which has first been made available to Patrons who support my work.

  • You Don't Know How Big of a Bubble Your in until AFTER it BURSTS
  • Stock Market Summer Correction
  • REPO Market Brewing Financial Crisis Black Swan Danger
  • Margin Debt Bubble
  • US Bond Market Long-term Trend
  • Michael "Big Short" Burry CRASH and HYPERINFLATION WARNING!
  • Michael Burry's Track Record
  • Michael Burry's Portfolio
  • Investing During Uncertainty
  • AI Stocks Portfolio Buying July Levels Update
  • HEDGING AI Stocks Portfolio
  • Crypto Bear Market Accumulation State
  • Bitcoin Bull / Bear Indicator
  • Market Oracle AI Coin Thoughts
  • Biotech Brief

So for immediate first access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $3 per month. https://www.patreon.com/Nadeem_Walayat.

Including access to my recent comprehensive analysis of Bitcoin -

Bitcoin Bear Market Trend Forecast 2021 and Model Crypto Portfolio Buying Levels

  • Investing in the Tulip Crypto Mania
  • Bitcoin Price Trend Forecast Review
  • Lessons Learned
  • Cathy Crypto Wood's View on Bitcoin
  • BITCOIN HALVINGS TREND TRAJECTORY
  • Stock to Flow Infinity and Beyond!
  • Bitcoin, Crypto's and the Inflation Mega-trend
  • Black Swan 1 - Will Crypto's Get Banned?
  • Black Swan 2 - GOOGLE
  • Black Swan 3 - USDT Tether Un-Stable Coin Ponzi Schemes!
  • BLACK SWAN 4 - Bitcoin 51% Network Attack by China?
  • Black Swan 5 - Bitcoin is Already Obsolete
  • US Trending Towards Hyperinflation
  • BITCOIN TREND ANALYSIS
  • Bitcoin Bear markets analysis - How low could she blow?
  • Bitcoin Trend Forecast
  • Bitcoin Long-term probable Next bull market price target
  • Alternative Scenarios
  • My Crypto Bear Market Investing Strategy
  • Crypto 1 - Ethereum (ETH) $2600
  • Crypto 2 - Bitcoin $40,375
  • Crypto 3 - Ravencoin $0.078
  • Crypto 4 - Cardano $1.59
  • Crypto 5 - Pokadot $25
  • Crypto 6 - ChainLink $26
  • Crypto's 7 to 10
  • Creating The Perfect Crypto
  • How to Invest in Crypto Without Getting SCAMMED
  • CHIA SCAM COIN
  • Binance vs Coinbase
  • Have ARK Invest Funds Bottomed?

Of which this video gives a taste of -

Investing in the Crypto Bear Market of 2021 for the Bitcoin, Eth Tulip Mania Bull Market of 2022

For crypto trading and investing see Binance for 10% discount on trading fees - Discount Code LZ728VLZ

For managing your crypto's see Coinbase

For GPU mining check out Nicehash (affiliate links).

My analysis schedule includes:

Again for immediate access to all my work do consider becoming a Patron by supporting my work for just $3 per month. https://www.patreon.com/Nadeem_Walayat.

And ensure you are subscribed to my ALWAYS FREE newsletter for my next in-depth analysis.

Your biotech stocks investing analyst.

Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2021 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Housing Markets Forecast 2014-2018The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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