Economic pressures

[Danny B]

Sliding downhill to a smaller world

Automation won't be so much of a trigger as it will be a constant pressure.
Bangladesh needs 2 million new jobs every year but, automation is cutting into all employment.

https://www.youtube.com/watch?v=OsSDI8wWAyQ&t=210s

The Industrial Revolution has been chipping away at job niches for more than a century.

Robots will steal your white collar office job, too: 3 case studies ...
https://www.techrepublic.com/.../rob...ce-job-too-3-c...
Robots do destroy jobs and lower wages, says new study - The Verge
https://www.theverge.com/.../3/.../r...-us-labor-mark...

The trigger is most likely to be State spending to support people who have lost all or part of their income to automation. Italy is blowing out their budget to try to give some support to the poor. They will most likely blow the EU apart.
44 million Americans receive direct government support. 51% of Americans receive a check from the State. When the sovereign bond market blows, most of this support will come to an end. This public support is compensation to offset the loss of income. It won't be automation directly that blows up the sovereign bond markets. It will be the remedy for automation that blows the system.

Post WW II, America had 3% of the population and, 50% of the manufacturing capacity (ex iron curtain States) We lost that lock on manufacturing and aggregate income has fallen proportionately.
The computer has accelerated a process that began decades ago.

In the very crowded populations, 20% of seagulls are lesbian. Mother Nature has mechanisms for reducing population. Japan is the perfect example where they have even lost the desire for sex. The fertility rate in China is only 1.6 Most people realize that price inflation and resource depletion will bring us a lower standard of living. The whole world (ex sub-sahara Africa) is reducing their birth rate. This is completely incompatible with the demands of a debt-money system AND, the credit bubble.
The major CBs printed mega-pixels of new debt-money to try to compensate for the huge drop-off in consumption.

The debt bubble will blow when it is generally recognised that only debt-free money can keep it inflated. The FED prints debt-money but, the GOV has no ability or intention of paying it back. Last year, we paid $1/2 trillion in interest on public debt. It remains to be seen just how long the debt markets will allows the payment of interest-only with no hope of a return of principle. As interest rates climb, that $1/2 trillion will grow considerably.

No money,,,,, NO kids

EVERYONE assumes that; when things crash, the CB printing press will come to the rescue. I'm somewhat doubtful.


Buy more popcorn.

Stocks had a short-lived dead-cat bounce but, they haven't stopped falling.

https://www.armstrongeconomics.com/international-news/china/china-the-hidden-debt-crisis-in-the-provinces/

So, what happens to unemployment when this all blows?

The banks were first in line for free money. 0% money from GOV. This is in addition to all of YOUR savings that they speculated with. They bought up everything with that money and,,,, jacked up the price before they resold it to the end consumer.
This price inflation purely from speculation is what drove down the purchasing power of your wages. It is also the basis for the income inequality.
Here is the graph, https://tcf.org/assets/images/blog_i...mic-growth.png

https://tcf.org/content/commentary/graph-how-the-financial-sector-consumed-americas-economic-growth/?agreed=1

OK, but, how do you do a financial evaluation of a parasite that produces nothing?
"They" make up a fictional value of what all this speculation is worth and, ADD it to the GDP.

https://www.youtube.com/watch?v=EC0G7pY4wRE&t=82s

[bistander]

My solution

... What will break the cycle? My answer? Reduce the confiscatory taxes and regulations. How can that happen? Only when the corruption at the top is remedied. That could happen at any time. It only takes someone with police authority to arrest the criminal element in the structure. Do they have the spine or are they all weak, compromised and/or corrupt? How does AI fit into this picture? AI is a tool to increase productivity. It is not an independent "solution" or a means that really solves anything important. ...

How does AI fit into this picture?

Obviously have AI do this.

... arrest the criminal element in the structure.

Yeah, I know. Sounds easy. Gotta watch for unintended consequences.

Know a cure for greed?

Regards,

bi

[Danny B]

Why is everybody so fascinated with the 2008 date?He is claiming that the FED will relent, and, rescue our economic competitors.The Chinese may think that this is bad but, I doubt that Trump does.As they fool fewer and fewer people, there is more and more capital flight.They desperately need dollars. But, Powell's phone is off the hook.

"Yes, much of the western wealth has turned into a mirage, but in that respect, too, China has done what we did in a fraction of the time. "

https://www.theautomaticearth.com/2018/10/bubbles-balloons-needles-and-pins/

China was a huge gold buyer. They did everything that they could to depress the price,,, naturally. This may be coming to and end.

https://www.zerohedge.com/news/2018-10-19/has-china-finally-lifted-its-thumb-gold

"If global capital was buying empty flats in China, etc., and selling US-based assets, these numbers would be reversed. This suggests mobile capital is leaving China and other nations and moving into US-denominated assets."
"In summary: follow the money. Smart money is mobile, opaque and constantly on the move seeking safety, tax shelters, yield and capital gains. If mobile capital continues flowing into US assets such that demand exceeds supply, the Bull Market will continue sloshing higher. "
oftwominds-Charles Hugh Smith: Is the Greatest Bull Market Ever Finally Ending? (Hint: Follow the Money)

[Danny B]

Italy and China

Here is a graph showing the cost of capital, https://pbs.twimg.com/media/DplhWfsWkAAT7n0.jpg:large
This is a good article on discounting capital flows.

https://www.peakprosperity.com/blog/114462/weighted-average-cost-capital

"October 19 - Reuters (Massimiliano Di Giorgio): "European Economics Commissioner Pierre Moscovici said on Friday he wanted to reduce tensions with Italy over its 2019 budget,"
"At least for a few hours, Commissioner Moscovici's comments quelled tensions in the Italian (and European) bond market. "
That won't last long.


Italy and the EU / ECB are playing a game of "chicken" . There is no possible way for the ECB to win.

https://creditbubblebulletin.blogspot.com/2018/10/weekly-commentary-moscovici-and.html

Chinese shadow banking is failing and, the Chinese can't let up on the gas pedal. The more that they weaken the Yuan, the more capital flight they will get.
"This suggests mobile capital is leaving China and other nations and moving into US-denominated assets."



It won't be just China. Corporate America is going off a cliff also.
https://seekingalpha.com/article/421...-crunch-cometh

[Danny B]

The pervasive corruption created by the Central bank

The river of lies runs VERY deep as the bankers try to maintain their privilege at raping the producer. The most important tool for doing this is the Central Bank. Central Banks were originally created to supply war finance for the sovereign. The gold standard drastically limits the creation of sovereign bonds and, severely curtails war.
"Until the 1970s, all recorded history showed that bond yields were tied to the general price level, not the rate of price inflation as commonly believed. However, since then, the statistics say this is no longer the case, and bond yields are increasingly influenced by the rate of price inflation. This article explains why this has happened, and why it is important today."

No mention of the abandonment of the gold standard in 1971.
"This paper is a follow-up on my white paper of October 2015.[i] In that paper I explained why, based on over two-hundred years of statistics, long-term interest rates correlated with the general price level, and not with the rate of inflation. I now take the analysis further, explaining why the paradox appears to no longer apply."

200 years,,, about the same amount of time that we have carried the heavy yoke of the CB.
The article goes into great detail showing why Gibson's Paradox is no longer applicable. The article continually focuses on the role of savers / savings in the finance of productivity. NOT ONE MENTION of the fact that production is financed by the CB and, NOT by savings.

https://www.goldmoney.com/research/goldmoney-insights/how-gibson-s-paradox-has-been-buried

There is quite a bit to be learned from the article. It essentially proves (without trying) that monetary inflation from the CB has warped every aspect of finance.

The reason that I bring this up is; the CB was created to finance all the whims of the State,,,, be it war or, socialism. All of this money is channelled through the bond market. After all, when the CB buys sovereign bonds, the State can spend it as it wishes. The author of the preceding article claims that there is a new situation that is different "from all recorded history". The CBs have hyperinflated the bond markets. Armstrong claims that sovereign debt is soon to collapse. "Recorded history" may soon make comeback.

"The mechanics of the Greenspan put are extraordinarily simple. When the stock market drops by about 20 percent, the Fed intervenes by lowering the federal funds rate. This typically results in a real negative yield, and an abundance of cheap credit.

This gimmick has a twofold effect of seen and observable market distortions. First, the burst of liquidity puts an elevated floor under how far the stock market falls. Hence, the put option effect. Second, the interest rate cuts inflate bond prices, as bond prices move inverse to interest rates."
"A portfolio manager could smile in the face of the occasional and inevitable stock market crash because it meant their bond holdings were rising. Then, after a pleasant dip buying opportunity, their stocks would be running back up to new highs. This was the story of U.S. financial markets and money management from 1987 to 2016."
"But each time, the Fed came to the rescue by cutting interest rates, bumping up bond values, and engineering an extended stock market rally."
"When stocks go down, bonds go up.
Somewhere along the lines the flow of funds from stocks to bonds during a market panic became regarded as a flight to safety. But what if, in the year 2018, this flight is no longer to safety; but, to danger?"

"What may come as a great big surprise in the next market downturn is that this relationship between stocks and bonds is not set in stone. In fact, over the next decade we suspect this relationship will be revealed to have been an aberration."
Thank the FEDDon't hold your breath waiting for Powell to lower rates. He means to kill China. U.S. corporate bonds will be collateral damage. BUT, what plan does Powell have for U.S. sovereign debt?

https://economicprism.com/why-you-should-expect-the-unexpected/#more-6261

Here is a short history of the sainted Central banks.

https://www.clevelandfed.org/newsroom-and-events/publications/economic-commentary/economic-commentary-archives/2007-economic-commentaries/ec-20071201-a-brief-history-of-central-banks.aspx

https://www.economist.com/briefing/2017/04/27/the-history-of-central-banks

The State has sanctified the Central Bank because the CB finances the State. Sovereign debt is projected to blow up worldwide. Maybe it wasn't such a good idea to give the CB so much control. The academics claimed that they could smooth out the business cycle if a CB were given complete control over interest rates and the quantity of money. They have failed spectacularly. Anything that negates the business cycle is artificial and temporary.

[Danny B]

Italy, China, Scientific American & Kunstler

The bond market is a very well-known animal,,, very predictable. Salvini knows all this. By going head-to-head with the ECB and EU, he knows that investors will shun Italian debt. What is unknown is; how far will he take this?

Italy's Debt Rating Is Cut to One Level Above Junk - The New York Times
Investors bet against Italian debt as budget fears intensify | Financial ...
"Italy's bond yields rocketed above 7%. That's a crucial threshold--the bright red line Ireland and Portugal passed before their borrowing became so expensive that the European Union had to bail them out. This time, though, the stakes are higher and the options are more limited. Italy's debt is larger than the whole economies of Ireland, Portugal, and Greece combined. The euro zone simply might not have the political will or financial resources necessary to backstop those enormous obligations. As one analyst pointedly told CNBC, the country is "too big to fail, too big to save."

"Then, like Venice in the lagoon, it slowly began to sink. Starting in 2001, Italy's GDP growth turned absolutely paltry. It finally plunged below zero during the global recession "
Italy joined the EU in 1999 and, has been screwed ever since.

https://www.theatlantic.com/business/archive/2011/11/4-reasons-why-italys-economy-is-such-a-disaster/248238/

https://www.nationaldebtclocks.org/debtclock/italy

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&cad=rja&uact=8&ved=2ahUKEwi52KGYnZreAhXtxlkKHeeKCGQQqUMwAnoECAAQBQ&url=https%3A%2F%2Fwww.wsj.com%2Farticles%2Fitalys-debt-predicament-in-seven-charts-1540205027&usg=AOvVaw0fN6wSweXPfQr5hXU_UGRl

High Probability of Global recession – WorldoutofWhack

https://realinvestmentadvice.com/wp-content/uploads/2018/10/Debt-GDP-Total.png

"Of course, with the Fed hiking interest rates, which is pushing debt servicing costs higher, it is only a function of time until the rate of change in interest rates causes a financial decoupling in heavily levered companies with marginal balance sheets and debt servicing capacity."
YEP, we can't crash China without a lot of crashing here too.

https://realinvestmentadvice.com/market-clings-to-support-10-19-18/

https://www.scientificamerican.com/article/the-american-economy-is-rigged/

Imagine the world as a sinking lifeboat. The more States that get pushed overboard, the longer the time before the lifeboat eventually sinks.
Trump / Powell are pushing heavily.

https://www.alhambrapartners.com/2018/10/19/chinas-economy-is-not-crashing-its-worse-than-that/

http://kunstler.com/cluster****-nation/feeling-the-heat-yet/#more-9765%27

[Danny B]

$10,000 in nominal terms. "
There you have it. Wages are just too low for it to escape it's position as an export economy. Wages are too low everywhere. The current minimum Chinese salary is U.S. $ 270 per month.
Why China Inc is still stuck in 2015 | Asia TimesHow bad will this conflict get?

"The debt crisis continued and then in 86BC, the government was compelled into default. This is when the Valerian Law came into play and this remitted 75% of all debts. The State debts were deflated on and reduced to 25%."

"So we must understand that there was a brewing debt crisis in Rome and the oligarchy was determined to keep power at any cost."

https://www.armstrongeconomics.com/history/ancient-economies/roman-republics-debt-crisis-led-to-its-collapse/

Interesting article from Armstrong on pole shift.

https://www.armstrongeconomics.com/international-news/nature/there-are-two-types-of-pole-shifts-we-seem-to-be-on-course-for-an-event-faster-than-most-ever-believed/

Reportedly, the current mini-boom should be attributed to obummer
https://www.armstrongeconomics.com/i...trump-but-him/.

Just in case that you need a reminder, most politicians are too incompetent to survive in the private sector. Once they get in and collect a salary, the next most important thing is to lock in a good pension.

https://www.armstrongeconomics.com/international-news/europes-current-economy/why-britain-politicians-argue-to-remain-in-the-eu-pension/

the only member of the committee with any actual investment experience.

https://theintercept.com/2018/10/21/kentucky-pensions-crisis-hedge-funds/

[Danny B]

Italy is the third largest bond market in the world,,, behind America and Japan. It is the tenth largest economy and, the bond load is outsized to the economy. There was a proposal of OMT.
Outright Monetary Transactions ("OMT") is a program of the European Central Bank under which the bank makes purchases ("outright transactions") in secondary, sovereign bond markets, under certain conditions, of bonds issued by Eurozone member-states.
Outright Monetary Transactions - Wikipedia

The Italian economy has not grown ever since it was saddled with the EU. The debt load is growing horrendously. The ECB could execute OMT but, it would only delay the final execution. Evidently, Salvini, et al are going to ride this pony right off the cliff.


The Central Bankers inject free / fresh money into the upper loop as a support mechanism for the already-rich. The FED claims that we need 2% inflation per year. That is done to subsidise the rich bankers. Wages never keep up with price inflation. Since China, et al put a ceiling on wages, this has gotten even worse. The bankers want a continuous injection of free money. BUT, this money is debt-money and is deflationary. GOV takes about 50% of your income. As public debt service grows, there is less circulating money for the consumer.
The same is true for private debt-service. The bankers are holding $ bazillions of notes, loans and bonds. Not to mention several $trillion of margin debt from the stock market. Since most of this is debt-money saddled by an interest load, it actually has a negative worth.

Residential RE crashed in 2008. The price of a house has to be commensurate with the prevailing wages in the same area. If it isn't, there will eventually be a lot of defaults. The defaults hit and, the banks were rescued. Prevailing wages were never rescued. The 2008 bailout was just a bandage. The CBs pumped in even more debt money. This did nothing for wages. The 2008 crash continues to this day. But, not for much longer.
Good article.

https://www.zerohedge.com/news/2018-10-23/blain-we-are-finally-approaching-end-phase-2008-global-financial-crisis

We respond
US Birth Rate Hits All-time Low: What's Behind the Decline?
https://www.livescience.comhttps://www.vox.com/science-and-heal...s-births-women

Just like Japan; the birth rate falls at the same time the debt load MUST grow.


A bubble in search of a pin.

[Danny B]

We don't need no stinkin 2% inflation. RE, Armstrong

One of the main responsibilities of the Federal Reserve is to maintain price stability. BUT, all the recent FED-heads have claimed that we MUST have 2% inflation to maintain stability.
Paul Volker was FED-head for several years. Here is what he has to say;
Paul Volker is a Lutheran. ALL the jewish fed-heads demanded 2% inflation.

https://www.zerohedge.com/news/2018-10-23/paul-volcker-trashes-fed-washington-plutocrats-worlds-hell-mess-every-direction

An infusion of X dollars every year results in the hoped-for 2% inflation. This "money" is injected into the bankers loop so, no matter how much price inflation we get from the monetary inflation, the bankers are always ahead.
This constant monetary and price inflation resulted in minimal wage inflation. The time / terms of our credit purchases were extended way out to compensate for our lost ground on wages. The situation finally reached a point where we defaulted on our houses.
There is horrendous price inflation in the upper loop. It is slowly seeping in to the lower loop,,, especially for things that can be considered as a store of value.

Is it a coincidence that since 1913, leadership positions in the Federal Reserve have been held primarily by Jews?

https://www.quora.com/Is-it-a-coincidence-that-since-1913-leadership-positions-in-the-Federal-Reserve-have-been-held-primarily-by-Jews

Armstrong warned that the rising dollar would destroy everything.


Fear vs collateral,,,, lotsa graphs.

https://www.alhambrapartners.com/2018/10/23/three-stages-of-gold/

Here is a note from Armstrong. Look at the title of the picture. This sums up the biggest part of the crash.

https://www.armstrongeconomics.com/armstrong-in-the-media/the-forecaster/coming-new-german-documentary/

[Danny B]

Chris Hedges

Chris Hedges is a long-time reporter from distressed areas of the world. He has seen MANY wars. He has a good interview here. For some reason, he believes in global warming,,, Kavanaugh is a sexual predator,,, Trump is a nincompoop, Christian fascists,,, a few oddball beliefs like that. Don't let that distract you from his projections.

https://thetyee.ca/Culture/2018/10/24/Chris-Hedges-Big-Crash/

Couple of quotes, "Wages have been kept far below what they should be, based on productivity which has increased by 77 per cent since 1973. If wages had kept pace with productivity, the minimum wage in the United States would be well over $20 per hour. "
He is talking JUST about our increased productivity. If wages had kept even with price inflation, the number would be much higher.

[Danny B]

Fallout from currency inflation

The politicians created the post-war welfare-warfare State. This was initially financed by our Bretton-Woods credit card. We maxed out the card (good name of the U.S. dollar) and had to go off the gold standard. Both the gold standard and, Bretton Woods were mechanisms to keep any State from juicing up the sovereign bond market to finance a war. Free of the gold standard, the Treasury debt could be run up much higher. In June of 1971, the debt was 398,129,744,455.54
Currently it is 21,671,062,290,012.80
Population, 207.7 million (1971)
Population, 327,482,993 (2018)

We hyper-inflated the bond market and, had wars aplenty. Out of historic momentum, many people still used the dollar as the reserve currency. We no longer had the Bretton-Woods agreement helping us but, the dollar was still considered the best reserve. Add to this, the Saudi agreement to price all oil in U.S. dollars. We had a very high demand for dollars. We needed all that dollar flow to keep the wars going.
Population went from 207M to 327M
Debt went from $398B to $21,671B

The inflationist army saddled up their beast-of-burden (the productive worker). They put on blinders and cracked the whip.
Money supply, 1971-01-01 632.9 B
Money supply, 2018-09-01 14241.5 B
The FED looks for 2% price inflation. Hard to say just how much monetary inflation it takes to get 2% price inflation.
Never the less, the FED channelled fresh liquidity into the historic banking class. You can see that a 2% increase applied to 14241.5 B is quite a bit of money.
During the '60s, wages went up pretty well because America still had a lock on manufacturing due to the destruction in Europe. By the middle '70s, Europe had rebuilt much of their manufacturing base. Wages went stagnant from the competition. The monetary inflation continued apace.
The R.O.W. Had to undercut our prices to accumulate the reserve currency. With our diminishing income, we had to extend credit terms farther and farther out into the future. We had recurring crashes because our income couldn't support the predations of the upper loop.

Enter China and India. They drove wages down even more. We still had a high cost of living thanks to FED pumping. Our economic competitors didn't have this burden and could survive on very low wages. Wages have been essentially flat for at least 40 years,,, maybe 60. We have a growing money supply and, a growing public debt. We also have 96.2 million of working age who are not in the labor force. Consumption, confidence and, the birth rate are falling.

The money supply must be grossly inflated to support the finance class. The productive class is withering away. Note that derivatives are reckoned to be somewhere in the neighborhood of one quadrillion dollars. The financial class is doing each other's laundry. They sell bogus instruments to each other to "earn" fees.
The money is channelled into the banking class. It is pretty much useless unless some producer takes out a loan. With low wages and mass unemployment, there is little demand for credit from actual producers. To keep the party going a bit longer, FED GOV is borrowing $trillions. But, the tax rolls are diminishing and, eventually people will avoid public debt.

The perennial inflation to support the banking class, has priced Americans out of a job. The resulting defaults will eventually work their way up to the bankers.

We're still in 2018 and, there is a long way down in the future.

[Danny B]

Stocks are crashing and, Powell is on the sidelines

Armstrong, "We do not necessarily have to run and hide in a cave. I will let you know if it really is that bad. What we are looking at is the collapse of governmental systems. That does mean you have to run and hide someplace. Yes, that is possible in certain areas. "
Keep in mind that 51% of Americans receive a check from GOV
"So, no need to run and hide. We are looking at an economic implosion. Yes, that will result in civil unrest and that will most likely be focused in the big cities. So the risk would be greater for someone living in LA or NYC rather than in the suburbs. "

https://www.armstrongeconomics.com/armstrongeconomics101/understanding-cycles/forget-the-doom-gloom-its-not-that-bad/

Annualized loss in US Treasuries (-9.7%)

https://www.zerohedge.com/news/2018-10-25/10-thoughts-recent-equity-market-sell

You get the idea. Stocks are crashing. Previously, the FED always had your back. You could ALWAYS buy the dips. If Powell refuses to carry on what Greenspan started, there just won't be any rallies. Trump appears quite upset about this. One could assume that he doesn't want markets to blow before the election.


No earnings and, NO Greenspan "put" means that it is time to pull out.

THAT is a hypothetical question in all senses.

This is just the beginning of market seize-ups.

Bond buyers deserted European markets a long time ago. If the ECB stops buying, there will be NO BID.

https://www.alhambrapartners.com/2018/10/23/three-stages-of-gold/

[Danny B]

These boneheads wouldn't know what the "real economy" is if they found it dead in the road.Yeah, right.NOBODY wants to be in bonds. They all read Armstrong. They will go to gold and cash.
"For now, bonds have been relatively immune from a "great rotation" out of equities - the 10Y is trading around 3.13% without any buying panic observed"
What about selling panic?
"For now, there are no signals that Powell is planning on intervening any time soon."
Add to this;

So, the chair and vice-chair have a HUGE fan set up. It is switched to SUCK. Stocks and bonds are moving closer to the fan blades. Corporate America is going to crash no matter what. IF the FED can manage some kind of controlled demolition, it will probably avoid UN-controlled demolition.

https://www.zerohedge.com/news/2018-10-25/when-will-fed-step-rescue-markets

Remember that when all this notional value of assets is falling, this is deflationary. People stop spending.

[Danny B]

Armstrong,,, insane algos

If those of you who live in Europe don't know already what is coming at you, you've had your head stuck in the sand. The Eurozone project was doomed from the beginning. Armstrong, once again makes this perfectly clear.

https://www.armstrongeconomics.com/international-news/europes-current-economy/eurozone-will-collapse-there-is-no-other-choice-economically/

The derivative book at Deutsche Bank was at one time larger than the entire GDP of Germany. Now,

https://www.youtube.com/watch?v=KKPMLFz0rNY

Social Security was forced to buy U.S. GOV bonds. GOV needed the cash to fight wars. If the money had been invested in stocks, the fund would have grown ENORMOUSLY. The wars came first.

"The traditional way people took care of their future was to build a family structure. The children took care of the parents. The promises of socialism have relieved the children of such obligations for the government was there. As we begin to witness this crisis unfold, the world financial system will be turned on its head."

https://www.armstrongeconomics.com/world-news/pension-crisis/pension-crisis-hits-russia/

Invest in your family.

"While on paper, CTAs use computer-driven models to navigate markets and trade everything from equities to bonds to currencies to commodity futures, in reality they simply chase momentum and try to isolate an upward (and occasionally) downward pattern which to piggyback on. Unfortunately for their programmers, with volatility surging, the market's traditional patterns have all been shattered."
The algos don't know what to do.Wait, what about 2008?Traffic jam at the rabbit hole.
"In fact, according to Goldman, equity long-short hedge funds suffered one of their worst ever losses on Wednesday, pushing declines this month to 8.7%."
Damn gravity!

"2631 in the S&P is the next "sell level", at which point CTAs will go down to just "14% Long." We're almost there. Meanwhile, should the selloff extend even further, a move below 2577 would see the CTA Trend position flip to outright "-100% Max Short",
YEP, everybody on one side of the boat.
"Only then- with all the algos short - will it be time to finally buy the dip, ahead of verbal central bank intervention and rise the next furious CTA short squeeze to new all time highs."

https://www.zerohedge.com/news/2018-10-26/its-bloodbath-out-there-across-almost-every-strategy

SO, what if verbal intervention does not appear?

Here is some heresy from RT, https://www.rt.com/op-ed/442319-thre...order-nuclear/

The default cascade hasn't even started.

As the dollar goes up, foreign divisions of domestic companies lose money on currency arbitrage.

[Danny B]

Alternative economists,,,kill stocks to save GOV bonds,,, dying shale

Here is all you need to know about the U.S. dollar. The rise of the dollar is destroying everything in it's path.

https://www.zerohedge.com/sites/default/files/inline-images/YTD%20JPM.jpg

"the Fed is committing its habitual policy mistake by overtightening"
Yep, if they are cutting off the free money, they are definitely WRONG.
"JPMorgan's quant Marko Kolanovic had repeatedly pushed, advising clients - so far erroneously - on at least two occasions to buy the dip "
They got hammered. Everybody needs dollars and, they are driving them up.

https://www.zerohedge.com/news/2018-10-27/paranoid-traders-have-seen-market-only-twice-1970s-stagflation-and-global-financial

"Federal Reserve officials have tried this week to ease concerns on Wall Street that bank reserves are growing scarce "
Just words, no action.

https://www.reuters.com/article/us-usa-fed-reserves/soothing-words-from-fed-as-rate-hits-ceiling-for-first-time-idUSKCN1N0281

Armstrong tells us that bonds will crash but, stocks will do well. That is NOT possible.
"But on the other hand, they now find that U.S. trade deficit reaching its largest level on record - the precise deficit tariffs purported to narrow - is very worrying."
Like almost everything else, the theory did NOT work out in practice.
"The problem lies with government spending and monetary inflation, precisely those activities that global businesses have been taught either to ignore or, worse, to embrace and lobby for. "
The chickens are coming home to roost.
"In asking taxes for such payments the government makes the citizens answerable for money squandered in the past. The taxes paid are not compensated by any present service rendered by the government's apparatus. The government pays interest on capital which has been consumed and no longer exists."
YES, but, we got a lot of nice war stories to tell our kids.

https://www.zerohedge.com/news/2018-10-27/why-public-debt-problem-and-trade-deficits-arent

https://www.zerohedge.com/news/2018-10-26/establishment-must-undermine-alternative-economists-crisis-unfolds

The broken trend,

https://www.zerohedge.com/news/2018-10-27/markets-trend-breakdown-has-been-confirmed

https://www.zerohedge.com/news/2018-10-26/warning-fed-not-going-rescue-stocks-time

OK, the FED crashes the stock market to drive money into bonds. Keep in mind that most economic theory seems to be major BS. Stocks and bonds are now 100% correlated. They go up and down together.

https://www.armstrongeconomics.com/markets-by-sector/stock-indicies/is-it-the-elections-of-interest-rates/

"So whom has the bonds and will take the loss? Guess who? The central banks. They are loaded to the gills and cannot sell the long-bonds they bought. There is no bid. In this debt crisis, there is no bid for debt, which is typically how empires, nations, & city-states collapse."

https://www.armstrongeconomics.com/future-forecasts/the-bond-crisis-2015-75/

2 links, https://www.armstrongeconomics.com/t...ernment-bonds/

https://www.zerohedge.com/news/2018-10-27/us-shale-oil-industry-catastrophic-failure-ahead