Black Swan - US Debt Default

2021年6月25日

Speculation for Black Swan:
- Liquidity being sucked out of the system o/n RRP nearly 1T.
- G4 Central Banks' liquidity (B/S YoY %) rolled over globally (Global liquidity peaked and collapsing).
- US Debt and global debt at ATH and parabolic.
- Global Credit Impulse turns negative.
- Global productivity stagnating, through debt-fueled artificial economy.
- Rates more negative than housing boom of 2000s.
- All asset classes parabolic and market at a 100Y resistance.
- "Central banks have bought $900 million of financial assets every hour in past 15 months" - BofA

No more room for debt for next crisis.
Won't be long now. Debasement of USD coming.

en.wikipedia.org/wiki/United_States_debt-ceiling_crisis_of_2011
bloomberg.com/news/articles/2021-06-23/yellen-renews-plea-to-raise-debt-limit-ahead-of-july-31-deadline

GLHF
- DPT

2021年7月19日

交易开始

We can start with a sovereign credit downgrade

2021年7月30日

交易开始

Congress needs to pass 4 bills: eviction moratorium, infrastructure, budget for 2022, and debt-limit extension. They have 7 days in Committees and then 10 days to argue and vote between now and Oct 1st, to do all this. Then the treasury goes into default.

2021年9月2日

交易开始

Foreign ownership of US gov't debt fell from 35% end-2012 to 24% end-2020, part of a broad drop in foreign ownership as debt grew and central bank QE stepped in as a buyer. We see this lack of foreign enthusiasm for all the debt we're issuing as a key "market" signal.

What we know for sure is that foreigners bought US Treasury debt in 2009 during the global financial crisis (blue), but sold in 2020 (red), with the Italy & Greece the only places where relative to GDP gov't bonds were sold more. Not a great signal for Treasury safe haven status.

- Robin Brooks

2021年9月3日

交易开始

It's been obvious for a while as described here, but something is clearly very very broken.

NY Fed Suspends Its GDP Tracking Model as Economic Growth:

zerohedge.com/markets/wheels-come-economic-growth-craters-ny-fed-suspends-its-gdp-tracking-model

Meanwhile, China will replace COMEX as the world’s commodities futures hub. We will be trading with e-CNY, the Chinese CBDC.

reuters.com/world/china/china-launch-more-futures-contracts-increase-foreign-investors-trading-cabinet-2021-09-03/

Optimists argue that if the economy crashes the Fed will just buy stocks directly... but isn't that effectively what is already happening, comparing the SPX to the Fed balance sheet?

US following Japan's playbook in the 80s and 90s. I wonder if the result will be different.

Japan's PM Suga announced his resignation today by the way, to take the fall for BOJ Kuroda's handling of the pandemic recovery, taking on even more debt than even the US or EU.