Hey Jessyclical traders
As we see the world trying to cope with one of the biggest events in recent history with the global lockdown. Regardless of where you stand on the issues, we are all trying to cope with the fallout, be it socially, mentally, emotionally, physically or financially.
I can't speak for the first 3, but I definitely keep track of what is going on in financial markets, because, well I'd like to secure a future that doesn't involve me having to have to start from scratch like I imagine many will find themselves in.
Everyone who is not sitting on a pile of cash, which is 99% of us is looking at ways of securing either cash flow or savings to make it through these uncertain times and into the future. It's why we're seeing such volatility as everyone is either trying to save or trying to risk what little they have to try and secure something.
The markets now in complete decoupling of anything we do, it's essentially central banks propping it up and the companies that trade their value in public markets. If they do not, pension funds will collapse and we would fast forward the depression.
Traders on both the institutional side and the retail side see this and continue to front-run the money printing allocation and that's why we see the disconnect between markets and real life.
These markets are simply trying to acclimatise to the phases we're moving through and to me, I see its 3 phases. Many think we're in the clear, that this is as painful as it's going to get but I am not so optimistic.
When markets shut down and supply chains grind to halt, we saw assets dump and anything that wasn't the dollar take an absolute beating and the central banks had to move these assets to their balance sheet and provide liquidity.
People are flocking to fiat, we saw stock markets, crypto markets, housing markets all start to tank as people sell up to get cash. Cash is where the majority of people flock to in times of uncertainty and central banks have been pumping as much cash into the system as they can.
As central banks try to adjust to these changes they reduce interest rates and print til the cows come home. They issue new debt to pay for old debt and the Ponzi continues. As long as they can maintain the illusion of markets. As they continue to print and buy up assets we see confidence come back to the market as people see nominal improvements and can't see its the result of currency debasement.
Day trades and pension funds return looking for opportunity, but the problem is zombie companies aren't going to be able to produce returns regardless of new capital injections.
I think we'll eventually hit the insolvency phase, mortgage holders won't get holidays from the bank and will have to pay up or give up their homes. Companies will have to cut staff or close up shop, governments will try to support with social programs and having less tax income so they have to go further into debt.
Student debt, credit card debt, auto loans will all start to fail at massive rates and insolvency in consumers, corporates and governments.
More money printing, buying direct equities and negative interest rates are the tools they will use to kick the can down the road as far as possible. The boomers are only trying to hold out long enough to make it the next generation's problem.
Have your say
What do you good people of HIVE think? Are we going to see massive insolvency?
So have at it my Jessies! If you don't have something to comment, comment "I am a Jessie."
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