| Author | Source |
|---|---|
| u/CoffeeLaxative |
| [Education 👨🏫 | Data 🔢](https://www.reddit.com/r/Superstonk/search?q=flair_name%3A%22Education%20%F0%9F%91%A8%E2%80%8D%F0%9F%8F%AB%20%7C%20Data%20%F0%9F%94%A2%22&restrict_sr=1) |
I have no background in macroeconomics. In fact, I’m in healthcare. However, this is what I’ve gathered in all of my 3 months of investing, learning more about econ and finance than my own field. You tell me what you think and where we stand. The title of my post… pretty much sums up my thoughts. If I made any mistakes, please let me know. After all, I’m a smooth 🧠.
1. S&P 500 inflation-adjusted earnings yield 🔥
You may have seen this picture from this post. It’s the S&P 500 inflation-adjusted earnings yield that’s now falling below zero, setting a 40-year low. The last times it fell below 0 were in 2008 (housing bubble), 2000 (dotcom bubble), 1987 (Black Monday), 1973 (recession). And it’s going under again. Here’s another post about it, with Crescat Capital’s letter. Essentially, impending boom ?
2. The Repo Market 💣
It’s been all the talk lately. Lately, the Fed has been conducting reverse repo operations at higher and higher amounts. On May 20th, we hit the 5th highest ever with $351B and 48 participating counterparties.
Then on May 21st, reverse repos reached $369B with 52 participants! Compare this to two weeks ago where we had less than half that amount, $155B on May 6th. Here’s a chart showing reverse repos from January til today. Notice the exponential increase ? Ya, shit is fucked.
Data from: https://apps.newyorkfed.org/markets/autorates/temp
Edit: 05/25: reverse repo @ $432.96 billion.
If you are not familiar with the repo market, I recommend reading this: The Imminent Liquidity Crisis & Reverse Repos Usage or watching George Gammon’s YouTube video (Repo Market Rates Turn Negative).
Wat mean? Means there is too much cash in the system and not enough collateral (like treasury bonds). It means there’s an imbalance between dollars (which are essentially IOUs) and whatever is backing the dollar’s worth.
Why imbalance ?
Quantitative easing (money printer go BRRRR)
Rehypothecation (the same treasury bond being lent to A for 10k, who lent it to B for 10k, who lent it to C for 10k, … but there is only 1 treasury bond and now 30k was lent.)
Probably more reasons
So now, nobody wants $ (except you and I) and all of these institutions want treasury bonds. And as of May 21, treasury bonds have a negative interest rate! Source: https://www.dtcc.com/charts/dtcc-gcf-repo-index
U. S. Treasury < 30-year maturity (371487AE9).
In other words, banks and institutions want these treasury bonds so bad, they’re ready to pay (lend) what it’s worth and pay some more cash to get their hands on it.
3. Crypto Correction / Crash ⚡
The crypto market dropped $1 trillion in the past 2 weeks ($700 billion last week and ~$300 billion the week before if I got my facts right). The leading coin went from ~$59k to ~$30k and all other coins followed.
So there’s a LOT of differing opinions on this matter, on why it happened… Elon Musk, China, etc. Let’s agree that it was probably a combination of everything. It also seems that the leading coin followed a textbook Wyckoff distribution, essentially a method to fleece retail investors (yet again!).
Huge volume spike on May 19th. Very sus
The sell off occurred mostly between 8:50 - 8:55 AM EST and continued til 9:10 AM on May 19th.
What happened on May 19th ? Oh, right! OCC had previously issued a letter to members notifying them of temporary increase in deposits for clearing fund size totaling $588M due at 9:00 AM on 5/19/2021. So, let’s all agree the crash was caused by a combination of everything.
Many coins were affected 6 days ago. Screenshot by u/incandescent-leaf
Edit:
Here’s an interesting DD that could shed some light on these crypto whales: https://www.reddit.com/r/Superstonk/comments/nkde38/bitcoin_address_activity_appear_to_mirror_gme/
It’s also interesting how Goldman Sachs now considers the leading coin as an asset class. The timing is what’s most intriguing. Last weekend, crypto had another big sell off. https://finance.yahoo.com/news/bitcoin-is-officially-a-new-asset-class-goldman-sachs-103540636.html
4. Commercial mortgage backed securities (CMBS) 🏬
According to Fitch Ratings, US CMBS delinquencies ticked up in April for the first time since October 2020, mostly from hotels and regional malls.
I don’t know about you, but this suuure reminds me of something… and this don’t look good.
🚀🚀 Edit 🚀🚀
Thank you to u/Due-Mountain-9044 for this:
In his interview and in his new article, Ryan Grim calls CMBS a BIGGER problem than the 2008 housing crisis:
Article: https://theintercept.com/2021/04/20/wall-street-cmbs-dollar-general-ladder-capital/
Podcast: https://theintercept.com/2021/04/23/deconstructed-whistleblower-financial-crisis/
4.1 Mortgages 🏠
Thank you to u/plasticbiner for also pointing this out:
New Report From Consumer Financial Protection Bureau Finds Over 11 Million Families At Risk Of Losing Housing (March 1, 2021)
Source: https://www.consumerfinance.gov/about-us/newsroom/new-report-from-consumer-financial-protection-bureau-finds-over-11-million-families-at-risk-of-losing-housing/
🚀🚀End of edit 🚀🚀
5. Banks, hedge funds, and the Fed working 24/7 🏦
We’ve seen the night pics and enjoyed them. Quite the norm nowadays, but quite unusual still.
But wait! There’s more. Not only do they have to deal with the stock market, the repo market, CMBS, paying their employees for overtime… they’re also losing money with fines.
UBS, Nomura fined $452 million by the EU. Bank of America, Credit Suisse Group AG and Credit Agricole were fined about 28.5 million euros last month. Source: https://finance.yahoo.com/news/ubs-nomura-unicredit-fined-452-100701721.html
Since January 2021 up until today, the SEC has awarded ~$163.2 million to whistleblowers. Whistleblowers get 10-30% of the money collected, which means someone is bleeding from $544 million to $1.632B.
And then the petty fines by the SEC that I won’t list. Chump change for them.
There’s also weird or bad news every week :
The European Bank Issues Financial Stability Warning. Reddit post on this
In Mexico, BBVA closes 867 branches and 1 million credit cards. In Spain, they closed 530 branches.
Banks are planning on launching a pilot program where they will issue credit cards to people with no credit scores: https://www.wsj.com/articles/jpmorgan-others-plan-to-issue-credit-cards-to-people-with-no-credit-scores-11620898206
Not to mention the margin calls already happening on Wall Street as reported by European financial news
Much more… won’t dig further. It’s 1:30 am lol
🚀🚀 Edit 🚀🚀 I’m back at it 3 days later
Here are a few more articles to make you go “Hmmmm 🤔”
Right after supposedly great earnings, Morgan Stanley sells $6 billion worth of bonds, following JP Morgan which sold $13 billion of bonds. Goldman Sachs also issued $6 billion of bonds. Source: https://www.bnnbloomberg.ca/morgan-stanley-joins-bank-bond-bonanza-with-three-part-sale-1.1592121
Over-leveraged Archegos Capital Management cost Credit Suisse $4.7+ billion in losses. Morgan Stanley dumped $5 billion in shares in Archegos’ stocks before fire sale. Nomura losses could be as much as $2 billion. Source: https://www.cnbc.com/2021/04/06/morgan-stanley-dumped-5-billion-in-archegos-stocks-before-fire-sale.html and https://www.cnn.com/2021/03/29/investing/wall-street-hedge-fund-archegos/index.html. Keep in mind Archegos was just a small family firm. How many more are there ?
Italian bank collapses on exposure to Greensill and GFG. Source : https://www.ft.com/content/c02a6e97-5505-4d4a-933f-a0e934ca6eda
🚀🚀 End of edit 🚀🚀
On top of that, the CEOs of all major US banks have to testify before Congress this week on May 26th and 27th. Source : https://www.bloomberg.com/news/articles/2021-04-15/wall-street-bank-ceos-called-to-testify-before-congress-in-may
How often does this happen ? Since 2008, they were called twice to testify before Congress according to above article.
6. The rich divorcing and/or selling stocks 💔
So Bill Gates divorced and Gabe Plotkin divorced ? Huh. Weird…
Wow. That’s a lotta shares. A week before the tech sector dumped.
Mark Zuckerberg selling his FB shares. Goes all the way back to February.
Google too?
Source: finviz.com
Edit:
7. The domestic market and the international markets 📉
Let’s look back at the past 2 weeks.
05/19 by u/CryptoFX1
On May 12, Nikkei Bled. Only 1% Away From the Low of Jan 28. by u/incandescent-leaf
“Taiwan Stock Exchange Index just wiped out YTD gains. This is abnormal. Very likely that it will also affect the US markets (though many can argue that this is actually a reflection of the US markets, and I would agree)” by u/_atworkdontsendnudes
Ok, the market has had its green days here and there. But overall, it’s been pretty unusually red, right ? Yeah, also, all of this could be unrelated. Could be a coincidence. What do I know ? You be the judge.
8. The media 📰
Usually very biased or bought out, but there are some exceptions like this article: Are we on the verge of a new financial crisis? The GameStop case, the signals of Hedge Funds and the rise of crypto.
What’s concerning is that even “biased media” is warning of inflation, hyperinflation and an impending crash. No links, just go on YouTube. If they’re talking about it, we know shit’s about to hit the fan soon…
Edit:
Ever doubted media manipulation ? Remember this video “Independent” media using the EXACT same words and this video of the 2008 crash: Not a single expert/spokesperson mentioned the true cause of the crash; Mortgage Bonds.
Remember “Bear Stearns is fine” back in 2008 ? Cramer says he’s confident inflation will not end up crushing US economy. Source : https://www.msn.com/en-us/money/markets/cramer-says-hes-confident-inflation-will-not-end-up-crushing-us-economy/ar-AAKl951
Motley Fool agrees, as per their “38 reasons you don’t have to fear a stock market crash” article: https://www.fool.com/investing/2021/05/23/38-reason-you-dont-have-to-fear-stock-market-crash/
9. GameStop 🎮
I think you know what I’m thinking of. Let me just repeat this. We have played the game while following the rules. We played against players that had cheat codes in an unfair game, designed for us to lose. Yet, here we are.
Buy, hodl, and vote fellow 🐈 & 🦍& 🐜. I appreciate you all. The rest can fuck right off.
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Edit: alright, who the f reported me ? Seems like the shills don't like this. To everyone else, I am perfectly happy with my life 😉🤑
Edit 2: I guess I was too subtle. I was reported for self-harm and potential suicide. Let me make it clear, I have absolutely zero thoughts about this. I love my life, even if it's a mess.
Also, thank you all for the awards and kind feedback! Was not expecting to gain so much traction. "Controversial" title is a reference to the movie The Big Short. Some of you (superstonkers) caught on.
Lots of great input and good discussion in the comments.
A few people questioning my sources and my background. Listen... forget it.
🚀🚀🚀🚀🚀🚀🚀🚀
10. The flurry of new rules and regulations 📝
Let’s not forget Gary Gensler, Chairman of the SEC, was sworn in on a Saturday (April 17, 2021). Why the Weekend Swear in Ceremony for Gary Gensler is of Significance
Also interesting how the DTCC, OCC, ICC, and NSCC have been implementing new rules and regulations like crazy in such a short time-span. Below is an overview of them (credits to u/MATTATI2005). And here’s another great DD tying them in with the FTD cycles of GME.
11. Margin debt 💵
FINRA Margin Debt is at a current level of 822.55B, up from 813.68B last month and up from 479.29B one year ago. This is a change of 1.09% from last month and 71.62% from one year ago. Source: https://ycharts.com/indicators/finra_margin_debt. Thank you to u/CapoeiraCharles who reminded me of this.
12. More charts 📉
I’m just going to leave this here. You be the judge of what this all means. Credits to u/peruvian_bull.
13. Final words 💎
My goal is not to incite panic but to share data and encourage discussion. Without knowledge, where would we even begin, let alone be prepared ? Imo, this is what makes r/superstonk great. It’s like a hive mind of 300k+ people sharing info.
To those who are panicking, I believe US banks insure up to $250k for each account. The comment section below is quite informative as well.
Are all the points in my post correlated ? Maybe, maybe not. Saying they are would be speculation. However, each point was based on facts and I think that’s what matters. The rest is up for you to decide.
This is not financial advice. If I missed anything, please let me know.
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