Here are the latest news items and commentary on current economics news, market trends, stocks, investing opportunities, and the precious metals markets. We also cover hedges, derivatives, and obscura. Most of these items are from the “tangibles heavy” contrarian perspective of SurvivalBlog’s Founder and Senior Editor, JWR. Today, we further examine the global derivatives market.
Precious Metals:
Time To Buy Gold As A Hedge Against “Extreme Financial Deleveraging” Credit Suisse Says
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Gold gains on weaker dollar, stocks ahead of Fed meeting.
Economy & Finance:
Morgan Stanley Warns a Major Stock Market Correction Imminent.
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Stock Bulls Look Toward $17 Trillion Burning a Hole in Pockets.
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At Zero Hedge: New Home Sales Crash In June To Lowest Since April 2020.
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Reader L.K. sent this: PayPal Partnering With Anti-Defamation League to Share Info With Law Enforcement, Determine Who Can Use Their Services. JWR’s Comment: This does not bode well. Given the ADL’s long-standing relationship with the SPLC, I can foresee a lot of “mission creep”, as they gradually expand their definition of “extremism.”
Inflation Watch:
USPS will move forward with higher prices despite lawmaker concerns: letter
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Gas prices soar as demand climbs following easing of pandemic restrictions.
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David Einhorn Lays Out The Blindingly Simple Reason Why Soaring Inflation Can Not Be Transitory.
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Temporary or not, inflation is rattling restaurants and broader economy.
Derivatives:
Reader J. McC. sent us the link to a fascinating piece, over at the oft-cited and oft-quoted Zero Hedge: Why Rolling Lockdowns Will NOT End Unitl 2023 and the Real Reasons Behind Their Continuation. Here is an excerpt:
” …digging deep into uncovering the real reasons why these lockdowns have been rolled indefinitely into the future. When the oligarchs informed people with my uncertain travel status, trapped in the throes of the March 2020 travel lockdowns, that after an initial 15-day period, we would be allowed to return home and promptly rescinded their promise after the 15-day period passed, I knew immediately that something far more sinister and nefarious was about to proceed. So, I started trying to connect the various events in the global financial markets directly to the length of the lockdowns. Time and time again, the money trail kept leading me back to one financial market – the $500 trillion of interest rate based global derivative contracts. As interest rates started rising precisely at the time global lockdowns went into full effect in March 2020 and quickly were adopted unilaterally around the world, global economic recovery would have been disastrous to the then nominal $500 trillion of institutionally-held global interest rate derivative products, most of which were tied to USD and Euro interest rates. Just as interest rates started to rise, the oligarchs conveniently announced the appearance of a lethal pandemic that coincidentally rescued bankers from this intractable, seemingly inescapable position. And along with the very rapid deployment of pandemic, global lockdowns that destroyed economies in nations all around the world, the highly vulnerable sector of global interest rate derivative products found the protection they desperately needed in March 2020 to prevent their complete meltdown.
Comically, eighteen months later, the BIS latest reports still show nominal amounts of $467 trillion of interest rate based global derivative contracts on the books, meaning that bankers have only allowed $33 trillion of the $500 trillion that existed at the start of these lockdowns to mature and come off the books. It is self-evident that they have continued to roll over their low-interest rate bets into the future instead of de-risking their books from these financial weapons of mass destruction. Over the past eighteen months, we’ve experienced a perpetual roll over of low interest rate bets in the hundreds of trillions in the financial derivative markets, and concurrently, the global masses, including myself, have experienced indefinitely continuing rollover of global lockdowns. Coincidence? I think not. Lastly, I know that market values of derivative products drastically differ from their nominal amounts as financial derivatives entail highly leveraged products, but the important takeaway point, to all the charlatans that always state that nominal amounts greatly overexaggerate real risk of financial derivative markets is this: In a rising interest rate environment, the nominal values of financial derivative bets placed upon never-ending low interest rates replaces the market values of these contracts as the REAL risk. In order for this risk to remain unrealistic, interest rates must remain as low as possible indefinitely until these derivative contracts mature and expire. And the latter half of this equation simply has not yet happened. This is why lockdowns will keep happening in some region of the world, or in multiple regions of the world at least until 2023, if not longer, as the risk of the motivating reason behind continuing waves of lockdowns has not expired…”
Forex & Cryptos:
South African Rand Falls Ahead of Fed Build Up.
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At the Currency Thoughts blog: Weather Extremes, Covid, and Sino-U.S. Government Talks on Investors’ Minds.
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Bitcoin tops $40,000 for first time since June as cryptocurrency rallies after sell-off.
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H.L. spotted this: California Has Banned High-End Computers for Residents.
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China’s digital yuan could pose challenges to the U.S. dollar.
Provisos:
SurvivalBlog and its Editors are not paid investment counselors or advisers. Please see our Provisos page for our detailed disclaimers.
News Tips:
Please send your economics and investing news tips to JWR. (Either via e-mail or via our Contact form.) These are often especially relevant because they come from folks who closely watch specific markets. If you spot any news that would be of interest to SurvivalBlog readers, then please send it in. News items from local news outlets that are missed by the news wire services are especially appreciated. And it need not be only about commodities and precious metals. Thanks!