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My usual rant about too much global debt. Got triggered by Fintwits on X this morning. It kills me when I see "experts" online say the economy can handle 6 or 7% rates. "Before 2009 we had 6% rates the economy was just fine". The people saying this are clueless. Look at the level of global debt now comparted to pre 2009. Look at the debt servicing costs as percentage of US budget. Look at the mark to market loss at the Fed and other central banks. Looks at the losses on hold to maturity bond assets on most banks balance sheets. Those are 30 years bonds they bought. Even if they did accounting tricks and tried to sell them, THEY CAN'T while rates are this high, let alone higher. The collateral value of those bonds is suppressed while rates are this high. Banks need other sources of liquidity. Hence FED discount window and repo. Ultimately, too much debt. It has to be monetized away through higher inflation. Rates are not going to be able to go higher to deal with it.

?? AUGUST is when Vol happens?? August 1990 - Iraq invades Kuwait August 1997 - Asian financial crisis August 1998 - Russia defaults on debt, causing LTCM's collapse August 2010 - European debt crisis August 2011 - US debt downgrade August 2015 - China devalues the yuan August 2024 - Yen carry trade collapse Regardless, August holds a special place for me. Our daughter was born in August, and she’ll be turning eight this Friday. —— And there you have it: *BOJ'S UCHIDA: WON'T RAISE RATE WHEN MARKET IS UNSTABLE ??The Bank of Japan's (BoJ) influential deputy governor said on Wednesday the central bank *won't hike interest rates when markets are unstable*, playing down the chance of a near-term hike in borrowing costs. Here’s what you need to know: The BoJ plans to continue raising rates gradually, but only after markets stabilize. They will use market volatility to guide their decisions and are positioned for lower volatility. As I’ve mentioned before, they won’t be able to raise rates significantly. A similar situation is likely for Western central banks in the medium term, with disinflation and lower rates ahead. Once debt exceeds 100% of GDP and continues to rise without credible reduction plans, rates cannot remain high due to the costs of debt service and other structural growth barriers. Lower rates are an inevitable, gradual process, akin to a “limit approaching zero” as we say in calculus. ?? Meanwhile, the VIX closed down 10 points yesterday at 27, which is 38 points below its peak on Monday. (For context, the previous record drop was 22.5 points in February 2018) ?? How unprecedented was the VIX movement over the past two days? In the history of the VIX, there has only been one instance where it closed below 30, surged above 60 intraday the following day, and then closed back below 30 the day after. That instance was the past two days. ?? ??The last three instances of a 10-point decline in the VIX in a single day have been buying opportunities: - Flash Crash in May 2010 - US debt downgrade in August 2011 - Covid market dip in March 2020 In each case, the S&P 500 was up an average of +25% within 12 months. **not an investment advice** Let me know what you think. Please share your views below. Tap the bell ?? to subscribe to my profile and you'll be notified when I post ?? #investing #pullbacks #sp500 #carrytrade #markets #volatility #rates #yieldcurve #nvda #msft #AI #technology #disinflation #VIX #BOJ #Uchida #Japan #Nikkei #sp500 #Federalreserve #powell #debt #disinflation #economy #financialMarkets

To understand if your money will be safe in the bank, let’s start with analysing with US Debt situation. Just in the course of the one year, the US Debt went from 31 Trillion to 33 Trillion. Debt to GDP ratio in the US is at 98%, which serves as a stability indicator and which makes the payoff of debt unsustainable. If you look at who holds the debt in the #US, 30% of debt is foreign and 70% domestic. Run on the bank would happen as soon as foreign investors, like #Japan and #China, do not feel that they will get paid off by the US and will sell off the debt holding. Banks go down with a spike request for levered cash. Read more about "Is my money safe in the bank?" ?? ?? ?? https://lnkd.in/eKcjbeBt #economy #realestate #mortgage #titlesearch #realty #realtyinvestor #investing #realestateinvestor #alexgoldovsky

External debt service burden nearly doubled in US dollar terms in 2023 due to sharply higher US and global interest rates since 2022 to better manage both inflation and inflation expectations, amid higher world oil and other commodity prices triggered by the Russia-Ukraine war nearly two years ago. For the coming months, possible Fed rate cuts later in 2024 could help ease the country’s external debt service burden in terms of lower interest expenses on foreign debts going forward https://lnkd.in/gktB7fB7

Worsening US debt outlook seen more in gold and bitcoin than in bonds Full Article Link >>> https://lnkd.in/g2hBkNXJ Concern about the rapidly rising US government debt is partly behind recent surges in gold prices and bitcoin , even as the Treasury market so far remains relatively sanguine about the country’s fiscal path , market observers say.The US budget deficit widened to $1.7 trillion in fiscal year 2023 and is on track to reach […] . . Latest IND . . . . #trendingnews #newstrending #trendingtopicnews #lifestyle #business #news #healthylifestyle #smallbusiness #supportsmallbusiness #lifestyleblogger #luxurylifestyle #businessowner #businesswoman #smallbusinessowner #businessnews

US government debt has broken through the $35 trillion mark this week. Without a fiscal surplus since 2001, US government Debt/GDP ratio is now at 122% and double the level it was at just before the credit crisis in 2007. This development is more than just a headline as the US debt level is increasingly a focus for global markets as we head into the November election. Similar to the UK experience after the Truss budget, the potential impact on long term interest rates and the US dollar could be dramatic should market sentiment turn negative. With the exception of the JPY, major currencies have been trading in tight ranges over 2024 but this absence of volatility is not analogous to an absence of risk. When markets move, they move quickly and the US debt problem has the potential to drive currency and rate markets over the rest of the year. Contact the team at [email protected] to find out how we're helping businesses like yours manage their financial risks

Good summary of global debt levels and how they’ve evolved over the last few years. The outlook isn’t promising, in particularly given the reduction in central banks’ balance sheets. Let’s see how long that trend will last. I would say probably not long.

Worsening US debt outlook seen more in gold and bitcoin than in bonds Full Article Link >>> https://lnkd.in/gxPwkAhs Concern about the rapidly rising US government debt is partly behind recent surges in gold prices and bitcoin , even as the Treasury market so far remains relatively sanguine about the country’s fiscal path , market observers say.The US budget deficit widened to $1.7 trillion in fiscal year 2023 and is on track to reach […] . . Latest IND . . . . #trendingnews #newstrending #trendingtopicnews #lifestyle #business #news #healthylifestyle #smallbusiness #supportsmallbusiness #lifestyleblogger #luxurylifestyle #businessowner #businesswoman #smallbusinessowner #businessnews

US government debt has broken through the $35 trillion mark this week. Without a fiscal surplus since 2001, US government Debt/GDP ratio is now at 122% and double the level it was at just before the credit crisis in 2007. This development is more than just a headline as the US debt level is increasingly a focus for global markets as we head into the November election. Similar to the UK experience after the Truss budget, the potential impact on long term interest rates and the US dollar could be dramatic should market sentiment turn negative. With the exception of the JPY, major currencies have been trading in tight ranges over 2024 but this absence of volatility is not analogous to an absence of risk. When markets move, they move quickly and the US debt problem has the potential to drive currency markets over the rest of the year. Contact the team at [email protected] to find out how we're helping businesses like yours manage their currency risks

Guangdong Banks Handled USD733 Million of Foreign Debt Registrations in First Two Months