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Rising Systemic Risk for all Markets

February 10, 2016

Rising Systemic Risk for all Markets 

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We are on the precipice of what can  only be described as rising systemic risk for all markets. The Fed is now hinting that banks should prepare for NEGATIVE INTEREST RATES and this insanity of following the crowd is undermining the entire world economy. The increasingly unstable footing that we find ourselves standing upon is reflected in widening credit spreads demonstrating that CONFIDENCE is indeed collapsing. The EU Commission will no longer classify government bonds in bank balance sheets as “risk”. Banks would also have government bonds on par with “equity” yet government bonds have proven to be risky and are inferior to what would in some financial institutions result in an increased capital requirement. Turning to Goldman Sachs, we see the so called world’s greatest trader closed out its long-USD trade against a basket of Euro and Japanese yen with a potential loss of around 5% which is being bantered about on the street showing they too got this all wrong. This early 2016 destabilization is stopping out short gold positions but not replacing them with any buying conviction while the Euro trade of long Italian 5 year against short German 5 year has also turned into a blood-bath as the Euro finally rallied begrudgingly to reach our first resistance target in the mid-113 area.

Global economic growth has been anemic at best in the States but it is clearing turning down since 2015.75. This new world order of NEGATIVE INTEREST RATES is so insane and focused solely on trying to stimulate borrowing, it is undermining pensions and the elderly creating an economic storm of the century on the horizon, which is far worse that the Great Depression of the 1930s. Even the Japanese 10 Year bond has gone NEGATIVE demonstrating the total collapse in CONFIDENCE.

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