Wednesday, March 23, 2016

Another bank signaling contraction

The warning signs are all out there right now and the latest one is the mass layoffs by Credit Suisse mentioned in this story.  The article states that, "The bank is leaving some business areas altogether, including distressed credit products.".  Well, its the marginal players that are hit the first and the worst, right?  So the first thing that we will see is the collapse of subprime debt which will be indicated by an increase in interest rates for junk bonds.  If fewer and fewer want to loan money to deadbeats then everything which has been financed by those loans will dry up including automobile sales and student loans.

The backlink to JNK provided the chart below.

As you can see from below, we got one more move down, a small move back up, and then one final move into a bottom which has move up rapidly since then.  The move up so far looks motive so we have to wait for the first pullback to understand the true nature here but I suspect we at some point move a good deal lower with markets beginning to panic as the liquidity crisis (AKA Ponzi scheme collapse) raises its head again.

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