Monday, December 14, 2015

The Markets Edge Closer To Collapse – What About The Derivatives?

http://investmentresearchdynamics.com/the-markets-edge-closer-to-collapse-what-about-the-derivatives/

The massive, unprecedented level of Central Bank intervention in the markets has terminated the purpose for having capital markets.  Currently the only goal of the Fed is to do what needs to be done in order to prevent the markets from collapsing.  This has been the mission since 2008 – and, really, since 1987.

Currently there’s a gargantuan tug of war going on between the hedge funds and the Fed. The hedge funds are leveraged up on extremely overvalued stocks and bonds.  Most of them are about to become impaled on their OTC derivatives, which have zero liquidity and function to “turbo-charge” the margin debt extended to hedge funds by Wall Street.  On the other side of the tug-of-war rope is the Fed/ECB/BoE, which are working furiously to prevent forced hedge fund selling from collapsing the markets.

No comments: