The video above is a 10-minute (to the second) video about what looks like a possible bullish AB=CD completion given bullish net volume (despite all the news insanity and government handwaving) with regard to interest rates.
If you have a subscription to Doomberg (something I would suggest many of you try, at least for a month), you will get a balanced picture of the threats and limits to the banking crisis, particularly in these articles, Pandora’s Precedent, Don Jerome, and Gold In Handcuffs.
These articles show how the Federal Reserve is closing in on all cryptocurrency transactions (including Bitcoin) for the purposes of establishing their own public and fully-accessible-to-the-government central bank digital currency (CBDC), FedNow. The bank failures and Fed receivership of Signature and Silicon Valley Capital (SVB) were all deeply involved in Defi projects. In essence, the Fed first struck down banks that were badly managed from the standpoint of unhedged 10-year U.S. treasuries when the bank’s customers were investing in highly risky Defi and other tech ventures. Once capital reserves began to degrade as printing and excessive Federal spending threatened the safety ratings of U.S. Treasuries in world markets the bank hedging managers, who were possessed of the notion that 10-year Treasuries were de facto cash equivalents unraveled quickly, and the bank became insolvent. The bank instead hired an ESG avatar and not a risk manager after 9 months of not having a risk manager, and the whole thing turned into bovine scat. The same thing happened to Signature Bank a short time later.
As Doomberg mentions, he believes that the contagion likely stops here, as it is the clear intention of the Federal Reserve to destroy private crypto to be replaced with CBDCs. That may or may not be the case. The reason for that is that many small regional banks may also have been playing Russian roulette with 10-year Treasuries as cash equivalents.
Take a look at this chart from Agecroft Partners:
You can now see the degree of impairment that SVB and Schwab were (and in their case likely still are) from holding shorter duration Treasury Bonds that are underwater, likely because they are unhedged and because their 10-year treasuries or the equivalent. SVB was effectively insolvent.
THOSE ARE THE LARGEST 100 BANKING INSTITUTIONS IN THE USA. What about smaller regional banks? These banks may also be in peril, but there is no publicly available data as there might be for publicly traded banking institutions.
That is what the Fed will consider as it makes new rate decisions in the future. If rates are raised to stifle government-created inflation, will it force other banks into insolvency? It is a question that must be dealt with eventually, as Congress refuses to stop spending and the Fed and US Treasury will not stop printing money.
If you read that last article closely, there is rampant fraud in the gold market also, as primary dealers are diluting gold sold to governments. If those dealers can do it to governments, think of what they could do to you.
My point to you is that if you have more than $250,000 in an FDIC-insured bank, you might want to find another bank to hold business accounts, or buy short-term t-bills in a Fed Direct account to take the full protection offered by the United States government. Now is not a time to deal with fear. It is time to keep your eyes open as regional bank liquidity and solvency are determined. Many of them may be liquid, as the money is flowing and being printed, but the short-term bonds and money instruments may be underwater and perhaps underwater considerably, just as you see in the chart above.
As time moves forward, I will reevaluate upside and downside targets to aid with the understanding of where MNQM23 may be going. Hopefully, these issues can be resolved in the near future to take the edginess of this market.
I will write later the really spikey volume we have seen in recent early sessions, and how I deal with it. I am working on ideas for that as I write this.
Have a wonderful Sunday and a profitable and productive week next week! Thank you for supporting this blog!
