2020 Is there a Black Swan just around the corner?

Due for COVID-19 a.k.a. corona-virus, China is tighten its lock down in Wuhan and other big cities. China economy is getting hammered down.

Check this out for how many worldwide ports are restricting ships from China due for Corona-virus breakout.

Market Watch reported on 2/15 that Trump administration considers proposing new tax incentives for stock buying. This is a dangerous move that government will damage the economy cycle by pumping cash into security market directly, without generating any actual value in the economy chain.

US government national debt to GDP ratio is 106.7% which means GDP can't cover its soaring debt. Debt to penny is USD 23T debt on 2/23. Negative interest is on the horizon for US.

2019 natural gas price went down 27.3%. WTI crude oil increased 31.2% in the same year.

First time two commodities is divergent in one year. See below chart.

This is an important signal worth of some research.

Meanwhile, US dollar, gold and Bitcoin are all climbing. After 1/17/2020, lots of cash poured into US market as part of risk management. This doesn't mean US stock market is going to continue its upward momentum. Doesn't this worth a closer exam?

Quoted from this article, The “Repo” Fiasco; the Fed’s Cash Injections Send Stocks Soaring,

"But the greatest threat posed by the Fed’s reckless “repo” policy is not the threat of another giant asset bubble but the possibility that US Treasuries will lose their exalted role as the world’s preeminent “risk free” asset of choice. Keep in mind, that the way the Fed finances these repos, is identical to the way it conducted QE, by buying U.S. Treasury bills and other high-rated securities from the banks for cash".

Repo is ramping up. Feast is over. Bloomberg reported on 2/13/2020 that Feb to withdraw more liquidity than expected.

"The central bank on Thursday announced a new schedule for both overnight and 14-day term repo operations through March 12. Starting next week, the term offerings will drop by $5 billion, to a maximum of $25 billion, and those starting March 3 will shrink again, to a maximum of $20 billion. The bank’s daily overnight operations, meanwhile, will drop by $20 billion, to a limit of $100 billion."

Key take away on 2/17/2020: US economy is on the edge of melting down in next 6 month, in a high probability. Please keep watching how those events unfold: COVID-19 world wide spreading,mid term election, and US dollar performance.

Disclaimer: This website , blog and the information contained herein are not intended to be a source of advice or finance analysis with respect to the material presented, and the information and/or documents contained in this website/blog do not constitute investment advice. Please use at your own risk.


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