Today legend Art Cashin warned central bankers are worried about systemic risk as global liquidity dries up. Egon von Greyerz warned systemic risk will become systemic implosion.
Fed Pivot Or Systemic Implosion
October 10 (King World News) – Egon von Greyerz: Global currency and sovereign Debt markets cannot and will not last long under Powell’s current strong US dollar policy. Unless the Fed pivots to more pathetic QE (and hence a weaker, debased USD), the systemic risk will become systemic implosion…
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Central Bankers Worry About Systemic Risk
Art Cashin, Head of Floor Operations at UBS: They did some technical damage this morning, but are now trying to repair slightly. The fact that they got the Dow back into plus territory will be a help.
Critical is to how they close, particularly, the S&P. If it closes below 3600, that could cause some damage and a possible call down to as low as 3525.
The second important level is to try to close above 3636. That could actually hint of a little bit of a bounce building in.
So, the afternoon and the close will be very important.
Let’s review some of the numbers.
The key factor so far this morning has been the yield on the ten-year. It ticked at 4%, which took us to the day’s lows, but now has backed off to below 3.90%. So, keep an eye on that. If it gets above up to 4%, the equity bulls may go into retreat.
There is no real flight to safety yet, but the most recent intervention by the Bank of England and some hint in both Lael Brainard and Evans of Chicago yesterday that the Fed members are becoming somewhat concerned about potential systemic risk as global liquidity dries up.
It will be a clear topic at watering holes this evening and a subject of trading throughout the afternoon.
Let’s see how they close, particularly in the S&P. The technicals will come into play potentially heavily here.
Continued Leakage From Greatest Sovereign Bond Bubble In History
Peter Boockvar: The Bank of England again is expressing this as today they are adding index linked gilts to their purchase operations in its attempt to calm down markets but instead is doing the exact opposite. This especially as all the purchases are supposed to end on Friday. I just don’t see how they are then going to get away with outright selling gilts beginning month end as part of QT. The Fed’s QT right now is relatively easy as they have a lot of bonds coming due that will just mature naturally as opposed to the BoE that saddled themselves with a lot of longer term paper.
The BoE in today’s statement said:
“The purpose of these operations is to enable LDI funds to address risks to their resilience from volatility in the long-dated gilt market. LDI fund have made substantial progress in doing so over the past week. However, the beginning of this week has seen a further significant repricing of UK government debt, particularly index-linked gilts. Dysfunction in this market, and the prospect of self-reinforcing ‘fire sale’ dynamics pose a material risk to UK financial stability.”
After yesterday’s jump, gilt yields are lower while the pound is little changed. UK stocks are weaker along with everyone else.
While the JGB market is always key to watch and what the BoJ will do next with YCC, really the next one to have a gilt like event is in Italy. Today the Italian 10 yr yield is rising by 9 bps to 4.73% which is just a few bps from the highest level since 2013.
This comes a day after German Chancellor Scholz expressed some openness to issuing joint EU debt which in turn the proceeds would be loaned to individual countries to help them deal with the current energy price challenges.
I’ll say for the umpteenth time, we’re witnessing continuing leakage from the great sovereign bond bubble and trying to figure out where US long rates are going to go by just looking at US inflation and growth stats just won’t be enough in the analysis.
Also of importance…
Kraken Energy’s USA-based Uranium Project Permitted for Drilling
Kraken Energy announced today that it is now permitted to drill its Garfield Hills uranium property in Nevada and plans to commence Phase I drilling mid-October.
The permit allows the company to drill up to 5,000 metres (16,400 feet) to test the extent of uranium mineralization that includes historic drill intercepts from the late 1960s of up to 14 metres (46 feet) at 0.26% U308 and 14 metres (46 feet) of 0.18% U308.
Mathew Schwab, Kraken Energy’s CEO, commented: “With an approved drilling permit now in hand, we are ready to commence the Phase I drilling program at our newly acquired Garfield Hills property. Through multiple reconnaissance field visits this summer, our team has identified several highly compelling exploration targets on which we plan to complete up to 5,000 m of HQ drilling.”
Schwab, a former Senior Exploration Geologist for $2B NexGen Energy, is the fourth former NexGen employee to join Kraken Energy’s ranks. The team also includes Chairman, Garrett Ainsworth and Technical Advisors, Galen McNamara and Troy Boisjoli.
Kraken Energy is a new energy company advancing both its newly acquired Garfield Hills uranium project and its Apex uranium project, Nevada’s largest past-producing uranium mine. Stock symbol UUSA in Canada and UUSAF in the US.
Billionaire Pierre Lassonde Calls Major Bottom In The Gold Market
***To listen to billionaire Pierre Lassonde discuss the major bottom in the gold market as well as where he believes the price of gold is headed CLICK HERE OR ON THE IMAGE BELOW.
***To listen to Alasdair Macleod discuss the unfolding banking crisis and how it will impact major markets including gold and silver CLICK HERE OR ON THE IMAGE BELOW.
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