Research Summary
The report provides a comprehensive analysis of the global risks present in the markets, with a focus on ignored risks, central bank-induced hazards, and the Chinese economy’s impact on global markets. It also delves into the unknown risks of 2023, including the lack of coordination among global central banks, post-crash scenarios, bank run risks, and Federal Reserve policy risks. The report emphasizes the importance of understanding these risks and their potential long-term effects on the financial landscape.
Key Takeaways
Ignored Risks in Markets
- Ignored Risks: The report highlights the presence of ignored risks in markets, not seen since 1929, leading to complacency among investors.
- Central Bank Induced Hazard: The central banks have induced a moral hazard, zombifying investors and leading to a lack of incentive to guard against risk.
- Global Risk: The report emphasizes the global risk stemming from bad data out of China, fraudulent Chinese recovery, and uncontrolled Yuan devaluation.
Chinese Economy and Global Markets
- Chinese Risk: The report discusses the simmering risk in China’s economy, leading to global market crashes.
- Yuan Control: The Chinese government’s struggle to control the Yuan is highlighted as a significant risk factor.
- Emerging Markets: The report points to the fraudulent Chinese recovery and its impact on emerging markets.
Unknown Risks of 2023
- Unknown Risks: The report asserts that the greatest risks of 2023 are still unknown, and any known risk can explode the market.
- Global Central Banks: The lack of coordination among global central banks is emphasized as a major risk.
- Post-Crash Scenario: The report speculates on the unknown risks that may arise after a global crash, including fraud and financial instability.
Bank Run Risk
- Bank Run Risk: The report raises concerns about bank run risk, with U.S. banks being put on watch for potential downgrade.
- Financials Support: The report includes insights into the S&P down volume tracking higher with each time the Financials test support.
- Fitch Warning: Ratings agency Fitch’s warning about U.S. banks is highlighted as a significant risk.
Fed Policy Risk
- Fed Policy Risk: The report discusses the risk associated with the Federal Reserve’s policy, including the hawkish stance of FOMC members.
- GDP Growth: The report mentions the GDP Now real-time tracker predicting 5% growth in Q3, emphasizing that the growth is borrowed money.
- U.S. Deficit: The report highlights the U.S. deficit of 6% in 2023, describing it as “bonkers asinine” and a significant risk factor.
Actionable Insights
- Monitor Ignored Risks: Keep a close eye on the ignored risks in markets and central bank-induced hazards to avoid complacency.
- Understand Chinese Economy: Gain insights into the Chinese economy’s impact on global markets, including Yuan control and emerging markets.
- Prepare for Unknown Risks: Be aware of the unknown risks of 2023, including global central banks’ lack of coordination and post-crash scenarios.
- Assess Bank Run Risk: Evaluate the bank run risk, including U.S. banks’ potential downgrade and Financials support testing.
- Analyze Fed Policy Risk: Analyze the Federal Reserve’s policy, including GDP growth and the U.S. deficit, to understand potential risk factors.
