Swap Lines To Prevent Market Crash Next Week, But Major Pain Ahead – Eric Dubin…”The last duty of a central banker is to tell the public the truth.” – Alan Blinder, former Federal Reserve Board Vice Chairman”
TheNewsDoctors.com
Sat, Jun 25th, 2016
“The last duty of a central banker is to tell the public the truth.” – Alan Blinder, former Federal Reserve Board Vice Chairman
TND Exclusive: Eric Dubin
I don’t believe we will see a massive crash this coming week. We’re not going to get anything like an October, 1987 style downdraft. We are going lower, however, and seeing another 5% bleed out of the S&P 500 next week is roughly the level of carnage I’m expecting. But it’s going to come with a heck of a lot of volatility, and many people will view downside voltility as proof that the BIG ONE is upon us. This downdraft is part of the overall “rolling crash” that we are undergoing that will extend through this year and into next year.
My assessment about the coming week is based on what I’m seeing with market management efforts led by central bankers. I see substantial anecdotal evidence in multiple markets that stocks, ETFs and futures and options were being bought by the powers that be to save the markets. The magnitude of these flows is impressive, at least, as suggested by the impact to targeted assets.
I’m not able to prove that the Fed, BOJ, Bank of England and the ECB have fired-up credit swap lines with each other. But once the fireworks started to go off, post Brexit victory, the Fed actually disclosed to the media that swap lines were at the ready. Friday morning, the Fed released the following statement:
The Federal Reserve is carefully monitoring developments in global financial markets, in cooperation with other central banks, following the results of the U.K. referendum on membership in the European Union.
The Federal Reserve is prepared to provide dollar liquidity through its existing swap lines with central banks, as necessary, to address pressures in global funding markets, which could have adverse implications for the U.S. economy.
The Rest…HERE
