Folks, we are back and we've got several major things to discuss. Number One: A major warning coming from the Bis: There's apparently 65 trillion in so-called missing dollar debts, sparking concern all across the globe. What does this mean and what should you know? This is actually pretty damn important, so you're going to want to pay attention. And of course, buckle up.

Number two: We're going to discuss the latest on how the big money is positioning themselves in this current market environment, a market environment that still is historically bad by pretty much any standard. And then finally, number three, we're going to discuss the latest on the hottest plays, including one or two that I think are going to break out really soon. I Will go ahead and put all the time stamps down below and today's video is brought to you by: MooMoo If you'd like to get up to 15 free stocks and try out an excellent broker and trading platform, make sure to check them out using our link down below. Again, up to 15 free stocks A Wise man once told me that you can't go broke taking free stocks nor taking Free socks and I can help you with the first of those two.

Okay, so in a paper with the title Huge, Missing and growing, the Bis said a lack of information is making it harder for policy makers to anticipate the next financial crisis. In particular, they raised concern with the fact that the debt is going unrecorded on balance sheets because of accounting conventions on how to track derivative positions. This was from Bloomberg this morning. Two major points here: Number one: a lack of information making it harder for policy makers to anticipate the next financial crisis, and number two: the fact that a huge amount of dollar denominated debt is going unrecorded.

Massive massive amounts of unrecorded debt, creating a whole new risk that we haven't even talked about yet. And I know what you're thinking. Charlie Really another new risk Charlie I thought Jerome Take your wife, kick your dog Powell Just cancel the recession. Just last week, he said that the slowing down inflation is going to allow us to slow the pace of rate hikes which markets at the time took to mean that we are guaranteed out of a recession.

And I mean after all, if you can't trust Jerome Powell Within inflation. Who can you trust? That's like not being able to trust the Cookie Monster with cookies. where did the cookies go? Cookie Monster Oh, the cookies were transitory. They're in my stomach I Will have to adjust my cookie eating trajectory.

The missing dollar debt from FX swaps, slash forwards and currency swaps is huge. Adding to the vulnerabilities created by on balance sheet dollar debts of non-us borrowers, it has reached 26 trillion bucks for non-us banks. For non-banks outside the U.S double their on balance sheet debt in English What does this mean? Well, let's say that you're a Swedish asset manager and you're looking to buy U.S assets. You'll go and use your Swedish Krona as collateral to get a highly leveraged loan of USD using a foreign currency swap facility and then use that USD to buy the asset.

The problem though, is that the US denominated debt servicing costs of today aren't the same as tomorrow. If your native currency value changes one, Swedish Krona today gets you 20 percent less value in USD than it did a year ago. And of course, good collateral today is not always good collateral tomorrow, just ask Mr SPF And as the Swedish Corona denominated collateral loses value versus the dollar which it is supposed to be serving as collateral four, Well, all of a sudden the percentage of your loan which is actual assets and Equity gets diminished. Which all of a sudden means that your loan is more and more leveraged.

And unfortunately, the Suites can't just pay back with Swedish Fish Otherwise, everything would be fine. so they instead risk defaulting. And this is what's happening in a lot of different countries and a lot of different institutions in those countries. The other problem with this is that these transactions are recorded off the balance sheets.

They are recorded basically in a shadow space. The way that accounting works is you don't have to report these until after they're closed, which according to the Bis, is essentially a blind spot in the financial system and means that policy makers are at a huge disadvantage because they don't know which institutions in which countries need liquidity until it's too late. And like with most debt issues, the real issue doesn't come come to the surface until all of a sudden. you can't pay the payments.

And here's what we know so far in terms of payment obligations. Quote: payment obligations arising from FX swap slash forwards and currency swaps are staggering considering all currencies. Outstanding amounts at end June 2022 reach 97 trillion bucks, up from 67 trillion in 2016. this matched.

Listen to this. This matched Global GDP in 2021 at 96 trillion and was three times global trade at 29 trillion and it exceeded both Global external portfolio investment at 81 trillion and international bike clients and International Bank claims at 40 trillion at the end of 2021. So you could see these numbers aren't just oh, I'm throwing out numbers here. look how big they are compared to other things like the entire Global GDP or in higher International Bank claims so on and so forth.

You pull up on the balance sheet debt that we know about that is denominated in USD and you can see that has been increasing at a steady Pace. However, when you add estimated off-balance sheet debt, the numbers are a lot a lot more dire. Look here. Nothing to see here.

folks. don't even talk about this because then you're a fudster and this is a bigger problem than problem McGee And he was a big problem himself. Remember when the USD gets stronger, which it has been year over year, it's been reversing a little bit as of the last couple of weeks. But overall, it's a lot stronger than it was a year ago.

Well, when it gets stronger, institutions and other countries have to pay more in their native currency to service their USD denominated debt. And obviously, when there's a massive, massive dollar shortage, all of these countries with their native currencies while those go less and less far in terms of buying USD, which increases the divide in the risk. Even more so, in order to help mitigate this, the FED usually goes and uses its credit facilities to help inject dollars into Global institutions that need it. But when there's all this off sheet balance debt that the FED can't see and doesn't really know about, it means that the FED can't appropriately make those decisions because it doesn't have the real data.

Charlie At least they know about the on balance sheet debt. At least they know about what's out in the open. Well, actually, the off balance sheet debt is a lot more freaky. Quote: The auth balance sheet US dollar debt of non-banks outside of the US substantially exceeds their on-balance sheet debt and has been growing faster.

At end June 2022, the missing debt amounted to as much as double the on balance sheet component, which was estimated at only 13 trillion. Again, re-read that the missing debt amounted to as much as double double the on balance sheet debt, the on balance sheet debt being at only 13 trillion. So we're talking about 26 trillion in off balance sheet debt and the odd ballot sheet. Debt itself is a huge problem.

Ugh. Charlie Wait a second, Are you stupid? Who cares about the missing International USD denominated debt. This is a non-us institution obligation, so it doesn't affect the US even though it's our currency. Why do we need to worry about some fancy panty credit swappy institutions? Don't we have enough debt here at home? I Mean household debt student debt, corporate debt, state government debt, Federal government debt.

Well, unfortunately, we do have to worry about this because if the FED can't accurately make decisions to support the USD driven Global Financial system, then it risks a much much larger crisis Quote: The market turmoil all during the Great Financial Crisis and in March 2020 highlighted the central role of the US dollar in the financial system. In each episode, disruptions in dollar funding markets led to an extraordinary policy response in the form of Central Bank swap lines whereby the Federal Reserve channeled U.S dollars to key central banks. and you can only get away with this for so long as the great Warren Buffett once said, when the tides go out, you can see who has the stamps off balance sheet dollar debt May remain out of sight and out of mind, but only until the next time. Dollar Funding liquidity is squeezed.

Then the hidden leverage and maturity mismatch and Pension funds and insurance companies portfolios generally supposed to be long only could pose a policy Challenge and policies to restore the flow of dollars would still, even at that point be set in a fog because we don't have accurate reporting data. So folks, yes, this is a big thing to pay attention to right now. If you're somebody that's bullish and think that the market sell-off is over, you need a lot of things. A lot of things that go right, but if you are bearish right now, you only need one of these things.

one of the many things we've talked about including this off balance sheet dollar issue. You just need one of those things to go wrong, which I think is kind of the bigger picture that a lot of people are missing right now when they're looking at the bullish and the bearish points next. Moving on to the market. So we have now completed the pattern confirmation of testing that redirectional SMA in this current rebound rally.

This is the third time this year that this has happened, and generally speaking, it's spurred by some level of expecting the FED to lay off hikes at some point in the future and then it breaks down when the FED flips again and we could speculate all we want on whether this time is different, whether inflation is going to continue going down and stay down, whether the FED is going to reverse policies sooner or later, and of course whether there's going to be a massive earnings recession. But how is the big money positioning in this environment? That's what I want to focus on right now. Well, we now have the worst 60 40 portfolio performance since 1930 and 1931, which means one of the most popular investing strategies is getting hammered. So how is the big money reacting? what are they doing well? Bank of America Global Research Put out this data set on CTA positioning and this is dated December 2nd and it showed clear Trend Riding with Cta's positioning increasingly bullish, you look at the data we showed from November 21st.

We found that Ctas were positioning to be triggered to buy the heaviest around 42.47 and were positioned to sell if we drop below 38.57 However, we ended up climbing and since then we are getting closer to that buying point and some funds have been positioning more and more bullish to hopefully Garner some Alpha some extra Returns on the rest of the market if we do get pushed past that previous cycle. High Remember, the biggest buying points in stock market history tend to be when you get past a previous breaking point, right? you get a new and higher high, especially when you've had such an aggressive overall downtrend right now. we're still in an overall down trending Channel But if all of A sudden we go and reverse past the previous Channel's High the previous cycle is high, what happens then? Well, all of a sudden you're in a completely new paradigm at least as far as the Market's concerned and people start buying in, funds start buying in. and all of a sudden, if you can get in before that happens and you can calculate a probability of that happening beforehand, you're like, okay, well, I'm gonna buy in and I'm going to get in before everybody else starts buying in Now whether or not that maintains is a whole other issue and most people and most funds don't care about that because they're just trying to ride the momentum.

My thoughts are that if we do continue to see some positive data with inflation and the PPI is coming out on Friday and the FED meeting on the 12th is a little bit more supportive of lower rates and a slowing down of overall aggressiveness, well, that could easily spur a Santa Claus rally and that could push us farther to that buy point, which could shoot us up a lot more after that. However, I do still see that as fake once rate hikes and the dilapidated consumers start really hitting companies and their bottom lines. You're going to start seeing that earnings recession and that is when I think you're going to see that final push to the downside where you get that final sell-off and then you get the bottom and then after that we could start reversing to the upside. Next Top Trade So we'll start with Cosm.

Them Cosm has been a hugely fun play that we've been covering since around 15 cents back in early November and it's had several fun. Cycles We just had a nice dip cycle that bounced above our redirectional SMA line and it's attempting a trend to a newer High My thought process on this. Well, we want to see in the next few days a new attempted High past 67 cents and then a push to above 88 cents. If the momentum is going to continue, we need to see this happen in the next four or five trading periods or we are going to have a big take profit cycle like we've seen in other stocks that we just can't recover from.

What we are now seeing from or text is that the shorts that we're covering and helping spur the influx of capital? Well, they had decided to reverse course and started shorting again just right after the stock started plummeting. Classic short sellers. This is creating this: Dynamic Though we're short covered in the future, we'll have an amplified effect if prices continue going up and staying stubbornly high. So I Still like this overall setup, You just have to have a clear plan.

Do Not hold in Hope of this I Would not even buy and hold this I Would say ride the momentum, but don't let the momentum ride you okay. Connect I Continue to follow Mmat and Mmtlp. Remember the main dates of Catalyst for these are on December 12th and December 14th. Both have been in a take profit cycle heading into this.

I Say let them sell off as much as they want more upside once they bottom. If you want to see a rebound in Mmtlp, my guess is your best bet is probably the last few trading days prior to December 12th probably Wednesday Thursday and Friday of this week. and then for emmat, the best trading days are probably either the last few trading days of this week or going out a little bit farther because Mmtlp is closing and Mac is not. Well, the best days may actually be the 12th and the 13th and maybe some of the 14th itself, but once the catalysts are behind them I Think the momentum is going to die off for a while, then you're going to have to have another.

Catalyst Anyways, that gaps off the video. I Am happy to be back and I'm looking forward to spending this week with you. We went on a nice little hiking trip to Sedona and it was fantastic! I Highly recommend visiting. It's an interesting spot because you have the desert.

You have the beautiful rocks that kind of look like the Grand Canyon onion, but you also got beautiful trees. so it's not just a dead desert right? Highly recommend it! Very very interesting spot. I Also highly recommend hitting that ravishing like button and also subscribing. If you have any questions, comments or concerns, make sure to leave them in the comment section down below.

And of course, if you would like to get your up to 15 free stocks with Mumu I'll put a link to them down below if you want to join us in zip Trader you I will put a link to that down below as well. Have a good one folks and we will see you in the next video.