Folks, the Global Financial system is on the brink and banks are getting very, very nervous. in this video, we're going to discuss three things: Number One, a very strange occurrence in markets that just happened and is statistically rare over the last five decades. Number two: the disastrous earnings reports coming from Banks right now and how it's going to affect you bank after bank is reporting that they are Shoring up their reserves and really, they all seem to be doing it right now at the very last minute. Meanwhile, B of Aegis came out and warned that we're going to be losing 175 000 jobs per month in Q1 2023.

And then finally to cap off this video, I Want to leave you with this data set that shows that banks around the world are starting to worry about liquidity issues. It is incredibly important that you watch this video carefully and to the end so that you get the full perspective on what is going on here. Let's get right to work and this video is brought to you by the powerful trading platform and broker MooMoo and the up to 15 free stocks that you can can get when you sign up with them using our link down below Australian Users can get up to 50 AUD Give it a look folks, they have top tier resources that a lot of other Brokers charge for. So I think it's totally worth a look, especially if you're going to get up to 15 free stocks.

So I Want to start with how unusual these times are for this market. So as you know, yesterday we had a pretty deranged day where stocks were up in the pre-market then when the CPI came out, they dumped going down as far as two percent and then after market opened, they pumped back up over two percent despite the terrible inflation news. Of course, today's market went and erased that gain. But how common is this sort of behavior? Well bespoke.

Investment Group Told the Wall Street Journal that quote. There were only nine other days since 1983 when the S P 500 fell more than two percent intraday, but finished the day up over two percent Said bespoke. The most recent occurrence was over 11 years ago on October 4th, 2011, and before that there were five separate occurrence says in 2008 alone. And then you look at the S P 500 chart and you could see that these types of volatility days were very frequent during the great financial crisis and the period of uncertainty right after and then you had some around the.com bubble and bust and then in the 1987 crash which included the famous black Monday And so the question becomes: why is this happening right now And I think a big reason has to do with the sheer amount of Leverage in this market, the sheer amount of algo trading in both directions, and how torn Algos really are on the current state of this Market when you have Algos making decisions based on binary numbers and short-term reports, Is inflation worse or better than expected are Bank earnings worse or better than expected? Is the GDP print better or worse than expected? How are consumers doing so on and so forth? You start getting this trading that's based not so much on.

oh, this is a holistic analysis of the market environment, but rather on what is going to work in the next three to four hours. On one hand, you get some Algos going and being set to react to a hot CPI print by dumping immediately and then you have other Algos set to take advantage of short-term new Year-to-date low dip rallies which we saw yesterday and buy back in and then take profit. On top of that, you also likely had a set of algo shorting into the CPI print and then once the CPI print came out, they locked in profits, causing a squeeze to the upside and you probably had some other Algos that didn't know what the heck was going on. and all of a sudden they shorted after the CPI print and they got totally destroyed because markets bounced back so fast And I Think that's the funny irony in how all of this is coming together.

Never before in history have you had not just this level of margin debt, but also this level of algorithmic, computerized trading that reacts to very, very simple variables. Sure, there's some complicated formulas that go into that, but at the end of the day it reacts to the Hardline numbers and you can tell based on how the immediate reaction to CPI data is taken. And it tends to be the case that if you look back at history when you hit these statistically significant periods of volatility, that means that you're heading into a new era of even more volatility in coming weeks. And I think this is a warning.

a foreshadowing if you will of what we are going to see: all earnings season. these huge whipsaw days where people scream bottom, we're done, no more selling off and then all of a sudden boom, they're destroyed. For people who can take advantage of this, this is a great thing. For people who decide to be very one-dimensional and think things can only go in one way or the other, this is a terrible, terrible situation.

Moving on to Banks So the banks are reporting earnings. Earnings season really started today and it has so far not been pretty. No, not at all. The Stanley's over at Morgan on Friday reported a 30 slop in third quarter profit Missing analyst estimates a 30 drop in profit is a disaster with a capital D Usually when Financial systems contract, the first ones that start showing the pain are where well in the banking industry and overall credit markets.

A big reason for Morgan Stanley's issues are a drop in mergers and Acquisitions their Investment Banking sector Revenue dropped 55, cut more than in half and listen to this stat for the entire industry quote: Global m A lost ground for the third straight quarter with volumes in the United States plummeting 63 percent as the rising cost of debt forced companies to delay big buyouts plummeted 63 percent. That is insane. A lot of people are like, oh, no, these rates these rate increases. They're no problem because we had rates like these in the 90s, the 80s, the 70s even higher.

But people don't realize. Wait no, This economy was rebuilt for much, much lower rates. So now all of a sudden, when you raise rates, you're destroying the entire industry. and that is what we're seeing.

And so when people say oh, don't worry, these are going to come back, Wait a second. they're going down because borrowing costs are going up huge. When are borrowing costs going to go back down If The Fed is to be trusted no time soon. Which means a lot of banks are going to have to deal with major sectors of their business seizing to exist.

Citigroup Similar news: It's third quarter earnings fell 25 as it shored up its credit loss provisions and Investment Banking slumped. Listen to this. The decline in profit came in part from an increase increase in loan loss reserves Citigroup grew its allowance for credit losses by a net of 370 million during the quarter, compared with a release of more than 1 billion in the same period last year. So the total credit loss provision now for the quarter came in at 1.37 billion.

So Citigroup has taken a massive l in order to shore up their reserves to the extent that they switched from 1 billion in reserves to 1.37 billion a 30 increase quarter over quarter, or rather year over year. That's a pretty big increase for an environment where people are saying oh, don't worry, there's no chance of defaults anywhere Uh, well, why are all these Banks Shoring Up reserves so quickly right now? If there's no increasing chance of defaults according to the CEO, there is accumulating evidence of slowing Global growth. and we now expect to experience rolling country level recessions starting this quarter. Rolling country level recessions.

Oh, this sounds exactly like what the UN was warning about. And really, the IMF as well. the Fargo of well cells are also showing up their reserves. According to CNBC this morning quote.

In the latest period, the bank set aside 785 million for credit losses after reducing its Provisions by 1.4 billion. A year ago, the provision included a 385 million increase in the allowance for credit losses reflecting loan growth and a less favorable economic environment. Now, keep in mind that Wells Fargo's main segment is home mortgages. So when they are saying they are Shoring up reserves right now, they are saying they see their risk of default in the home mortgage segment to be rising fast now.

JPMorgan Chase came out today and quite frankly, their numbers actually weren't too bad and they beat analyst expectations which were a low standard. But they still beat them. And as the street reports, they are setting aside nearly 1 billion to cover potentially bad loans in a weakening domestic economy as income from rising interest rates offset a slump in global deal making. Keep in mind that Chase has already some of the highest reserves in the industry, so the fact that they are showing up right now is really telling.

CEO Diamond said quote: There are significant headwinds immediately in front of a stubbornly high inflation, leading to higher Global interest rates, the uncertained impacts of quantitative tightening which is increasing all geopolitical risks, and the fragile state of oil supply and prices. Diamond said in the statement: while we are hoping for the best, we always remain Vigilant and are prepared for bad outcomes now. Bank of America didn't report earnings today, but they did come out with a big warning recently saying the U.S economy will start losing 175 000 jobs a month according to Yahoo finance. Bank of America expects non-farm payroll gains to be cut in half in Q4 of 2022 and turn negative in 2023.

During the first quarter of 2023, the bank projects that the U.S will be losing roughly 175 000 jobs a month. So our economy gained 263 000 jobs in September and unemployment declined to 3.5 percent. and Bank of America says that we are going to see these job gains be completely obliterated as we go into 2023 and then turn negative. when looking at the overall key you want switching from Gaining 263 000 jobs month over month to losing 175 000 jobs a month over month.

Now keep in mind, during the Great Recession, the U.S economy experienced 21 straight months of job losses averaging nearly 400 000 per month, with the unemployment rate rising to nearly 10 percent. And so when you compare this to what B of A is predicting for next year, Well BFA is saying we're going to lose about half that per month 175 000 jobs per month. and they are saying that the unemployment rate will reach 5.5 percent and this is for next year. So it almost sounds like they are projecting a mini Great Recession as their new base case scenario.

and if things get worse, you very very quickly get to numbers that rival the Great Recession We'll see how long it actually lasts. Not many people think it's going to last 21 straight months in terms of job losses, but I mean if the inflation battle continues for a couple more quarters, you can very well see that all of a sudden the FED has to go on this restrictive policy stance for much, much longer. If they have the stomach for it. now, next week is going to be very interesting.

We have a lot of big companies reporting earnings and we will talk more about that on Sunday's video. But I Want to go ahead and move on for the last segment of this video and talk to you about this data set from Vanda and what it says about the state of the global banking system. Liquidity wise. The Wall Street Journal Reports central banks appear to be moving treasuries from Federal Reserve custody into temporary facilities, a sign that officials are preparing for possible cash needs.

This could be a sign that central banks are growing nervous that they may need dollars on short notice and are making sure dollar assets are quickly available for sale. And in fact, the same pattern happened in March of 2020 at the height of the Covid-19 pandemic. So you pull up the data set. it shows Fed custody Holdings of Ust's AKA U.S treasuries are going down fast, similar to what we saw during the beginning of Covet.

Meanwhile, FEMA Repo facilities and Central Bank Repo facilities are skyrocketing. What does this mean in English? Well, here's the deal. as the FED in the U.S has tightened. It has caused most International currency exchange rates to crash the historic lows as currencies become worth less and less and people pour out of those currencies and into ours because of the higher yields and tired of policies that reward uninvested Capital if they hold our Reserve currency.

However, a ton of central banks and institutions around the world need USD and operate in USD and pay their debt in USD denominated payments. and the huge demand for the holy USD has essentially removed adequate supply of it from International markets, causing each USD to cost a lot more in comparison to countries native currencies say you are a small African country and you pay your debt in USD but the value of USD has climbed 40 percent against your currency euro every year. Well, that is a disaster, right? What if it goes up another 10 month over month, Which that's happening in a lot of areas now. Of course, Most countries that operate or use USD as their Reserve currency also holds a lot of US Government debt, which is what you see here, but that's locked up for long periods of time.

So the FED offers various repo programs which allows countries to swap out those long-term Usts for short-term ones that they can sell fast if they need to, just in case they need to access some extra dollars. and they right now are thinking they need to access those extra dollars because they're such a massive shortage of them. Keep in mind that the rest of the world, believe it or not, is the number one holder of U.S treasuries. So right now, a lot of central banks and institutions around the world are going and they're saying oh no, we need dollars because we have no dollars to pay our debt and we don't want to go and pay those extreme currency exchange rates to convert our native currency to the USD.

So we're going to go ahead. and we're going to move our U.S denominated U.S debt that we own and we have as reserves and we're going to have it converted into short-term debt, which then can be sold off very, very quickly if needed for actual US Dollars. And when you consider that this is happening right now and there's a global USD shortage and the FED is continuing to get tighter, that means the situation should continue to get worse. Central banks and institutions around the world are all preparing for the continued collapse of their currencies and a continued strengthening dollar.

Which means that a lot of the negative things that are happening right now in the global economy, well, central banks and institutions around the world are preparing for those to get even worse and to accelerate. Oof. This reiterates exactly what we've said over the last few weeks about the warnings from the UN, the IMF, and other institutional warnings that we've covered. This talks about: hey, we have a massive, massive global banking problem right now.

Massive, Massive Global debt crisis. Massive, massive shortage of key currencies. and at the same time, a lot of the Native currencies are inflated at rates that are going to cause a massive collapse throughout the system. So anyways, folks, buckle up.

We've got a rocky road ahead of us, but we're gonna get through it and we're going to come out on the other side. better off. Hopefully unless we die. at which case, we won't be better off.

but maybe we'll be in a better place. I'm not really sure it depends on your beliefs. Anyways, have a good rest of your day and we will see you in the next video. Make sure to hit that ravishing like button if you want to get 40 off our ZIP trade review program Flash 40 That coupon code is still available.

Make sure to check that out before the sale ends at the end of next week. Friday The 21st have a good one folks and I will see you in the next video.