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Strategies & Market Trends : ajtj's Post-Lobotomy Market Charts and Thoughts
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To: Lee Lichterman III who wrote (82310)10/23/2023 1:22:05 PM
From: Real Man1 Recommendation

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ItstheJourney

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It’s all about interest rate swaps. Most people who have a mortgage are comfortably sitting in 2-3% 30 year mortgages from 2 years ago. They can’t refinance or move. Those who wrote them passed them on. Only $2 trillion of treasury debt is at long duration, the rest is below 10 years and Tbills. Somebody in swaps is blowing up because these are derivatives and the negative value is huge. It’s what held the markets together. A mind boggling notional value like 1 quadrillion.
When rates change that fast someone is sitting on a huge negative position in these derivatives. While true that notional value is not real value, for long durations such as mortgages it’s a significant portion of it.

That’s only part of the problem. Biden is running record deficits in GOOD economy. Imagine it turns bad and the government has to support failing businesses and the unemployed and the influx of early retirees. It won’t be pretty. It can potentially cause another credit downgrade of US sovereign debt, and the rates will just go higher. This crisis will be much worse than 2008 because we ran out of bailouts and have to take the tough love pill of letting free markets take care of the problem.
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