CORRECTION WIDENS - DAX DOWN TO 12107 -1,85% - DOW JONES BREAKS THROUGH ITS KEY SUPPORT LINE

DOW JONES BREAKS THROUGH ITS SUPPORT TO BEARISH TERRITORY

https://www.zerohedge.com/news/2018-06-27/boj-now-top-10-shareholder-40-companies-owns-42-all-government-bonds

 Something you should bear in mind, especially after the Dow Jones Industrial fall below the 200 day moving average support line and turned to bearish market. The DAX is already in bearish territory since June 19^th 2018. As already mentioned long ago, the BoJ owns some 75% of all Nikkei ETFs, and so do other central banks as well. The ECB for instance owns 83% of all Italian government bonds and the Swedish Riksbank owns 53% of all Swedish government bonds. The  US central bank FED owns already $4,5 trillion in bonds and stocks as well, the BoJ as well $4,5 trillion in its books, overall central banks worldwide have some $20 trillion in assets in their portfolios. Assets that should not belong to central banks following the policies. But yet central banks keep on buying assets monthly, the ECB for instance since January 2018 €30 billion each month. Starting September the amount will be reduced down to €15 trillion monthly until December when the QE program will end. And this even though the well watched monetary aggregate M3 grew by more than 4% last month, telling the truth about real inflation.

Knowing that during the past 10 years only two big market players dominated the market and lifted it up is indeed the main problem. Without central banks liquidity and investments in bonds, stocks, ETFs, etc and the companies buy back programs there was almost nothing that lifted markets up.  However liquidity is still very poor and was missed more and more during the past 10 years in the aftermath of the 2008 crisis. Ever since then buy back programs made a huge 30% of the overall increase in the SNP500. The amount of central banks is not clearly known so far, but it is surely not less. The remaining rest were private and institutional investors. Especially private investors made a name for themselves with the so called buy the Dip behaviour during the past three years. So whenever markets dropped in the past years since 2015, private investors bought the dip and lifted markets up. But since the start of 2018 this behaviour is missed.

So if central banks will stop their QE programs and hike interest rates and so they will, all those buying programs will stop. And it´s not only central banks but as well companies that will surely stop their share buy back programs. Just remember the 10-year government bond yield in the US are already at 2,83% and therefore investments in equities become less attractive compared to bonds and lending money becomes more expensive. So what will happen next? The next step is the already mentioned unwinding of central banks portfolios, that in the US already started ever since January 2018.  And if there are no other purchasers in the market the only way is down in equities and bonds as well.

And if it comes to the often discussed recession, and I am pretty it will  come, all asset classes, no matter if it is equities, bonds, commodities or real estates, will come down in prices.

So once again, make sure your positions are defended. If you are stopped out, don´t stay in cash – buy gold or silver physical instead. Even though prices in precious metals doesn´t fit with expectations, I am pretty sure, prices will skyrock in the moment central banks stop selling gold and silver via futures. And they will one day soon. Gold is the only payment tool with a real intrinsic value. And as mentioned earlier if it comes it goes fast and any investment idea is much too late. So be ready well before. This FIAT money system is at its end, there is no doubt about it. By the way buying farms or farmland wouldn´t be the worst idea as well.