After the war in East Europe dreaded the market in 2022 and the Federal Reserve had to raise the rate to combat inflation following a peak in energy costs, three mid-sized banks fell to their knees. Combatting inflation, in simple terms, always means withdrawing liquidity from the market, more so that raised base rates make bonds more appealing. And because the market did not put up some kind of cash reserve to buy the better-marked bonds, the bonds held by the market with lower markup were sold, effectively devaluating them, which eventually brought creditors to turmoil. A law which allowed banks to put some make-up on their bilance did their part. Somehow the most important providers of credible credit became the butt of the joke ever since the Subprime Crisis.
I am aware that the current WTI price course does not exactly reflect patterns from the past, but other than earlier crises on the market, the current one actually lasted for more than two years now. It is even possible that the Pandemic crash on the market was only a test on how low we're able to go and that we are facing a way bigger downturn ahead - at least the indications for it do not sound good: United States' governance is at a low point in ability to compromise, which is a bad sign for negotiating a raise of their debt limit. The Fed has to manage two crises in parallel, tightening their space to move on the base rate. And the development in Taiwan could motivate China, Americas largest creditor, to call all debts of the U.S., which is effectively defunding the republic.
In this scenario, the downturn for oil predicts a slightly stronger downturn of the whole market after liquidity providers continue to fail. The merger of Credit Suisse with UBS would not solve fundamental issues of the market, as in a recessing market liquidity. Going low on rate hikes by the Fed to aid liquidity providers would cause inflation to return. So we have a decision resistance to which we're headed. Breaking through generates a short signal.
I am aware that the current WTI price course does not exactly reflect patterns from the past, but other than earlier crises on the market, the current one actually lasted for more than two years now. It is even possible that the Pandemic crash on the market was only a test on how low we're able to go and that we are facing a way bigger downturn ahead - at least the indications for it do not sound good: United States' governance is at a low point in ability to compromise, which is a bad sign for negotiating a raise of their debt limit. The Fed has to manage two crises in parallel, tightening their space to move on the base rate. And the development in Taiwan could motivate China, Americas largest creditor, to call all debts of the U.S., which is effectively defunding the republic.
In this scenario, the downturn for oil predicts a slightly stronger downturn of the whole market after liquidity providers continue to fail. The merger of Credit Suisse with UBS would not solve fundamental issues of the market, as in a recessing market liquidity. Going low on rate hikes by the Fed to aid liquidity providers would cause inflation to return. So we have a decision resistance to which we're headed. Breaking through generates a short signal.
Order cancelled:
The OPEC+ decreased the amount of exports, which in a recession would stabilize the oil price, or in even a moderate developing market, would increase the price. Therefore, this scenario would no longer be relevant.