Stormy Monday or Finally a Pivot?

The Fed has called an emergency meeting for Monday, October 3rd.  I suppose  it could be nothing, like the meeting 

On Monday, September 12, 2022 at 10:45 a.m., a meeting of the Board of Governors of the Federal Reserve System was held under expedited procedures, as set forth in section 261b.7 of the Board's Rules Regarding Public Observation of Meetings, at the Board’s offices at 20th and C Streets, N.W., Washington, D.C. and by audio/video conference call, to consider the following matters of official Board business.

But, there are these things.

The Bank of England has stepped in to stop the British pound from crashing. The Japanese yen continues to plunge. The Euro is below par. The amount reverse-repo spiked to a new record $2.426 trillion, paying 3.05%. FXHedge tweeted Saturday, “CREDIBLE SOURCE SAYS A MAJOR INTERNATIONAL INVESTMENT BANK ON THE BRINK -ABC AUSTRALIA “

It’s only a flimsy peg keeping the Chinese Yuan from whistling down the mineshaft.

U.S. stocks continue to get hammered but it’s not watercooler (real or virtual) talk.  

Then there’s Credit Suisse. None other than Alasdair Mecloud tweeted Friday, “The collapse in Credit Suisse's share price is of great concern. From $14.90 in Feb 2021, to $3.90 currently, markets are saying it's insolvent and probably bust.”

Macleod did an interview recently titled “The Current System is Close to Collapse.”  He said “We are very close to bank credit contraction.” He points out that higher yields mean lower values, putting the collateral values in jeopardy at European banks and the ECB itself. The $610 trillion derivatives hangs on a knife’s edge.

Credit guru Steph Pomboy said recently, “We’ll be lucky to have something like 2008. We are significantly more levered than then. The excesses we build up are the same if not greater.” Ms. Pomboy by the way has 60 percent of her net worth (sans cash and house) in physical gold and 30 percent in mining stocks.

Collateralized loan obligation (CLO) issuance has dried up since the Cineworld bankruptcy. Forty percent of CLO issuance had Cineworld debt in them.

See below in charts. Monday might be quite a day.