dustinthewind
The actual reasons are not stated. Armstrong Economics computer models have previously forecast the collapse of Europe accelerates in 2020 with the sovereign debt crisis along with the pension crisis which along with the banks have been buying this worthless sov. crap with little or no yield. In early 2019 at the firms World Economic Conference Forum in Rome Armstrong told the packed house that the models are indicating a major liquidity crisis right after Labor Day all caused by the total loss of confidence in Europe. About 14 weeks ago the models started tracking again huge capital flows from Europe moving into treasuries bidding up prices and collapsing yields. Because of Draghi fiscal polices and in addition to Merkels of no taxpayer bailouts as opposed to the US which has done TARP removing all the toxic assets, banks in Europe still have these on their books. Add in that speculators have realized that Draghi has been trapped ever since his forcing sovereign rates extremely low and charging banks to park capital at the ECB they have been also bidding up prices and forcing yields into negative territory and every time he has acted bonds appreciate and then are flipped for a profit which has caused the largest bond bubble the planet has ever seen. This starts to blow in 2020 and the Germans know it. You have Merkels bailins, banks holding worthless sovereign debt that is in a bubble, pensions getting ready to implode with the bond burst and capital is simply fleeing Europe in staggering amounts. Treasury auctions have been on fire with 4 to 5 times oversubscribed. This has caused the liquidity crisis in Europe first with dollar shortages which spread to wall street forcing the FED to act. Armstrong has said the FED has been doing swaps with central banks across Europe receiving euros for dollars to ease the liquidity crisis in dollars and to also weaken the dollar. Ad in the fact that banks across Europe invested heavily in emerging markets when Draghi started to charge banks to park capital and with capital fleeing into dollars causing more unwanted strength and weakening these currencies in relation to the dollar they are in serious trouble effecting the banks in Europe. Emerging markets borrowed heavily in dollars and with a strong dollar and weak currencies these loans cannot be serviced putting more pressure on banks across Europe.

       Add in another factor of Brussels going Green with their zero carbon emission policies this is destroying industry and farmers across Europe especially the German auto sector plus the fact of world trade slowing as the computer models forecast that we enter a recession in 2020 which is what pushes Europe over the edge. The models forecast the US will only be mildly effected due to the continued overall strength and the staggering amounts of international capital fleeing into the US assets. As Europe and Japan plus Australia go south in 2020 even more capital will flee to the US moving US equities higher in 2020.

        If you read what I wrote again and then re-read the article you can see between the lines the Germans are in panic mode. They cannot bail out Deutsche Bank without coming under intense fire especially from the Italians where the Germans stopped them from a taxpayer bailout of the banks.  The bottom line is capital is fleeing banks in Europe and is buying dollar based assets which is in short supply hence again the FED stepping in.

        Ironically back in 2009 the computer models alerted clients that Europe was beginning to collapse and eventually capital would flee to dollars causing unwanted strength, cause US equities to move to record highs and commodities to take a hit especially crude and gold. Then on June 13, 2011 the models called the bottom in the Dow and capital started flowing to dollar based assets and has not stopped only the intensity which has accelerated after Labor Day as forecast. The 5 forecast back then rounded were 21,000 then 23,000 then 26,000 and the last two at 30,000 and around 40,000 out in the future. The models forecast a normal correction before the end of the year with then moving higher sometime in 2020 as international capital flees and parks here. This capital has caused markets again to break records as it simply flees euro based assets and its banks. Armstrong has said recently that sources say that Lagarde wants to place an expiration date on the euro to force consumers and businesses to spend. This just shows how desperate things are in Europe. Would you park capital in any bank in Europe or even in euros with all this crap going on?