BANKS ISSUE WARNINGS: Time To Get Out?

Why are Bank of America, JP Morgan, Citibank and others sounding the alarm?

Is it just their legal team preparing customers “Don’t say we didn’t tell you there was going to be a problem?”

 

Or is something much bigger coming?

Since the election of President Trump bank stocks have seen dramatic increases in value.

But what happens if Trump does not get tax reform passed?

What happens to the credit markets when the U.S. raises the debt ceiling?

Here’s what is coming that could change everything.

Several warnings have been posted on the dramatic rise in loan defaults for used car loans. This is the canary in the coal mine for the economy.

If Americans in this sector of the economy can’t make their payments, this says something about what is really happening in the job market.

The Federal Reserve Unwind

All of the Treasuries and other bonds the Federal reserve purchased in the financial crisis to drive rates down, are going to be sold back into the market. It won’t happen in one day, but over a number of months.

When this “unwind” starts, nobody knows for sure what will happen, but it is generally expected that interest rates will rise. This will negatively affect home purchases, and other consumer financed items.

It will also affect the interest we the people pay on the U.S Debt through our taxes.

You can read more at NASDAQ and Bloomberg who have reported on this.

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