• Fact prices in the bond market decline At the same time as the stock market indicates that there may be a liquidity crisis in the financial sector that occurs at the same time with the commercial tariff crisis. Either the phenomenon can be on the scale of the 2008 financial crisis, if President Trump does not change the path. Some investment managers call for intervention by the American Federal Reserve.

You can forgive yourself if, before today, you have never heard of “basic trade”. You don’t have a reason for.

But we may be about to learn a lot about the basic deals in the same way in which we had to get to know suddenly “credit credit bodies” and “mortgage -backed securities” during the 2008 great financial crisis.

Because this moment – with President Trump’s program, which threatens him to push the planet to recession, with the decrease in stocks and bonds – on August 3, 2007, Matthew Jim Kramer suddenly started screaming CNBC The American Federal Reserve was to “open the opponent’s window” (meaning that it is more generous for the large banks that were in trouble) because former Federal Reserve Speaker Ben Bernanky “has no idea about how bad he is!”

That was the moment that caused the 2008 crisis. S&P fell by 50 % of its value over the next two years, slowly at the beginning and then with an increase in warning, everyone realized that the economy had taken mortgage debts more than it could be paid.

On Tuesday, the S&P 500 collapsed to less than 5000-by 18 % less than its highest level ever reached 6,144 in February.

Usually, when the stocks decrease, investors flee to the safety of the bonds, and the bonds rise.

But the bonds were also declining. The return on the cabinet increased for 10 years from 3.9 % and a short period of 4.51 %. (Remember: If the returns are rising, this means that the prices of bonds are decreased).

This was unusual

Slow, unusual in mysterious circumstances. This means that there was no “safe” place for money to hide.

Then, on Tuesday, Torsten Släk, the chief economist in Apollo Management, was published, fictional useful Note an explanation of the possible problem in the bond market: “The foundation is a trade.”

It turned out that since the great financial crisis in 2008, hedge funds were putting bets with up to 100 times on the difference between the prices between the treasury and the future treasury contracts. In the bet, simply, you can buy the treasury bonds and then shorten the contract contracts with different prices on a similar bond. With the appearance of the bond on the expiration date, prices are close. The price of futures decreased, and your short bets are fruits.

Price differences are small, which is why hedge boxes use a 100 -time crane to earn money on them.

“What is the size of the basis for trade?” Firetail request. “It is currently about $ 800 billion and an important part of $ 2 trillion in the main mediation balances.”

Liquidity problem

The only problem with leverage, of course, is that you have to pay it.

What seems that the bond market – with low prices – is that there is a liquidity problem between hedge boxes and banks that were scrambling out of the basis for the collection and keeping them.

When there is a liquidity problem on this range, it is likely that you have obtained systematic institutional issues. Ark Invest’s Cathie Wood Posted on XAnd if it was reference to a different side of the bond market, there were “serious liquidity issues in the American banking system.”

“This crisis calls for … serious support from the federal reserve,” she said.

It is not the only one to be anxious.

The American economist at Jeffrez, Thomas Simons, published a memo to customers on Wednesday morning, “We can see the Federal Reserve Intervention soon.”

Nick Lawson, CEO of Ocean Wall Investment Group, He said Financial times“As a vortex, they are [the hedge funds] Forced to sell anything they can-even good assets-just to stay standing on his feet … If the federal reserve does not interfere soon, this may turn into a complete crisis. This is dangerous. “

This looks like 2008

That is why it is very scary.

But this time, it is likely to be worse than 2008.

The operator of this crisis is not just hedge boxes that make some bad stakes on treasury bonds. It is the commercial definitions of President Trump. The White House calls it all the so -called international trade with America – and the stock market interacts negatively as a result.

To put the volume of what Trump does in his correct perspective: Trump’s tariff may be interested in the end of Apple for American consumers. The definitions of China means that the price of the new iPhone may rise to $ 3500, according to the Wedbush analyst Daniel Eve. This price assumes apple The iPhone can be made in the United States, thus avoiding China’s tariff. But this is impossible, says Evis, because it takes years to build the type of semiconductor manufacturing factories needed for a smartphone. Even if you can do this, the phones will be very expensive for anyone other than the rich. “The reality of the iPhone, which costs $ 1,000, is one of the best consumer products made on this planet,” it will disappear, “says Evis.

Goldman Sachs sent their clients on Wednesday a note saying: “Reducing the implicit growth on April 3 and 4 [from the tariffs] Analysts Dominic Wilson and Viki Zhang wrote: “It has exceeded anything that was seen out of the initial shock, one episode in GFC, and Monday black in 1987,” analyst Dominic Wilson and Viki Zhang wrote.

With these possibilities, it is not surprising that the shares are sold. The definitions will simply prevent many companies from working.

In February – it seems to be as if it was a few weeks ago, but it was just a few weeks! – All gossip was about the “soft landing” that the American Federal Reserve seemed to have been designed for the American economy. The American economy achieved some bumps last year, but it was mainly sound. The stocks expected the coming times. Even the last job numbers in March look good.

All that has gone now

Of course, there is a treatment for this. Trump can be reversed by his commercial policy. But it is unknown to decline or admit that he may have made a mistake. Instead, Congress can intervene and pass a draft law that regains control of the customs tariff policy.

In the absence of these two conditions, we may now have only two only two crises of 2008 at the same time, both of them nourish each other: the crisis between companies that cannot be traded suddenly; And a crisis in the financial sector, which suddenly cannot be determined by the location of enough money to stay liquid.

This story was originally shown on Fortune.com

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2025-04-09 16:27:00