The Bank of England Pivots AGAIN & Investors Are Terrified

So the UK has done another pivot and They have stopped quantitative easing They have shut down the printing presses And now the bond market is left in the Hands of feed and investors are Terrified and make no mistake the British bond market is still extremely Fragile and if we look at the 10-year Guild it looks as though all that money Printing hasn't made much of a Difference before the bank of England Intervened with QE born yields Spike to Nearly 4.5 percent and today he has gone Back up just shy of 4.4 percent are we Back to square one and this is a classic Example of how just throwing money at a Problem isn't a solution a central bank Intervening in the capital markets isn't A show of strength but a sign of Weakness investors knew that UK bonds Their hot potatoes and they decided to Dump what they had right and let the Bank of England buy up their junk the Boe wasn't the savior of the guild Markets they were the cleanup crew and This is the big problem the UK markets Face which is a comfort evidence crisis Investors they are spooked they are Afraid and uncertainty is not a good Thing right now we have fears spreading Throughout the British Markets we have UK Pension funds Panic selling Dr assets To meet margin calls and this has Extended to their U.S dollar corporate

Bond Holdings now we have the ftse 100 Falling for six days straight As now There's no more free money being Injected into the system we can see a Temporary rise from 29th when the Boe Started to bailout but then the markets Collapsed again after they announced an End to all the money printing fear Return to the markets the bank of England is no longer pumping liquidity To pop up the system and investors are Running away from London they know that The bond market is still on the verge of Cracking and if it collapses The Fallout Will take down the British stock market As well now this is the problem with Government interventions in capital Markets investors just don't know what To expect and when people are uncertain They just packed their bags and they run Away Ray Delhi was right when he said The Panic selling you are now saying is Due to the recognition that the Big Supply of debt that will have to be sold By the government is too much for the Demand and that makes people want to get Off the debt and currency and now that The Boe has stopped buying British bonds The markets are back on the recipes of Collapse so what does this U-turn mean For the UK's born stock market well Things are definitely not looking good Firstly the bank of England spent almost 20 billion pounds sterling to buy up the

British guilds during these two weeks And by modern measures this isn't a huge Amount of money and fall short of their Original 100 billion pounds Target but We can see that most of the buying came At the end of the plan investors and Pension funds started unloading Dr bonds Aggressively towards the end and this Shows us that their confidence in British bonds is breaking they are Probably thinking to themselves once the Boe stops buying there will be no one Crazy enough to buy the guilds so we Better sell now and this tells us that Confidence is lost and it's easy to see Why we have the governor of the bank of England coming out with guns blazing he Has one of a big weight height coming Remember that August inflation for the UK is still Sky High at 9.9 percent and This is causing chaos on the streets of Britain we have protests popping up Across the country with posts and rail Workers carrying out strikes over pay And conditions and that's a big problem Right that's the problem with inflation It affects the lower income and the Working class more and just like in America inflation is still the number One enemy in the UK and here's the thing The bank of England knew the physical Plan was a bad idea from the start you Can't just print money increase the Money supply and think that inflation

Won't get worse in a report from Bloomberg we have the bank of England's Chief economies who peel admitting that Fiscal stimulus will add to demand and Inflation and interest rates are likely To rise sharply in November to find Inflation and respond to the stimulus From the government and this means that The UK guilds are still likely going to Keep Rising right the yields they're Going to reflect the reality in the UK Very soon now if the bank of England Does a big hike we could very easily see The yield on the 10-year hit back and Test the previous high of 4.6 percent And we all know what that means Borrowing costs are going to go up Companies are going to suffer and Layoffs are on the horizon now let's Quickly talk about list trust you turn On a tax card policy now originally the Plan was to keep the corporate tax at 19 And now the tax rate is going to rise to 25 percent and this should be a bearish Sign but weirdly enough the footsie Actually searched up because of this News or maybe it was because the Finance Minister core tank was fired just six Weeks into his job and the markets Wanted a better finance minister so they Kind of consider this a victory of sorts However let's take a step back and Analyze this temporary recovery now the Bank of England is going to hike rates

Again and it could be a big one plus Corporate tax is going up which means Fewer profits and slower growth for Companies and let's not forget that Winter is coming So this move up in stock prices it's Likely just a knee-jerk reaction and We'll be giving up all those gains very Soon but there's another underlying risk That's lurking underneath and that is The UK Pension funds funds that were Using leverage on whole people's money And they were crushed when you spiked up And we have the bank of England telling Pension funds to rebalance their books And the leverage and they don't want Another pension scare where QE Infinities repeated but here's the big Question have Pension funds fully Rebalance their positions have they Reduced their leverage we really don't Know and is now a wait and see game and We must appreciate the gravity of the Boe stopping the QE this is a serious Move because if the bank of England Flips again like a pancake and pivots Back to money printing they will lose a Ton of credibility this will make the Federal Reserve look like the best Central Bank in the world and this is The big problem with government Interventions in capital markets it's a Double action thought we have seen the Terrible effects of the OA banking

Bailouts and money printing back in 2020 And now the bank of England is learning This lesson in real time we have Investors extremely nervous if the UK Markets will continue a meltdown if we Compare the footsie to S P 500 we can See something very interesting the first Sea is down only nine percent while the S p has crashed by 25 but ask yourself This question is the UK's Market really Stronger than the United States the FED To their credit has not done any U-turn Yet they're still pulling money out of The system the Boe actually cracked and Had to do a bailout so the British Markets might not be reflecting reality Just yet and if the British Bond values Keep falling and stock markets keeps Crashing the pound sterling is going to Take a further beating there'll be less Of an incentive to invest in the British Markets and investors are going to Demand a cheaper pound to the dollar to Buy UK assets right we can see the pound Has is crashed by 18 to the dollar and This is feeding into the local inflation Yes yes we covered a little but it's Still likely going to crash all the way Down to penalty one is to one of the Dollar we have Global Banks like Standard Chartered nomura and Morgan Stanley all coming together and chanting The same thing the pound sterling is Going to weaken by at least 10 percent

More thanks to government policy Missteps we can see that the pound has Risen from its lows but the bear Market Trend is still rather strong and there's A serious confidence crisis in the UK Right now and it doesn't matter whether It's the Bond Market stock market or the Local currency and this is just going to Fit into a stronger US dollar remember In today's Twilight Zone economics the Dollar is the safe haven because it's Still the reserve currency because just Think about it if you're invested in the UK Market you don't know what will Happen a month down the road you don't Even know what will happen tomorrow will The bond market break again will the Government suddenly intervene again and Get Poe to print money because in the Free market the Pension funds should Have collapsed because of their risky Bets but that isn't the case right the Winners and the losers are now decided By Central Bank action investors now Have to plan an investing strategy that Includes potential bailouts it's no Longer about if an economy is strong or Will recover organically but if the bank Of England will come in and save the day And this is becoming the new reality of Investing government interventions might Help restore short-term stability to the Markets but it is likely comes at a cost Of long-term credibility and when

Investors are afraid they run away and Right now we can see that the UK is on The verge of a recession right let's Recall the definition of a recession It's two negative quarters of GDP growth And right now we clearly have a negative Q to GDP and just take a look at Q3 Through lies GDP growth is 0.06 while Has seen a contraction of 0.33 we are Just one month away from the UK Officially being in a recession and According to Goldman Sachs the tax U-turn will likely make this recession Worse so government intervention in the UK has actually made the situation worse Than before and this is the law of Unintended consequences try to stimulate Your crushing economy when inflation Still high evidently isn't a good idea And the big question now is if the UK Will write out the pain to the other Side or if they were suddenly pivot Again to save the economy because Further government interventions might Push the UK markets off the cliff and we Are seeing dangerous signs that any more Interventions especially if it's QE Money printing will just crash the pound Even further we can see that the UK's Current account deficit is widening the UK has been a net importer of goods and Commodities for a long time but a weaker Pound versus the dollar is making this Is worse the UK is becoming a bigger

Debtor to the world and right now even The United States is having difficulty Selling off their treasuries to raise Money right you'll be even worse for the UK to borrow cash from the public for Their spending their youth will have to Rise even further which will add even More pressure to their economy and if You think that the UK has enough US Dollar reserves to ride out the storm Like Japan you might be wrong we have The former bank of England Deputy Governor admitting that Britain's Forex Reserves won't be able to prop up the Pound he said we don't have much Reserves compared to the scale of the Currency markets so I think that's not An effective weapon so the British Economy is still in a very fragile state And there are three things on the Horizon that could crash the markets Even further now firstly is there still Any systemic risk in the Pension funds Have they fully leveraged their Positions and other big British banks at Risks as well and no one knows for sure Because we could very well see another Bond crisis as rates continue to go up And second when is coming will the UK Face an energy crisis like Europe and How are they going to solve the problem Will they just throw money again at the Problem and finally if the pound crashes To parity with the dollar can the

British government step back and let the Free market do its job or will they Intervene again because sometimes the Best solution is you just let the chaos Play out and pick up the pieces later Money Printing and trying to save the Markets isn't always the best solution You might prevent short-term pain but Investors won't have much faith in your Economy anymore so let me know what you Think will the bank of England pivot Again for the third time back to QE or Would they let the UK ride through the Recession for Real Recovery let me know In the comments below stay safe be sure To smash the like button and subscribe Has been navigated through these crazy Times