Another constellation is aligning and a big financial crisis is brewing this time. - Part 3

Many financial firms such as investment banks had just announced their latest earnings.  However, there is one thing that truly concerns me about their earnings.  Many financial firms had good earnings because of their fixed income trading (a.k.a bond trading).  This bond trading income was just an ad hoc profitability because the FED reduced the interest rate to zero.  Since the bond price moves inversely to its interest yield, the bond price will move up when the FED reduces the interest rate which in turn enables the financial firms to take advantage of the phenomenon which cannot be repeated.  The FED had stated clearly that it won't consider negative rates policy.  Therefore, this bond trading profitability is unsustainable unless the FED adopts a negative interest rate policy.

http://sg-stock.blogspot.com/2020/05/what-will-us-fed-do-after-rejecting.html

Financial firms' earnings news:

https://www.marketscreener.com/BLACKROCK-INC-11862/news/BlackRock-Q2-2020-Earnings-Release-30942082/

https://www.cnbc.com/2020/07/15/goldman-sachs-gs-earnings-q2-2020.html

https://www.cnbc.com/2020/07/16/morgan-stanley-ms-earnings-q2-2020.html


The financial tsunami that I'm projecting is based on the following highlights.

Rising US-China tension (trade, economic, financial, sanction, etc)

Excessive monetary policies

Imploding debts

Covid virus

Natural disasters (floodings in China & Japan now, and the US typhoon season)

Unsustainable financial firms' earnings (bond trading income)

The US typhoon season is also a big worry as the typhoons will be much stronger this year.  My observations from the floodings in China, Japan and India now have led me to reach this conclusion.  The US insurance firms will be badly hit when the stronger typhoons hit the US.

Is the die cast in stone? I leave it to you to decide for yourself.

http://sg-stock.blogspot.com/2020/07/another-constellation-is-aligning-and_15.html