The distortion in the yield curve is building with tremendous force. There are vast bids for US 90-day T-Bills from around the world and no offers. The shortage in US government paper is now being reported to us from repo desks around the world. There is a MAJOR PANIC in to the dollar as emerging markets come under a financial crisis, in part, instigated by Turkey. The government simply trapped investors and refuses to allow transactions out of the Turkish lira. Turkey’s stand-off with investors has unnerved traders globally, pushing the world ever closer to a major FINANCIAL PANIC come this May 2019.

There is a major liquidity crisis brewing that could pop in May 2019. European Banks have loaded their portfolios with real estate loans thanks to quantitative easing and negative interest rates, and emerging market debt. Spanish banks are especially invested in Turkish debt where they hoped to get the highest yields expecting that the IMF would never let Turkey default. On top of this, banks have been lending to each other to also avoid parking money at the European Central Bank where they would be charged with a negative interest rate.