Welcome back to the channel everyone today, i want to talk about the massive margin calls that are coming, and i also want to talk about evergrande's official default, so stay tuned and let's make some money. And now i want to dive straight in with the key information. But before i do, i just want to let you know about the video that i've got coming out later today, which contains some massive massive news, a giant bombshell and trust me. You do not want to miss that video later, but now, let's dive in with that key information, so here is some serious.

Due diligence. This chart shows margin balances over time. When margin calls begin, the market is going to unwind like never before, only a matter of when and not if get ready. So this is a chart that shows investor credit and the market, so red is negative.

Credit balance or large margin balances. Green is positive. Credit balance, so it means they have spare money in their trading account that they're not utilizing they're, not 100, deploying all of their capital they're, not over, deploying their capital and using margin to borrow they've, actually only deposited or only used, say: 80 90 of their capital. Maybe even 70 of their capital and they have spare cash and obviously in blue, we have the s, p, 500 monthly closes or just the long term s p, 500 char.

So as an exact description, it says credit balances is calculated as the sum of free credit. Cash accounts and credit balances in margin, accounts, minus margin, debt, so obviously in the red. It's because the margin there exceeds what's in the account so obviously through 1980. 1985.

1990. 1995, all the way to 2000 hedge funds and institutions did have small amounts of margin in their accounts they were margin and leveraged trading, but obviously, as we ran up to the year 2000, that margin drawdown got larger and larger. We can also see that the s p 500 grew a much faster pace when they started drawing down more and more margin cash, then. Obviously, during the tech bubble and the tech bubble burst, the s, p 500 crashed and obviously they paid off.

All of that margin and were carrying some spare cash not fully invested now again in 2007, they started drawing down more and more and more margin cash, because obviously the market was increasing at a very good rate. Then obviously came the 2008 margin crash, where they paid back all of their margin and again had spare cash in their accounts, not fully invested, but looking at the margin levels in the year 2000 and the year 2007. That is absolutely nothing compared to the current margin levels. Now, in 2021.

we thought we were using a lot of margin back in 2018, but that is absolutely nothing compared to what's being used right now and obviously you can see over the last five ten years the s p 500 has been absolutely flying, especially over the Last year, where the s p 500 has almost nearly doubled. Now there is going to come a time where this margin balance cannot be drawn down any longer and there will be a trigger that causes the s p 500 to crash, and all of this margin will have to be paid back. Therefore, as says, the s p. 500 will unwind at an alarming rate.

Never before seen now, while i don't think the s p 500 will crash back down to this support level around the thousand point area. It would not surprise me if the s p 500 crashed towards the 3 000, maybe even down to the 2 000 point area. If you didn't already know, mumma are currently holding their largest ever promotion, currently giving away up to 17 500 in free stocks. Just for signing up and making your first deposit mumu also have an excellent trading platform with free, real-time level.

2 market data advanced charting tools, 24 7. Real-Time financial news, so that you don't miss an urgent announcement and a global investing community so that you can get some new stock ideas to get these five free stocks. All you have to do is open a brokerage account and you get the first free stock. Make a deposit of any amount, even if it's only a single dollar, to get your second free stock and deposit, at least two thousand dollars to get those final, three free stocks.

Now i also wanted to tie in what's currently going on in china to the crypto dump that we experienced late friday night slash very early saturday morning. The reason for the crypto dump explained crypto is dumped to raise cash to meet margin requirements. The cash can also be used to buy junk chinese bonds to meet margin requirements. Now, that's technically not 100.

True, because, obviously, defaulted bonds can't be used to meet margin requirements. Only the highest rated aaa rated bonds can be used to meet margin requirements. Now we know that a lot of chinese property developers have already had their bonds downgraded. Some have been downgraded from triple a's to b's and c's and even into default.

Obviously, but it wouldn't surprise me if there are still some chinese property developer bonds out there. That are still rated as aaa, but are trading for pennies on the dollar and obviously aren't really aaa they're more likely in the full, and these junk bonds have a higher value than straight up cash, because obviously these bonds can be purchased at a discount. As they're trading for pennies on a dollar, obviously, the defaulted bonds are trading for pennies on a dollar, but even some of the aaa rated bonds may still be trading for pennies, on a dollar on the over-the-counter market, sending private markets or private deals. Now these hedge funds could potentially go out there and use the cash that they got from dumping crypto on friday and purchase, say 500 million dollars worth of chinese bonds for only a hundred million dollars in cash and therefore the face value of these bonds, providing their Still rated aaa can be used to accept and meet margin requirements from the dtcc.

You may remember this notice from the dtcc securities that are not rated triple a to double a will receive a haircut ranging between five percent to 35. Anything below double a will obviously receive a 100 haircut, but therefore that means that if there's some chinese bonds that are still rated aaa, they can use 100 of the face value to meet margin requirements, even if they purchase these bonds for pennies on the dollar. But the important thing here is the dtcc will only accept these bonds until the issuer goes kaput until these chinese property developers go into liquidation and go bankrupt and then all of a sudden, a chinese bond that was rated triple a where they could use a hundred Percent of the value of this bond to meet margin requirements all of a sudden falls below double a and receives a 100 haircut and is therefore not only worthless for meeting dtcc margin requirements, but is also still worthless in the market. Because the developer has gone bankrupt and that way not only of the heges lost hundreds of millions of dollars in chinese bonds, but they've also lost hundreds of millions of dollars and potentially billions.

Maybe even trillions of dollars worth of margin. And then they get margin called, and obviously this is exactly what we're wanting, because as soon as those hedges get margin called, they have to sell off all of their long positions and cover their short positions on amc and gamestop. Now you might say well tom, surely a lot of these chinese property developers aren't going bankrupt? Yes, there were a few that went bankrupt, but isn't that all over well chinese regulators have just said that evergrande's actual default is an individual case and supposedly the impact is controllable. Now this came from china.org.cn a chinese news website coming directly from the chinese regulators.

They said the recent default of property developer. China evergrande is an individual case and will pose little impact on the market. So therefore the regulators or the regulatory authorities are confirming the actual default of evergrande. Yes, they are saying that it's going to have little impact on the market, but we know full well.

That is an absolute lie. We know that's an absolute lie because that's 300 billion dollars worth of bonds that have just become absolutely worthless, and we know that these bonds are also going to be traded in cdos or collateralized debt obligations or now called collateralized loan obligations and synthetic clos and also Clo squareds. We also note the market for insuring these bonds with credit default swaps are ensuring these cos with credit default swaps, and the total overall shadow market is around 50 times the size of the underlying bonds value itself. So that means that all of a sudden, very quickly, 300 billion dollars worth of bonds turns into 15 trillion dollars worth of cdos or clos synthetic close credit default swap insurance and whatever else goes on in that shadow market.

So the people's bank of china told the press when asked to comment on evergrande's recent default on guarantee obligations that evergrande's problem was mainly caused by its own mismanagement and break neck expansion. Now, on top of this, we also have more chinese defaults being reported sunshine. 100. China holdings defaults on sgx listed bond payment so yet another chinese property developer, sunshine.

100. China holdings has just defaulted on a 178.9 million us dollars of debt and interest payments due on sunday december 5th. So this is just another entity and another company to add to those long list of chinese property developers that are defaulting left right and center on their bonds and going bankrupt. Now you might say: well tom, there's not really much in the mainstream media talking about a u.s recession or talking about a stock market crash.

Surely it just doesn't exist, but i think it's also very important to remember that the media didn't warn you about the 2008 recession or the 2020 stock market crash. The media also paid no attention to the panama papers or those members of congress selling their shares before the 2020 market crash because they knew it was coming. They just didn't tell you about it. The mainstream media also didn't tell you about the potential amc and gamestop squeeze back in december of 2019 or december of 2020 or in january 2021.

Instead, they told you to sell amc and gamestop, because it's somehow a terrible investment and yet they're both up over 2 000 on the year and therefore, even though there's not much talk about a u.s recession or a u.s stock market crash now in december of 2021. That doesn't really mean that it's not gon na happen now. I also wanted to talk a little bit more about why 100k for amc is absolutely possible, but why you most likely won't be able to time the exact top both if it goes over 100k and if it doesn't quite reach 100k, as suggested by al from boston. Al says: if you set a sale limit 100k and the price exceeds 100k to like 110 or 120k.

You might not be able to cancel your order to get that higher price. But similarly, if you have your sell order set at 100k and the amc price only goes to say 95k or 99k and then when it reaches 99k, all of those shorts have been brought back and therefore no more shorts need to be purchased at that price. It could be quite difficult to cancel your sell order at 100k and place another sell order at say, 95k or 91k. You may not have time to cancel that sell order and place another sell order before amc starts falling.

You may see. Amc go up to 95k, but then realize that all of the shorts have been bought back and it may then start falling to 80k and 70k, and you may only be able to sell at 60 or 70k, for example, especially because when platforms have a lot of Volatility they've been known to put up an order, being filled, error message and don't fill your order until the price is potentially higher or potentially much lower. So, therefore, even though i do think amc could go to 100k because there'll be so many people that have their sell orders at exactly 100k, it may only reach 91k or 95k and then may start falling and the squeeze may be over at that point and therefore This is why it's very very unlikely that more than say, one or two people will time the exact top during the amc squeeze. Now many of you will ask and have been asking tom.

How do i know exactly when all of the shorts have covered? I want to try and sell at the highest price that i possibly can. So, when can i know if all the shorts have been covered and at the end of the day, this isn't something you can see in real time. Shorts, don't report their covering until t plus two, so they don't report when they've covered all of their shorts until two days later, at which point the price of amc will have fallen from the very very tippy top of the squeeze and therefore because we can't see This data in real time. This is why i've been saying it's important to sell smaller chunks of your shareholdings on the way up, so that you can time multiple points during the squeeze.

Yes, you may not time the very, very tippy top, but at least you'll sell off a number of different chunks at different price points during the squeeze, instead of missing the squeeze all together or selling everything right at the very start. Maybe you sell say 10 at the very start: 10 a few hours later or when the price has gone up by a few, more thousand or a few more hundred, then another 10 a few hours later, or a few more thousand dollars later, another 10. Another 10 and so on, or maybe larger chunks - maybe 20. 20.

20. 20. 20. It's all up to you really, but i do think it's important to sell on the way up in small portions, so obviously saving most for the very, very tippy top or as close to the tippy top as you can.

It's just important not to miss the squeeze altogether, guys be sure to. Let me know down in the comments below what you think about the incoming liquidations and what you think about evergrande's official, formal default and guys if you want to stay up to date. With my new stock and crypto picks, or if you just want some help with amc and gamestop, be sure to check out the patreon and the private discord linked in the description below and become part of the team, and as always guys if you enjoyed this video, Be sure to check out some of my others, alternatively, subscribe the channel and ding that notification bell, because that way you'll be alerted. When i upload a new video cheers.