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After the Federal Reserve System and the European Central Bank decided to leave rates unchanged yesterday, anxious financial markets were left wondering when the desired rate cut will come. Nothing less than opening the floodgates of money again is going to rescue a financial system which is now showing symptoms of a stroke, like the almost freezing of the repo market that forced the Fed to resume major money injections last week. Especially so, as the ongoing contraction of the physical economy will open giant holes in already distressed bank balance sheets.

“We will need a lot of money printing,” DoubleLine Capital head Jeffery Gundlach said in an interview with CNBC. He said that the economy will get worse and this will provoke a reaction.

Some financial traders believe that the announcement by Sultan Al Jaber at the COP28 last week, of $30 billion for the Green Transition has eased the situation a bit, and point at the recovery of U.S. bonds (ten-year bonds are now at 3.5%). Others are betting that Jerome Powell must sooner or later come to help Biden for re-election.