Financial Retraction Ahead?

Leo Kolivakis's picture

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RockyRacoon's picture

"Cash in the coffers...", "Loaded with cash..."  Yep, companies have loaded up on debt and holding the cash while they can at low rates.  I'll be glad when this meme is exposed.

b_thunder's picture

"For three years, any given day in the markets could be seen as a day when people wanted risky assets – equities, emerging markets currencies, peripheral European government bonds – or wanted safer assets..."


no, not people.  the machines.  dumb microchips executing instructiosns.  there is a huge difference between real investors, speculators, day-traders, and the machines.


ZackAttack's picture

Inflation in the things you need; deflation in the things you have or own.

The Fed can QE all it wants to. It hasn't mattered the tiniest bit.

It buys trillions in MBSs. We wind up with multi-decade low mortgage rates, yet record high foreclosures, record low existing home sales. Mortgage rates aren't the problem here. Jobs and wages are the problem.

It buys trillions in UST, because, obviously, the problem is that treasury yields are far too high. It's accomplished nothing. Swami predicts that another round, even bigger and badder, will just waste more money. Again, jobs and wages are the problem.

Gromit's picture

OK so Fairfax bought $23 Billion deflation coverage.

what I want to know is....if we get deflation who's going to be able to pay $23 Billion?

Der Spieler's picture

Drive by your local plasma donation center and see the recovery in process......

taraxias's picture

It's a Depression, Leo, wake the fuck up.

anony's picture

First of all I'd like to rip her.....nevermind...

"...And with temporary employment picking up and leading full-time employment, a turnaround in the US labour market might be materializing..."

As labor costs rise, stock prices do down.  It is ever so.

Thoreau's picture

"Ahead," behind and still ongoing. You can hook electrical leads to a dead body and make it move; that's all we've been seeing as of late.

AUD's picture

Are you bearish now Leo?

Leo Kolivakis's picture

No, but I'm increasingly concerned about the wolf market.

Teaser's picture

Can't wait for you to finally go bearish.  There is no shame in changing your opinion when the facts change.

LePetomane's picture

"Interest rates near zero risk fanning asset bubbles or propping up inefficient companies, say Rajan and William White, former head of the Bank for International Settlements’ monetary and economic department."


Government is not an impartial observor?  Mon dieu!

Rogerwilco's picture

These guys are retiring because the supply of greater fools is dwindling. The lure of solar therapy (the real kind) is now stronger than the animal spirits.

mephisto's picture

These guys are retiring as they can see the writing on the wall. With bonds yielding 2%. stock dividend yields arent going to go up and probably are going down. Value investing is dead, alpha is dead, their way of life is over. Pension funds are dying a slow death, insurance companies are in distress.

Cross asset algos desroy macro strategies in milliseconds. Derivatives hedging rules these markets as the single equity volumes are so low. There are new ways to profit in these new markets, but those old guys and old institutions dont know them, everything happens intraday now and they can't react.

Leo, I disagree with your conclusion. What if the Fed means what it has explicitly said to Congress, and refuses to monetise the debt? Remember this, from February:

"We're not going to monetize the debt," Mr. Bernanke declared flatly, stressing that Congress needs to start making plans to bring down the deficit to avoid such a dangerous dilemma for the Fed.

"It is very, very important for Congress and administration to come to some kind of program, some kind of plan that will credibly show how the United States government is going to bring itself back to a sustainable position."

daneskold's picture

Refuse to monetize the debt?  Form over substance.

The Fed IS monetizing the debt to some extent.  Tomorrow is another POMO, which necessarily means monetizing debt.

Are you really shocked that a government would deceive its own people?