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SocGen's Future "Anchor Themes" Matrix And Black Swan Probability Distribution Chart

Tyler Durden's picture




 

Anyone expecting to see an immediate reference to Albert Edwards or Dylan Grice when the name SocGen is mentioned will be disappointed. Below we present a comprehensive outlook report by the firm's Michala Marcussen and her team, which unlike the abovementioned duo of doom, is far more optimistic (not necessarily an outlook we share), although it does provide several unique approaches to evaluating and quantifying future risk. For one, the firm analyzes 6 "anchor themes" which it believes will shape the near and medium term future, namely a "sustainable recovery", "policy asymmetries", a "US mini-v", a "V-shaped recovery for Japan", "German diet for Euro area" and "China bumpy landing." Then it evaluates the impact of each of these across monetary policy, bond yields, currency and risk assets. As we said we disagree with virtually all of the firm's assumptions, but in analyzing the logical consequences of each faulty premise, one can then merely flip the conclusion. Additionally, SocGen also provides a risk map with a black/white swan distribution curve, which identifies the biggest growth outlook downside and upside risks. Bottom line: not a report of the intellectual caliber one would expect from the firm's two core contrarians, but certainly a glimpse into how the traditional bullish groupthink is trying to explain away the current regression to the depressionary mean, and just what outcomes their delusions will have on various market products.

SocGen's Anchor Themes:

And its risk map:

Full report:

SocGen Q3 Sustain Ability

 

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Wed, 06/15/2011 - 23:24 | 1373462 Global Hunter
Global Hunter's picture

Soc Gen is a black swan

Wed, 06/15/2011 - 23:23 | 1373470 williambanzai7
williambanzai7's picture

Yes, they have a knack for stepping in Swan shit don't they.

Thu, 06/16/2011 - 08:34 | 1373940 I am more equal...
I am more equal than others's picture

SocGen has five black swans - that makes a flock.  That flock predicts a flucked up fluture.

If the flock shits in the woods does Bernaked smell it.

Thu, 06/16/2011 - 06:45 | 1373734 falak pema
falak pema's picture

This is the bankers cum Bilderberger Oligarchy spiel pitch based on artificial steroids pumping over NWO span, like a Lance Armstrong climb up into the Alps or Pyrenees. As the latest example of this shot in the arm is hoped to have achieved : the QE-2 USD injection into core EU banks, to withstand the upcoming PIIGS meltdown shock by the USD inundation of world liquidity markets with "worthless" fiat. The banks now hope that all actors of the world financial scene are henceforth gridlocked into realising they are in the same boat. If the USD goes west so do they. EU has bought into this because of EU banking debt fed sovereign sector default (+ local govt. Shenanigans as in Greece).

This scenario now hopes that ALL will row in the same direction to pull their Oligarchic boat out of the whirlpool; the "radeau de la Meduse" scenario. Is this a VAIN central bank fed pipe dream that will shatter under its own turbulent entropy effect?

The collateral victims of this rip-off remain ALL the populations of the DC world who are now condemned to paupercy. Will the dam hold and people act like serfs, sheeple, cowed down and ready to take rape by their Oligarchs, scions of the "democratic" world? 

We will see, if the whole shooting match does not dissolve EITHER under pressure of Main street à la Syntagma contagious effect OR because these "jugglers", with so many balls up in the air, and so many black swans to fight, lose their focus or their skills; reverting to 'kill or be killed' feudal group/nation suicidal acts that will seal their own collective fates.

By all the projections of the "wise", who look at this incredible tipping point drama, their common deadline for "game over" or for "game save" will be around 2016 at latest. 

Happy horror picture show watching in cinema scope and dolby sound!

Thu, 06/16/2011 - 07:22 | 1373806 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Good comment except that you trashed Armstrong, thus, I junked you.

Thu, 06/16/2011 - 07:58 | 1373872 falak pema
falak pema's picture

lol, TY for being frank up-front.

Wed, 06/15/2011 - 23:26 | 1373468 ratso
ratso's picture

Like you say - an interesting glimpse into how they think.

I don't agree with most of their premises either.

Wed, 06/15/2011 - 23:28 | 1373472 Global Hunter
Global Hunter's picture

From earlier today (June 15th, 2011). 

Meanwhile, rating agency Moody's also placed French banks BNP Paribas, Societe Generale and Credit Agricole on negative review for their exposure to Greek liability.


Wed, 06/15/2011 - 23:29 | 1373478 Josh Randall
Josh Randall's picture

Anchors Away B!tchez - go ahead and bet on your "V" recovery since everyone with a brain knows QE3 is commencing now or shortly after

http://www.youtube.com/watch?v=O6gtISlR2dk

Wed, 06/15/2011 - 23:29 | 1373480 ZeroPower
ZeroPower's picture

Looks like SocGen's work is premised upon QE3 coming into play.

I.e. "further momentum in investment"; "flatter curves"; "china over-heating"

 

Above pretty much all due to further easing, and not just by the Fed. Rest assured, easing will NOT allow the deflationary spiral one has come to expect as per ZH.

Wed, 06/15/2011 - 23:36 | 1373487 buzzsaw99
Wed, 06/15/2011 - 23:45 | 1373513 JW n FL
JW n FL's picture

seriously.. that was like bag tag just started.. I will get you back fucker!

Wed, 06/15/2011 - 23:34 | 1373491 harlanaladd
harlanaladd's picture

I bet if Taleb deigned to look at that chart, he'd be apoplectic.  Shows complete misunderstanding of the idea of a black swan.

Thu, 06/16/2011 - 02:47 | 1373632 topcallingtroll
topcallingtroll's picture

I believe you are incorrect in how Taleb would view that chart.

 If black swan events are "more common than usual" then this is what people mean when they talk about "fat tails."  Those supposedly extreme ends (the left and right side, or the tails of the probability distribution) occur more often than would be expected by the assumption of normal distribution.

If the chartist has put those black and white swans at where he thinks the odds are of them occurring then he is correct in how the chart was constructed.  Even if all he has calculated is highest probability to lowest probability of occurrence and he has named and placed those swans in that order then the chart is correct conceptually.

If you are talking about a black swan as something completely unforeseeable then you would be correct.  That is the narrow definition of a black swan, something completely unforeseeable happening. 

However many black swans events in finance are foreseeable.  It is just the probability of occurence that is not known.  That is the broad definition of a black swan.  The definition most used when people are discussing black swan events.

We know an accidental nuclear launch is possible.  We may be able to get a rough approximation on its effects on assets depending on the geography and type of  blast.  What is not foreseeable (and makes it a black swan in the broad definition of black swans) is the probability and timing of occurrence.

Taleb used the black swan as a reason why supposedly low probability events were priced incorrectly and as the foundation of his investment strategy, buying way out of the money options.

However in reality when these events occurred and his options were in the money, these events weren't unforeseeable.  These were often events that we know can occurr (war, nuclear meltdowns, etc), we just don't know how to calculate when and where.

So even Taleb often used the broad definition of black swan, an event that people know could happen and has happened, but that happens rarely, and without any way to predict it accurately (but happens more often than would be expected if volatility of asset prices follows a normal distribution.)

He also used the black swan as an example of emergent properties of complex systems, something completely unforeseeable.  His attack on models that people used to make financial predictions and investment decisions was based on this, because no reductionistic model could entirely capture complex reality, so it was just a matter of time before something unexpected happen to demonstrate the inaccuracy of the model, but his main critique and his investment thesis was based on the fact that events were priced as if they were normally distributed continuous variables when in reality they were not.

Wed, 06/15/2011 - 23:42 | 1373497 Lord Koos
Lord Koos's picture

"Upside US growth surprise"

 

LOL

Wed, 06/15/2011 - 23:47 | 1373521 JW n FL
JW n FL's picture

there is $2.5 trillion - $3.5 trillion on the side lines that will be trickling down the leg of those AAA rated studs.. they are not back stopping $700 Trillion(ish) in derivitives with those monies.. they are for "We the People" to be employed with! part time, benefitless jobs for all insect consumers poste haste! LOL

Wed, 06/15/2011 - 23:44 | 1373503 chump666
chump666's picture

Jeez she is out about a year, we got our V or whatever, now it's a sinking feeling with oil inflation, China, US liquidty crunch etc etc

"rogue trader" hahah t

Wed, 06/15/2011 - 23:43 | 1373505 JW n FL
JW n FL's picture

This soft patch is transitory.. in another 6 months we will all look back and laugh.. becuase everyone knows it haves 6 to 9 months for the stimulas of QE-2 to trickle down the leg of the bankers.. cum on, loosen up ya'll! everything is going to plan!

Wed, 06/15/2011 - 23:49 | 1373514 Stoploss
Stoploss's picture

WOW, i didn't know bullshit could look this pretty.

Uncontrolled release of curium, BULLISH for Japan.

It's gonna be a deep V recovery. The first leg down, should bottom

in about 250,000 years, followed by a short sideways period of 50,000

years. There will need to be an iridium and cobalt stimulus, followed by

reverse repo's using depleted uranium to soak up the excess liquidity.

Are there any questions.

Wed, 06/15/2011 - 23:52 | 1373531 Global Hunter
Global Hunter's picture

Yes, I'd like a job doing the iridium bit and I'd like a pension.

Wed, 06/15/2011 - 23:54 | 1373533 putbuyer
putbuyer's picture

Now that ZH has surpassed the excellence that all must achieve. We now need a survival section on the site. What gun, knife to own. What food to buy. How to prepare. Shit like that. Should we buy some MF land in buttfuck nowhere - I think so, way things are going. Help us out so we can help each other. Peace

Thu, 06/16/2011 - 00:07 | 1373562 Global Hunter
Global Hunter's picture

look out for your brothers and sisters, try to think of ways that you can look out for your brothers and sisters, accept the help of your brothers and sisters.  

Humans were designed whether by god or evolution or some point in between to be unified to make life blessed. Others try to corrupt or split us.

Look out for others and it will come back to you in spades.

 

Thu, 06/16/2011 - 00:07 | 1373556 Yen Cross
Yen Cross's picture

 Once upon a time I knew a "Black Swan".    He was French. End of story.

 

    Hint hint N.A.T.O. ?

Thu, 06/16/2011 - 04:50 | 1373740 falak pema
falak pema's picture

Le Grand Charles ! 

Thu, 06/16/2011 - 05:25 | 1373752 Yen Cross
Yen Cross's picture

Merci bien.

Thu, 06/16/2011 - 05:40 | 1373756 falak pema
falak pema's picture

On his credit side : He didn't buy US administration BS and hubris. Even back then...

But, he had a mega-sized dose of his own...debit side! Even though he modernized agricultural France by jerking it by its roots, by its boot straps.

Thu, 06/16/2011 - 00:20 | 1373571 jm
jm's picture

I think a black swan is a sequence with no measureable cluster points.  Or the set equipped with the measure and filtration is noncompact.

Nice bird chart, though.

Thu, 06/16/2011 - 01:42 | 1373634 Itsalie
Itsalie's picture

Right, Socgen, the investment bank which is a dealing time-bomb itself and who proclaimed loudly in Dec 2009 the following:

“This current bout of nervousness around GGBs (Greek government bonds) will not go far” dismissing the sceptics with the line “Pigs can fly and Armageddon could be for tomorrow. Just silly talk.”

For the record, I don't buy Edwards' Iceage story on UST 10yr yield hitting 2% as equities tank. Sometime in the next 2 to 3 years, the Fed-created US treasuries bubble which has lasted 30 years (since 1981) will finally implode, JGBs will also go kaput and so will stocks. Soros is wrong, gold is not the last bubble, bonds are, and PIGS are just the starter dish.

 

Thu, 06/16/2011 - 01:36 | 1373643 contagiousNY
contagiousNY's picture

a glimpse into how the traditional bullish groupthink is trying to explain away the current regression to the depressionary mean, and just what outcomes their delusions will have on various market products.

 

Classic. Thanks for the smirk.

Thu, 06/16/2011 - 02:45 | 1373689 AldoHux_IV
AldoHux_IV's picture

"regression to the depressionary mean"

Brilliant, definitely going into the vernacular.

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