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What Keeps Wall Street Up At Night (Quarterly Edition)
Two quarters ago it was the muni implosion, last quarter it was sovereigns blowing up (again). Now, it's oil, and the stench of out of control inflation sending precious metals to daily all time record highs, that is keeping Wall Street up at night (yet doing nothing than seemingly providing one after another "buy the dip" opportunity). Every quarter the prevailing investing and spec opinion focuses on one key bogeyman in the wall of worry and refuses to let go, even as, or particularly because of, the Fed, in conjunction with the HFT-controlled market, sells vol to the point where everyone pretends risk is under control. Of course, it isn't, and neither the muni crisis has gone away, nor the threat of sovereign insolvency, nor pervasive inflationary threats (just buy gas in Europe). However, the fact that the Fed systematically takes on one conventional wisdom risk factor after another, and sells into every vol rally, almost certainly via curve exposure, but arguably via equity volatility indices as well (see thought by Artemis Capital on the subject), masks the symptom of an underlying systemic collapse until the market focuses on the next hotspot, which the Fed may or may not be able to resolve. And since we have finally moved on the biggest Fed artifact of all: inflation (and rampant one at that), the Fed's ability to extend and pretend the inevitable correction that needs to happen to push oil down to sub-$100 may be now coming to an end.
Here is how Bank of America's clients determine what the key concerns were for the past two quarters:
Below is Jeffrey Rosenberg's commentary on how and why Wall Street has now made it into a habit of selling into any fear drop.
Our quarterly survey of largest risk to the outlook has been a good source of contrarian trading strategies. From last autumns’ deflation concern (contrarian viewpoint: interest rates should rise), to December’s US municipal risks (contrarian viewpoint: credit risk overstated) to today’s concern over rising oil prices (contrarian viewpoint: oil market uncertainty overstated), each of these concerns have failed to deliver a significant asset price correction. The last one – oil market concerns – still lies ahead of us in terms of the lagged impact of rising gasoline prices on consumers, but the market’s fears (as judged by implied volatility in options) indicates improvement in confidence that a “super spike” can be avoided eroding one of our original motivations for a tactical underweight recommendation.
In other words, BTFD until BTFD as a strategy fails spectacularly and the trade of aligning with the Fed always and forever no longer works.
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If you didn't buy $42.5-$43 you seriously want your head examined.
I have yet to hear a credible plan of when they are going to bring jobs back and stop issuing H1B visas? Start taxing companies 60K per employee every year they have outsourced I say and see the results.
So Fucking Funny watching the silver bulls with Tight Sphincters and a sleepless night ahead.
I'll watch Hong Kong open for an hour, Aussie's doing a good job stair stepping up. Sleepless, no way, gonna watch a movie, eat some real pizza, and watch a movie. Thinking A Clockwork Orange since it's already loaded.
Keep your paper bigs. I have physical.....and have had physical since it was $14-20. Your 'sky is falling' antics hold no weight.
I bought a shitload of physical at $6.50. Apmex has it now. LMFAO!!! I'm sure they'll be happy to sell you some at $48. It's a bargain. Buy more.
Umm. They already sold the fuck out of that like months ago. Then they tried buying it back.
LMFAOROFLCOPTER going SOI SOI SOI SOI.
...but Bigs.....we do appreciate your enthusiastic trolling.
yes, it is quite enthusiastic isn't it? i think it must be nadler from ol' kitco, calling tops since $30!
Correction in silver was needed. Watch the MSM covered with articles tell us about how silver 'could correct back to $25-30'. Correction done.
So Fucking Funny watching the silver bulls with Tight Sphincters and a sleepless night ahead.
WTF? This volatility is a paper traders wet dream. Back over $44 already with a load of buys staggered below . I'll sleep well.
So Fucking Funny watching the silver bulls with Tight Sphincters and a sleepless night ahead.
WTF? This volatility is a paper traders wet dream. Back over $44 already with a load of buys staggered below . I'll sleep well.
In an unexpected development it was announced on Zero Hedge that the second American Revolution had been canceled. All banker targeting operations and preparations for burning, looting, pillaging, and general mayhem have been canceled. Gasoline plummets and styrofoam cup shortages have been mysteriously resolved.
My first description of the Fed was a Hail Mary pass.
I then changed it to being like the Tacoma Narrows bridge, with every action increasing the oscillation until it finally breaks. I still like that one.
But it's looking more and more like a Bugs Bunny cartoon where Bugs keeps throwing things at Elmer Fudd until he is juggling about 10 items at once (usually including a knife, an ax, and dynamite)