"The Fed Has Been Horribly Wrong" Deutsche Bank Admits, Dares To Ask If Yellen Is Planning A Housing Market CrashSubmitted by Tyler Durden on 06/01/2015 10:06 -0400
When the "very serious people" start to admit that the entire house of cards was held together with nothing but bullshit and propaganda, it may be a time to panic...
When money and investing is no longer rewarded by business acumen and prowess - rather it’s “Here’s a boatload of cheap money. Throw as much as you can, as fast as you can, at as many as you can, and see what, if any sticks” - that is when you should be looking for where the lifeboats are hanging. Rather, than hanging around on the poop-deck waiting to see if it’s all about to hit a fan. We guess we’re just back to the old turn a blind eye to anything historical. Remember “It’s different this time.” Nothing to see here, move along, don’t fret, no need for concern. Just remember and repeat three times every time there’s reason for concern when the market drops 200 or 300 points out of the blue only to recover all if not more the next day... “The Fed’s got your back, the Fed’s got your back, The……”
There is always a way out for Greece. But at what cost?
Will a robot steal your job? It turns out that the answer depends on the prevailing macroeconomic conditions much more than people think.
Successive rounds of government bond monetization have worked to destroy the Treasury, JGB, and EU core markets while the post-crisis regulatory regime has seen dealers back away from providing liquity in the secondary market for corporate credit just as the very same monetary policy that broke government bond markets has led to an explosion of new issuance from corporate borrowers, creating the potential for a self-feeding catastrophe in the event of selloff in corporate bonds.
Central banks took over everything and thus changed everything; they cannot simply declare themselves successful and just give it all back. That might (stress might) have been possible had it actually worked, a true and robust economic recovery to smooth the shift, but the majority part of that November 2013 recoil was the growing acceptance, throughout 2014 and into 2015, that it was never coming in the first place.
Rates have been so low for so long, that many of the traders who will be on the front lines if and when the Fed ever does decide to start down the long path to normalizing policy have never, in their professional careers, seen a rate hike. “The experience that many investment operations have with rising rates for most of us is very low for some it’s nonexistent," Jeff Gundlach warns.
Statistics have become very misleading: in particular we are being badly misled into believing that the US is teetering on the edge of price deflation, because the US official rate of inflation is barely positive, a level that US bonds and therefore all other financial markets have priced in without accepting it is actually significantly higher.
- Former House Speaker Hastert indicted on federal charges (Reuters)
- Blatter expected to win re-election despite soccer corruption scandal (Reuters)
- NYSE Looks to Ease Late-Day Pileup (WSJ)
- What Will Happen to a Generation of Wall Street Traders Who Have Never Seen a Rate Hike? (BBG)
- Japan spending slump casts doubt on central bank optimism (Reuters)
- Unclear rules, market volatility take toll on bank capital (Reuters)
- Greece Told Budget a Red Line for Creditors Venting at G-7 (BBG)
- The Economist Who Realized How Crazy We Are (Michael Lewis)
- Pimco Said to Have Considered Goldman’s Cohn for Top Job (BBG)
There are many things going on in the Greece vs Institutions+Germany negotiations, and many more on the fringe of the talks, with opinions being vented left and right, not least of all in the media, often driven more by a particular agenda than by facts or know-how. What most fail to acknowledge is to what extent the position of the creditor institutions is powered by economic religion...
It is unknowable how much more pronounced these excesses can become, especially in light of extremely loose monetary policy around the world. Things could easily become quite dicey as soon as tomorrow, but it is just as easily possible that valuations will continue to expand for some time yet. However, these data do indicate one thing: risk has increased enormously, and it will keep increasing the longer the bubble persists. Frankly, the situation also scares us a bit, because we expect that governments and their agencies (such as central banks) will find it extremely difficult to deal with the next crisis. They have become quite overstretched as a result of the last one. After having gone “all in” last time around, what are they supposed to do for an encore? The only options that come to mind are repressive measures such as capital controls, confiscation of private wealth, and a host of other unpleasantries.
Amid accelerating deposit outflows and an hourly flow of conflicting headlines, Deutsche Bank is out with a fresh take on the Greek endgame including an analysis of both the political wrangling that would need to take place in order for parliamentary approval of concessions to creditors and the mechanics of a default to the IMF.
Courtesy of central planning, virtually every single capital market has become an illiquid penny stock, with wild swings from one extreme to the other, the latest example of this being the Shanghai Composite, which after soaring 10% in the past ten days, crashed 6.5% overnight tumbling 321 points to 4620 after it briefly rose just shy of 5000. This was the biggest drop since January 19 when the Composite dropped 7.7% only to blast higher ever since. Putting the "plunge" in perspective, now the SHCOMP is back to levels not seen in... one week.
The Man in the Moon studies the pathology of Earth’s global economy and markets from a distance where there’s no gravitational pull towards empiricism or consensus. His findings: 1) the global economy is over-leveraged, fragile, stagnating, and increasingly centrally managed; 2) capital markets and asset performance have been captured by the perception of the ongoing value of money, and so; 3) unconventional investment analysis is prudent.
"As you know we are increasing our gold holdings, although this comes with market risks. The price of it (gold) swings, but on the other hand it is a 100 percent guarantee from legal and political risks."