The Markets Are No Longer Buying What Central Bankers Are Selling.

Phoenix Capital Research's picture


The global Central Banks are in damage control mode.


The big story here is China, which is fast approaching its “Lehman” moment with interbank liquidity drying up rapidly and overnight rates are soaring.


China’s shadow banking system equal to over $18 trillion (more than 200% of China’s GDP), so this could be the mother of all bubbles bursting.


Indeed, China’s stock market has now fallen 20% and is in a free fall.



The Central Bank of China spoke yesterday to assure the market that there was ample “liquidity” in the system. But the market isn’t buying it. Smart investors shouldn’t either.


In the US, two Fed Presidents (Fisher and Kocherlakota) engaged in verbal intervention yesterday, trying to convince investors that the market misinterpreted Ben Bernanke last week when he said the Fed could taper QE by late 2013 or the middle of 2014.


There isn’t much to interpret here. The Fed has failed miserably to generate economic growth of any significance. All it’s done is create a stock market bubble while draining high quality collateral from the system. Put another way, it’s created a situation in which leverage is even worse today than it was before 2008.


Bernanke knows this and is desperately trying to let the bubble down easily without it bursting. This is impossible. And as the bond and stock market action of the last week shows us, the very second the Fed backs off the system is at risk.



For insights on how to prepare for a market drop, we have a FREE report outlining which investments perform best during a collapse and how to take out “insurance” on your portfolio…


To pick up a FREE copy, swing by…


Best Regards

Graham Summers

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dunce's picture

No one with half a brain has any confidence on any economic metrics coming out of China, not even most Chinese so no one can anticipate  any events there. Masters of the universe have mainframe computers that they can play out on spread sheets various Chinese growth rates if they just had any hard facts. They can probably tell how low they can go before  there is a collapse. A negative quarter or 2% growth might be enough.

RaceToTheBottom's picture

Condos in High rises for everone!!!!

GoldIsMoney's picture

"The Central Bank of China spoke yesterday to assure the market that there was ample “liquidity” in the system."


I agree if the CBC says there will be enough money, nothing can stop them. The trillion whatever coin is not needed. The central banks decides there is "paper" (they call it money) and there will.

ebworthen's picture

3.5% on the 10 year T-Bill!  C'mon 3.5%!

dirtbagger's picture

Well Phoenix Capital, what will be your next post when China does not have the Lehman moment.  You could dramatically improve your forecasting by flipping a coin.   

Lmo Mutton's picture

$18 Trillion??  FU China.

We have $Quadrillions bitches.

Conax's picture

I keep getting the feeling that this next weekend something big is going to happen.

Can't seem to shake it.  Maybe the silver suppression op is going to go full retard.

There are still about 50,000 longs standing, and Op-ex is Friday.

(This has happened several times since last November, and every time they evaporate at the last minute.)

Maybe it will all blow sky high this weekend.

Har  har  har.

rustymason's picture

I've got "Cry Wolf Too Much" fatigue. Looks to me like this scam can go on for a very long time.

Mr. Hudson's picture this is what the Chinese book "Poop on the Wall", by Hu Flung Dung, was all about.

rsnoble's picture

I don't even know why they bother trying to save this fucking garbage talk about tunnel vision.

SAT 800's picture

"All its' done is create a stock market bubble, while draining high quality collateral from the system." Very nice summing up. Quotable, too.

semperfi's picture

Ben implodes his own holdings if he doesn't bid treasuries, making himself (Fed) insolvent.  Why does anyone think he is suicidal?

Bam_Man's picture

I think he leaves that turd on the floor for Yellen to clean up.

She will be the one who has to announce the Fed is "re-capitalizing itself" with its magical printing press.

El Oregonian's picture

Markets smell fishy... Is that the Financials I'm smell'n, or is that you Janet Yellen?


Looks like a chart fart shart to me.

Toilet paper ain't gonna clean up that mess, Graham. 

Never One Roach's picture

I'm still waiting for my $3,000 from Barry for those "Thingamajigs" he promised. Am I dumb to expect this?



[PS: it's a Rhetorical don't have to answer it]

SheepDog-One's picture

System built upon total Fed life support finds troubles when the machines are turned off? 

You don't say.

e-recep's picture

your trendlines are funny, graham. how do you make them up, really? :)