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Brevan Howard: "Faith In Endless Central Banker Put Is Serious Error"

Tyler Durden's picture




 

"Having faith in policymakers' ability to provide a perpetual put may yet prove to be a serious error; and, with interest rates stuck at zero, investors' ability to easily earn back losses remains severely impaired," is the not so subtle manner in which, Reuters reports, Brevan Howard, which manages $40 billion (and has never had a losing year) describes the current shambles of a market.

"Tail risks, which have haunted the markets for the last five years, appear to have receded for the time being, but have by no means disappeared," they go on to say, noting that while policymakers promise to do "whatever it takes," investors betting that actions by policymakers will prop up financial markets indefinitely will face problems as "policy hyperactivity coupled with investor apathy could lead to significant and persistent price moves in multiple capital markets."

But that's just an absolute return $40bn fund manager's view as opposed to a day-trading fast money trend masher or asset-gathering index-tracker.

 

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Wed, 03/20/2013 - 09:50 | 3351918 Croesus
Croesus's picture

Trusting bankers is always a mistake.....just sayin'

Wed, 03/20/2013 - 09:53 | 3351928 GetZeeGold
GetZeeGold's picture

 

 

So just print our own money and cut out the middleman maybe?

Wed, 03/20/2013 - 10:00 | 3351956 Croesus
Croesus's picture

Your username provides the answer, my friend! Better off "Getting Zee Gold" and letting the Central Banks drown in their own filthy paper.

Wed, 03/20/2013 - 10:10 | 3352011 aint no fortuna...
aint no fortunate son's picture

My money's on Larry Motherfucking Fink and that Fast Money frontrunning guy Joey Testosterone

Wed, 03/20/2013 - 11:03 | 3352197 monad
monad's picture

Barter Direct.

Wed, 03/20/2013 - 09:53 | 3351932 CClarity
CClarity's picture

ZIRP is price manipulation and confiscation of savers money, just as the proposed 9% "management fee" of Cypriot depositors is.  Savings are being confiscated, markets are medicated, and price discovery is false.  Everything built on top of these prices is a house of cards, set to tumble soon.

Wed, 03/20/2013 - 10:23 | 3352060 insanelysane
insanelysane's picture

This will never end until it explodes.  The precedent has been set; if something is going to drag down the market then the FED needs to QE.  There is always something going on that can be viewed as a drag on the market so there will always be QE.

Wed, 03/20/2013 - 09:57 | 3351943 BandGap
BandGap's picture

Wow, thanks for the tip, Captain Brevan Obvious.

Can I start my own "Writings of the Obvious"?

Wed, 03/20/2013 - 10:05 | 3351986 Jake88
Jake88's picture

Duh! You're on ZH. Not exactly a hang out for intellectual elites.

Wed, 03/20/2013 - 10:12 | 3352019 GetZeeGold
GetZeeGold's picture

 

 

Word is you have to be a self described critical thinker to hang around here.

Wed, 03/20/2013 - 10:58 | 3352184 shovelhead
shovelhead's picture

Not me,

My dry cleaner does that for me and gets out my ring around the collar too.

I tip well.

Wed, 03/20/2013 - 11:20 | 3352205 TruthInSunshine
TruthInSunshine's picture

QUIET!!!  I'm working on my new investment book, Dow 360,000.

Take your bickering elsewhere. Thanks.

Wed, 03/20/2013 - 10:20 | 3352043 astoriajoe
astoriajoe's picture

Thankfully.

Wed, 03/20/2013 - 10:18 | 3352036 GMadScientist
GMadScientist's picture

Next time he'll give you the whole shaft.

Answered your own question.

Wed, 03/20/2013 - 10:02 | 3351971 slaughterer
slaughterer's picture

Again, the specter of 1994 raises its ugly head.

Ask Brevan Howard how they are doing on their Argentinian debt.

Wed, 03/20/2013 - 09:50 | 3351919 yogibear
yogibear's picture

Bernanke and the Fed's Zimbabwe economic policy will fix everything.

Wed, 03/20/2013 - 09:53 | 3351927 Johnny_Reb
Johnny_Reb's picture

If they print enough money we'll all be rich!

Wed, 03/20/2013 - 09:52 | 3351921 LawsofPhysics
LawsofPhysics's picture

Faith in anyone outside of yourself on words alone is stupid.  But this would be applicable only in a society that empowers and protects the rights and property of the individual and not the state.  Not really sure that society exists anywhere on earth now.

Wed, 03/20/2013 - 09:51 | 3351923 Yamaha
Yamaha's picture

But that is not what Cramer says......

Wed, 03/20/2013 - 09:52 | 3351925 lordbyroniv
lordbyroniv's picture

What they gunna do -- stop printing? LOL

Wed, 03/20/2013 - 10:03 | 3351965 gmrpeabody
gmrpeabody's picture

They're gonna keep printing..., but they don't have to keep propping up the markets.

Then they will offer to help all the poor suffering IRA and 401K holders manage their money wiser.

Wed, 03/20/2013 - 10:41 | 3352125 tarsubil
tarsubil's picture

They'll never stop printing but they might stop ramping. How do you predict the whims of a sociopath?

Wed, 03/20/2013 - 09:54 | 3351936 Yen Cross
Yen Cross's picture

    German PPI sucked and us mortgage apps. were down again, yet the market is ramped. So Bernanke says he's going to keep POMO going for ever. Who cares? We all know that.

 

 

    Meanwhile the people of Cyprus have been locked out of their banks for almost a week. How the hell are they feeding themselves? This shit makes me sick. The level of corruption is so batshit crazy! It's beyond any level of rational thinking.

Wed, 03/20/2013 - 09:58 | 3351948 eigenvalue
eigenvalue's picture

Faith in gold and silver is a MUCH MORE SERIOUS error

Wed, 03/20/2013 - 09:59 | 3351951 Charles Nelson ...
Charles Nelson Reilly's picture

you gotta work on some new material, brah.

Wed, 03/20/2013 - 10:13 | 3351994 GetZeeGold
GetZeeGold's picture

 

 

What he's lacking in substance....he'll more than make up for in style.

Wed, 03/20/2013 - 10:01 | 3351959 Toolshed
Toolshed's picture

History indicates that you and your avatar are a serious error.

Wed, 03/20/2013 - 10:07 | 3351993 eclectic syncretist
eclectic syncretist's picture

http://finance.yahoo.com/echarts?s=SLV+Interactive#symbol=slv;range=my;c...^dji+^ixic+^gspc+gld;indicator=volume+rsi+mfi;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;

 

Wed, 03/20/2013 - 12:21 | 3352504 Professorlocknload
Professorlocknload's picture

Does this mean my average purchase cost of $8 and change is going red? Or that maybe I'll be able to lower it a bit, soon?

Wed, 03/20/2013 - 10:20 | 3352042 GMadScientist
GMadScientist's picture

I know...they're so sneaky. Sometimes they'll dip a tiny bit when I'm not looking, so I have to stay watchful.

 

Wed, 03/20/2013 - 11:00 | 3352191 Antifederalist
Antifederalist's picture

Yeah, 6,000 years of history,and mankind choosing gold and silver as money in a free non-coerced market.  Those things are irrelevant.  

Troll elsewhere.

Wed, 03/20/2013 - 10:02 | 3351954 AssFire
AssFire's picture

Fuckin Keynesians....

As an engineer in college I minored in business- after about two weeks of looking the their bogus equations I declared bullshit.

Anyone who has ever manufactured, mined or transported goods knows you can't just create wealth from thin air. With all the technology, no way would such a ridiculous theory prevail in coming years I thought.

Then as the years rolled by I watched hordes of overconfident stupid people obtain worthless degrees based on these lies. The power of false education has destroyed their brains and the world has become totally false and plastic- like a bowl of wax fruit. Good to look at but utterly tasteless.

Wed, 03/20/2013 - 10:03 | 3351977 Charles Nelson ...
Charles Nelson Reilly's picture

So what you're saying is that a technocrat like MDB is full of shit?  very interesting.

Wed, 03/20/2013 - 10:08 | 3351991 AssFire
AssFire's picture

I am saying all the "products" these banking econo types offer are all fucking ponzies in one way or another- none of it is self sustaining or creates wealth on their own.  Fuckin obvious.

Wed, 03/20/2013 - 10:05 | 3351978 TLT
TLT's picture

Yes, Economics is the study of "nothing". Their equations have nothing to do with the real world. It is a product of imagination and dreams.

I can't understand people still studing Marx, Keynes, and others, at the 21st century, if not for history purposes.

Wed, 03/20/2013 - 11:04 | 3352204 shovelhead
shovelhead's picture

Because they don't offer couses on Phrenology anymore?

Wed, 03/20/2013 - 11:44 | 3352345 bluskyes
bluskyes's picture

That's why the teachers are teachers. They can't cut it in the real world.
There is no connection in their mind between the incrementing digits in their bank account, and the sweat, skills, and raw materials involved in adding real value to something tangible.

Wed, 03/20/2013 - 11:44 | 3352346 bluskyes
bluskyes's picture

That's why the teachers are teachers. They can't cut it in the real world.
There is no connection in their mind between the incrementing digits in their bank account, and the sweat, skills, and raw materials involved in adding real value to something tangible.

Wed, 03/20/2013 - 12:31 | 3352558 Professorlocknload
Professorlocknload's picture

And in the case of phenomena like Bennybucks, some folks are educated way beyond their intelligence.

Wed, 03/20/2013 - 10:08 | 3352001 resurger
resurger's picture

yeah, like saying that the VIX is low so it indicates that the market is safe and we should only "buy"

As WB7 quoting Benny B:

"Buy Stocks, Save ya self"

Wed, 03/20/2013 - 10:18 | 3352035 LooseLee
LooseLee's picture
"Faith In Endless Central Banker Put Is Serious Error"...

 

and only Communists, Fascists, Socialists, et. al believe in and follow such demonic actions that central bankers deceive with. If you're not a part of the solution, you are part of the problem. You know who you are...

Wed, 03/20/2013 - 10:21 | 3352045 eclectic syncretist
eclectic syncretist's picture

There is no need for the banks given the current state of technology.  The new fee free prepaid direct deposit cards are a step in the right direction, but the banks have so far successfully blocked the spread of similar products.

https://bluebird.com/

 

Wed, 03/20/2013 - 10:22 | 3352052 GMadScientist
GMadScientist's picture

Does your doctor take trilion dollar coins?

Or would you rather spend yours on a gallon of gas?

 

 

Wed, 03/20/2013 - 10:23 | 3352058 Lewshine
Lewshine's picture

Brevan Howard: "Faith In Endless Central Banker Put Is Serious Error"

...And the sky isn't blue, the moon is made of green cheese - And the Dow is at 14600....WTF?

 

Brevan, you're a MORON till proven otherwise!!! This can go on FOREVER and EVER because it already has!!

 

Wed, 03/20/2013 - 10:57 | 3352180 oldschool
oldschool's picture

If "FOREVER and EVER" has already happened, doesn't that mean we're all dead?

Wed, 03/20/2013 - 12:38 | 3352611 Professorlocknload
Professorlocknload's picture

Yup, 90 miles an hour down this dead end street. Let's see if she'll do a hundred!

Wed, 03/20/2013 - 10:24 | 3352061 MFLTucson
MFLTucson's picture

What is this all about, we live in CandyLand, hasn't anyone told you?  All is free via the printing press.  Produce nothing, consumers of the world with unfunded liabilities so high no one can ever imagaine paying them so on good or bad news, CandyLand looks good to most Americans as the collapse is looming!

Wed, 03/20/2013 - 11:06 | 3352138 Floodmaster
Floodmaster's picture

Fund manager's/traders serve no purpose in society, they are a nuisance, remove all that Misallocation Of Capital and this country will thrive again.

Wed, 03/20/2013 - 11:00 | 3352151 haskelslocal
haskelslocal's picture

Can someone briefly explain What the "Banker Put" is in this context?

Also, when you here about tail risk, what's the simplist way to describe it?

Thanks.

Wed, 03/20/2013 - 11:07 | 3352212 adr
adr's picture

Is that a real question?

The "banker put" is Bernanke backing all losses. Like you have an Amex Black card to gamble with in Vegas. You get to keep all your winnings, and all the losses go on the card for someone else to pay.

In other words, if you're a big enough player you can't lose.

Tail risk is:

You blew out a tire, but you still have 100 miles to get to your daughter's surprise birthday party. The party starts a little over an hour from now. You can pull over and put on the spare, missing the start of the party, or you can risk it by driving 100 miles on the bare rim to make your daughter happy when she walks through the door. WHAT DO YOU CHOOSE?

Wed, 03/20/2013 - 11:58 | 3352403 haskelslocal
haskelslocal's picture

Thank you so much. Yes, real questions.

I get contextually blown out at times depending on the side I view the question from. Needed a better visual like the one you gave. 

Oh, and for fun, I choose to ride on my rim and create a lot of sparks and ruin my car and tear up the road and get a big bill from the county for repairs and Put it on my maxed out Amex Card because..... Because? My daughter's worth it AND that's what we do in this country!  /sarc

Wed, 03/20/2013 - 12:47 | 3352656 Professorlocknload
Professorlocknload's picture

Tail risk may be found the farther left  and right of center you go on this chart. Out at the fringes, your are at the "tail." It's a term of standard deviation variance/risk.

http://www.mathsisfun.com/data/standard-normal-distribution-table.html

 

 

 

Wed, 03/20/2013 - 11:01 | 3352193 adr
adr's picture

So what is the goal here, Dow 15k by April? 16k by May? 18k by June?

The way this thing is going, it is entirely plausible. The growth to support the market is not, but for the last 5000 points there hasn't been any real growth.

One can hope a corporation will grow into a 6400x valuation, but reality is a different story.

Nike is supposed to split their stock every time it hits $100 a share. They just split at the end of last year and there are already analysts expecting the stock to get to $100 again by the summer. Will Nike really double their sales in four months? 60% of their revenue is pure channel stuffed bullshit.

Doesn't matter though, to analysts and the wealth from shares set, all they see is driving the stock up to $100 so they can get twice as many shares so they can run it back up again.

Wed, 03/20/2013 - 13:01 | 3352738 Professorlocknload
Professorlocknload's picture

Like in most of the present day financial world, their earnings, revenue, book value etc is whatever their creative accountants want it to be. Remember VW? Enron? Bear? Chesapeak?

Wed, 03/20/2013 - 15:36 | 3353619 Winston of Oceania
Winston of Oceania's picture

The sell side is screaming BUY BUY BUY, big Ben has your back! (right in his sights most likely) The biggest problem with this view is that you NEVER know when they will be forced to stop and the sell side wants you ALL IN with everything you have. Trust them yet?

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