Explaining January’s Volatility In One Chart

Tyler Durden's picture

Submitted by FF Wiley of Cyniconomics

Explaining January's Volatility In One Chart

In a month of disturbing images from troubled countries in all parts of the developing world, the biggest threat to the global economy may have been lurking in the shadows (via Google Trends)

For more on recent shenanigans in China’s shadow banking sector, click here.  Also, this link has an interesting account of excesses in the market for bankers acceptance notes, in particular.

Note that we excluded China from the conclusions of Thursday’s post, “Fear the Equity Bubble, but Don’t Sweat the Emerging Market Crisis.” It’s a little late for early-year predictions, but here’s one for sometime in the next few years if not 2014: Richard Koo becomes the most sought after economics pundit and possibly the world’s most famous economist after China’s epic balance sheet expansion morphs into the mother of all balance sheet recessions.

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Global Hunter's picture

You haven't explained January's volatility with that chart at all.  The chart shows that more people are becoming interested and aware of 2 of the symptoms.

Winston Churchill's picture

Indeed.Maybe your focus should be on the shadow banking

system right here in the West.

If the ever increasing reverse repos are not sign of severe stress

in the SBS, then I am really Winston Churchill. reincarnated.

China I think is a symptom of this problem, not vice a versa.

new game's picture

just asking: who the fuck can anyone believe anymore?

speculating on lies is a fools game-good luck with that...

earleflorida's picture

if they all believe in the same lie, your a contrarian trade ahead


AlaricBalth's picture

Correct me if I am wrong but wouldn't worldwide search volume be a lagging indicator, or at best a coincident indicator.

rqb1's picture

China makes us look solvent.  

U4 eee aaa's picture

China makes us sniff solvent

Misean's picture

Ah...I truly laughed out loud. Good one sir! Good one.

toady's picture

Yep. Only two? Lets add 'pomo' 'fed' & 'obama' search trends to the list. I think those three will blow the two in the chart away...

Any more to add?

Global Hunter's picture

I don't think there would be any sort of Chinese Shadow Banking crisis if we in the west hadn't moved most of our manufacturing there and financed the operation with printed fiat federal reserve notes.

new game's picture

china has reserves to handle all there problems for near term-called savings!(foriegn reserves).

china has all the problems of centrally planned corrupt regime. aren't they all.

plus they can start dumping treasuries and fuck us over in a heartbeat.

and putting tons of gold in vaults.(if what we read is true)!

who is sucking hind tit?

as i recall, he/she who has the wealth with no debt, calls the shots...


ArkansasAngie's picture

Using the economy as a WMD is different from having a strong economy as a national security concern.

I do believe that the best means of dealing with a competitor is to do business with them.

With that said ... If China implodes ... it might be tough sledding.

Global Hunter's picture

If China implodes it will because we are no longer able to buy their mass/cheaply manufactured crapola because the consumer in the west will be all tapped out IMO.  I think this is well underway because of the Baltic Dry index and the revenues/earnings and guidance of big retailers lately.  Unless that is because of the cold winter hehe.

blindman's picture

what is banking again? is that like
movie making or jazz music?

blindman's picture

The Mandrake Mechanism-(How the Fed Creates Money)
The Creature from Jekyll Island -Book Excerpt ^ | May 1998 | G. Edward Griffin
".. Congressman Wright Patman, who was Chairman of that committee, asked how the Fed got the money to purchase two billion dollars worth of government bonds in 1933. This is the exchange that followed.

ECCLES: We created it.
PATMAN: Out of what?
ECCLES: Out of the right to issue credit money.
PATMAN: And there is nothing behind it, is there, except our government's credit?
ECCLES: That is what our money system is. If there were no debts in our money system, there wouldn't be any money."

Rising Sun's picture

Made a ton this week scalping VIX - thanks GS/JPM for fucking with the markets.


Spend a few hours in this market folks - moves really quickly - no stops.


Make a ton and fuck GS and JPM in the process.

new game's picture

doing my best to resist the temptation...

oleander garch's picture

One is very concerned about the shadow banking issues of the country with the largest foreign reserves, number one in world trade volume, number one in manufacturing capacity, number one in exports of real goods and with 4 trillion dollars in tax havens around the world.  Yes, that is exactly the place which should worry western bankers when their financial products are being challenged by a gold backed yuan.   What could they possibly fall back on if some chippy lenders are compelled to swallow the consequences of their bad decisions.  Much better to print.

disabledvet's picture

Why are the "big monies" fleeing China to various tax havens?

This strikes me as a major capital flow problem.

Winston Churchill's picture

Just watch that shiny thing over there.

No problem for the Chinese to scrap their whole system and

restart.They have lots of recent experience doing that.

.Now the have the hard assets,so kindly exported from the west.

Maybe a gold backed NEW yuan lies in their future.

He who has the gold makes the rules.,ruckers.

Implicit simplicit's picture

The right hand axis should show the search volume amount by click volume. The article's links are more scientific, and show how one might draw a correlation to the worldwide search volume of emerging market crisis and the shadow banking of China.

 I guess it must even be showing up in the  main media propaganda to get so many hits;  conundrum-they are ususally a counter indicator.

MollyHacker's picture

The chart exemplifies what is going to be "the path of least resistance"

Sufiy's picture

Clive Maund - very sobering:

Our guide for a more definite indication that the wheel is coming off the broad market is the lower blue trendline shown on our 5-year chart for the S&P500 index below – if the market makes a significant breach of this supporting trendline we could see an absolute bloodbath that would quickly go global.



user2011's picture

Without volatility on the stock market, how can they force unsuspecting people into "myRA" ?    Fed is trying to buy notes and bond itself, but need the MyrA to pick up the pace.


flow5's picture

No, when the U.S. sneezes, the rest of the world catches a cold.  Very simple.  Roc's in MVt peaked early & at subpar levels.