This page has been archived and commenting is disabled.

"The Pig In The Python Is About To Be Expelled": A Walk Thru Of China's Hard Landing, And The Upcoming Global Harder Reset

Tyler Durden's picture




 

By now everyone knows that the Chinese credit bubble has hit unprecedented proportions. If they don't, we remind them with the following chart of total bank "assets" (read debt) added since the collapse of Lehman: China literally puts the US to shame, where in addition to everything, the only actual source of incremental credit growth over the same time period has been the Fed as banks have used reserves as margin for risk purchases instead of lending. 

 

Everyone should also know that like a metastatic cancer, the amount of non-performing, bad loans within the Chinese financial system is growing at an exponential pace.

 

Finally, what everyone learned over the past month, is that as the two massive, and unresolvable forces, come to a head, the first cracks in the facade are starting to appear as first one then another shadow-banking Trust product failed and had to be bailed out in the last minute.

However, as we showed last week, and then again last night, the default party in China is only just beginning as Trust failures in the coming months are set to accelerate at a breakneck pace.

 

The $64K question is will the various forms of government be able to intercept and bail these out in time, as they have been doing so far despite their hollow promises of cracking down on moral hazard: after all, everyone certainly knows what happened when Lehman was allowed to meet its destiny without a bailout - to say that the CNY10 trillion Chinese shadow banking industry will not have far more dire consequences if allowed to fall without government support is simply idiotic.

But what could be the catalyst for this outcome which inevitably would unleash the long-overdue Chinese hard landing, and with it, a new global depression?

Ironically, the culprit may be none other than the Fed with the recently instituted taper, and the gradual, at first, then quite rapid unwind of the global carry trade.

Bank of America explains:

QE and the Emerging Markets carry trade

 

The QE channel has worked through Emerging Markets and China is a key vehicle. By lowering the US government bond yields to a bare minimum, and zero –ish at the short end, a search for yield globally ensued. Emerging market banks and corporates have gone on an international leverage binge, yet another carry trade, the third in 20 years. The first one was driven by European banks, financing East Asian capex – that ended in 1997. The second one was global banks and equity-FDI supporting mainly capex in the BRICs. That ended in 2008. This time, it is increasingly non-equity: commercial banks and more importantly, the bond market – often undercounted in the BoP and external debt statistics that conventional analysis looks at.

 

Chart 9 shows the rise of EM external loans and bond issuance (both by residence and nationality). Since, end-3Q2008 to end-3Q2013, external borrowing from banks and bonds has risen USD1.9tn. Bank loans have risen by USD855bn and bond issuance in foreign currencies by nationality is up USD1,042bn. In the prior five-year period (i.e. end-3Q2003 – end-3Q2008), forex bond issuance rose only USD432bn. Clearly, the importance of external bond issuance is rising. See Table 5 for details.

 

In China, since, end-3Q2008 to end-3Q2013, outstanding external borrowing from banks and bonds has gone from USD207bn to USD849n – a net rise of USD655bn. Outstanding bank loans are up from USD161bn to USD609bn – a net rise of USD464bn. Bond issuance in foreign currencies by nationality is up from USD46bn to USD240bn – a net rise of USD191bn. In the prior five-year period (ie, end-3Q2003 – end-3Q2008), forex bond issuance rose only USD28bn in China. Clearly, the importance of external bond issuance is rising in China.

 

 

There is more to this story.

 

As mentioned earlier, for externally-issued bonds, USD1,042bn has been raised by the nationality of the EM borrower since end-3Q 2008, but USD724bn by residence of the borrower – a gap of USD318bn, or 44%. This undercount is USD165bn in China, USD100bn in Brazil, USD62bn in Russia, and USD37bn in India. The carry trade this time around was helped substantially by access to the bond market, especially from overseas affiliates of EM banks and corporations.

 

There are a lot of moving parts in the balance of payments that finally affect the change in international reserves at any EM central bank – eg, the current account, portfolio equity investment and direct equity investment, and debt flows – both from the bond market and lending from banks. We focus on the link between these debt flows and the international reserves in China. As Table 5 below shows, China’s external debt – from bond issuance and forex borrowing from banks – rose USD655bn during 3Q08-3013.

 

 

We posit that this large rise was in part driven by the carry trade offered up by QE – China banks and corporates issued substantial forex-denominated bonds, and borrowed straight loans from international banks. We recognize the caveat that correlation does not imply causation. The USD655bn rise in China debt issuance is highly correlated to the Fed’s balance sheet since late-2008. As Chart 11 shows, the rise in China debt issuance of USD 655bn has (along with FDI and the C/A surplus), boosted international reserves by USD1,773bn since late-2008. Also, as Chart 11 shows, the USD1,773bn rise in China international reserves mirrors the rise of USD2,585bn in the EM monetary base. Lastly, the rise of China’s monetary base of USD2,585bn correlates well with the USD10.9tr rise in China’s broad money expansion.

 

 

 

As the Fed tapers, and the size of its balance sheet stabilizes/contracts, we should expect this sequence to reverse. Confidence is a fragile membrane. Not only does the Fed’s balance sheet matter as a source of funds, but we believe so does the attractiveness of the recipient of the carry trade – and the trust in its collateral. As Gary Gorton puts it...

 

The output of banks is money, in the form of short-term debt which is used to store value or used as a transaction medium. Such money is backed by a portfolio of bank loans in the case of demand deposits, or by collateral in the form of a specific bond in the case of repo. The backing is designed to make the bank debt as close to riskless as possible — in fact, so close to riskless than nobody wants to really do any due diligence on the money, just transact with it. But the private sector cannot produce riskless debt and so it can happen that the backing collateral is questioned. This typically happens at the peak of the business cycle. If its value is questioned, it loses its “moneyness” so no one wants it, and cash is preferred. But as we know, if everyone wants their cash at the same moment, their demands cannot be satisfied. In this sense, the financial system is insolvent. (interview with the FT) 

 

What makes sense for an individual carry trade - borrow low, invest at higher rates - falls prey to the fallacy of composition, when too many engage in the same carry trade. And eventually question the underlying collateral, now huge, and potentially suspect. China is a case in point. If our colleagues David Cui and Bin Gao are right, the trust sector in China could create rollover risks that reverse a gluttonous carry trade within China, but partly financed overseas. In China's case, this trade was between low global interest rates, low Chinese deposit rates, expectations of perpetual RMB appreciation on the one hand, and higher investment returns promised by Trusts on the other. A part of the debt funds raised overseas, we suspect were put to work in this Trust carry trade. The HK-based banks are big participants in intermediating the China carry trade - as Chart 12 shows, their net lending to China went from 18% of HK GDP in 2007 to 148% in late-2013.

 

There are always fancy names given to carry trades – financial liberalization of capital accounts, the Bangkok International Banking Facility, currency internationalization, etc. We remain skeptics of these buzzwords.

 

 

 

The potential consequences of Trust defaults and a China carry trade unwind

 

1. If the EM carry trade diminishes as a consequence of a changed Fed policy and/or less attractive risk-adjusted returns in EMs as collateral quality is questioned, the sources of China’s forex reserve accumulation will need to change. Perhaps to bigger current account surpluses, more equity FDI and portfolio investment through privatization and more open equity markets. If that does not happen, expanding the Chinese monetary base might require PBOC to increase net lending to the financial system and/or monetize fiscal deficits (this last part has not worked so well in EMs).

 

2. Potential asset deflation is a risk, as the carry trades diminish/unwind. Property prices are at risk – the collateral value for China’s financial systems. This is not a dire projection – it simply seeks to isolate the US QE as a key driver of China’s monetary policy and asset inflation, and highlights the magnitudes involved, and the transmission mechanism. Investors should not imbue stock-price movements and property price inflation in China with too much local flavor – this is mainly a US QE-driven story, in our view.

 

3. Currently, China’s real effective exchange rate is one of the strongest in the world. Concerns about China’s Trust sector, and its underlying collateral value, sees some of this carry trade unwound, the RMB could be under pressure.

 

 

4. Given HK’s role in the China carry trade, HK property prices and its banking system should be watched carefully for signs of stress.

 

5. UK, US, and Japan banking systems have been active lenders to China since QE. They should be on watch if the Trust rollover risk materializes and creates a growth shock in China. See Chart 15.

 

 

 

6. Safe haven bids for DM government bonds, overseas property and precious metals might emerge from China.

 

Could the party go on? Yes, if for some reason a significant deterioration in the US labor market, or a deflationary shock from China, or any other surprise that could lead to a cessation of the US tapering could prolong this carry trade. This is not the house base case. We believe it is better to start preparing for a post-QE world. As one of our smartest clients told us: “the main theme in the past five years was QE. If that is coming to an end, investments and themes that worked in the past five years must therefore be questioned.” We agree.

* * *

Yes, Bank of America said all of the above - every brutally honest last word of it.

The question, however, in addition to "why", is whether the Fed also agrees with BofA's stunningly frank, and quite disturbing conclusion, perhaps finally realizing that aside from the US, the biggest house of cards that would topple once the "flow"-free emperor is exposed in his nudity, is that of the world's largest "growth" (and credit) dynamo of the past two decades - China. Because, as noted above, if Lehman's collapse was bad, a deflationary collapse brought on by Chinese hard landing coupled with a full unwind of the global carry trade, would be disastrous and send the world into a depression the likes of which have never before been seen.

Finally, for those who want the blow by blow, here is BofA's tentative take of what the preliminary steps of the next global great depression will look like:

If we do experience a sizable default, the knee-jerk market reaction will be cash hoarding since it will strike as a big surprise. Thus, we expect the repo rate to rise first, while the long term government bond would get bid due to risk aversion flows.

 

However, what follows will be quite uncertain, aside from PBoC injecting liquidity and easing monetary policy to help short term rate come down. It has been proven again and again the Chinese government will get involved and be proactive. The bond market reaction will be different depending on the government solution.

Alas, at that point, not even the world's largest bazooka will be enough.

At this point one should conclude that reality - through massive, unprecedented liquidity injections - has been deferred long enough. It is time to let the markets finally return to some semblance of uncentrally-planned normalcy: there is a reason why nature abhors a vacuum. Even if it means the eruption of the very painful grand reset, washing away decades of capital misallocation, lies and ill-gotten wealth, so very overdue.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Fri, 02/21/2014 - 11:51 | 4461950 moneybots
moneybots's picture

"Countries around the world are taking on more debt without any fruitful attempts to curb their expenditures. This has resulted in a much more fragile and artificially held up financial system which is on a much shaky ground than it was in 2008."

 

The BIGGER the boom, the BIGGER the bust.

Fri, 02/21/2014 - 00:00 | 4460752 robertocarlos
robertocarlos's picture

TPTB want 6.5 billion of us gone for good. You can keep your gold though. 

Fri, 02/21/2014 - 00:09 | 4460770 Seer
Seer's picture

TPTB don't care, why should they?  They've always had, and they're set up to continue to have.  They have the System; and, as long as we continue to believe that we can "fix" the System we keep that System alive, which keeps Them alive.

The rest will take care of TPTB's "problem."  TPTB have programmed us quite well to turn on one another.

Fri, 02/21/2014 - 00:41 | 4460834 Manipuflation
Manipuflation's picture

At least someone finally said it.  Spot on there Seer.

Fri, 02/21/2014 - 12:18 | 4462071 Lost Word
Lost Word's picture

More than just ourselves.

Why is DHS buying billions of bullets for themselves,

and why are there stories of future False Flag nuclear weapons attacks?

Some people say Micro-Nukes were used in the 9-11 WTC towers demolition.

What is the next step in the tyranny?

Fri, 02/21/2014 - 00:04 | 4460754 AdvancingTime
AdvancingTime's picture

This article contends that now that we have wound up and distorted prices we are facing the great unwinding which may prove very painful, This event may be described in several ways, most likely as a collapse or a re-alinement but in reality it is the recognition that our path was an unsustainable illusion. To those who have painted themselves into a corner the idea of a new world currency would represent a new lease on life and a way to avoid and lessen the consequences of their past actions

To those people who have been calling for a "world currency" for years. the saying "one should never let a good crisis go to waste" means a meltdown with high levels of fear and contagion would present a perfect opportunity to advance this agenda down the field. Remember many people with agendas have a lot to gain when a major shift in the currency markets takes place. More on this subject in the article below,

http://brucewilds.blogspot.com/2014/02/contagion-may-lead-to-new-world-c...

Fri, 02/21/2014 - 12:13 | 4462043 SystemOfaDrown
SystemOfaDrown's picture

This could all be by design then. Order out of chaos? Go from "United Nations" to "WWIII" to "United Nation's Bank". Hooray! Our fearless leaders will save us!

Fri, 02/21/2014 - 12:22 | 4462092 Lost Word
Lost Word's picture

As you noted,

A world currency would fail just like the Euro has failed.

Fri, 02/21/2014 - 00:06 | 4460765 andrewp111
andrewp111's picture

If there is a big panic, all major Central Banks do a coordinated bailout. What could possibly go wrong?

Fri, 02/21/2014 - 01:02 | 4460876 TheObsoleteMan
TheObsoleteMan's picture

This calls for WAR!!  And it's going to be a bloodbath. Here is a newsflash: JAPAN HAS NUKES {no, not Fukashima}. They have had them since the 1980s. Guess where they got them? Any guess who they will use them on? From Korea to India to Australia, it will be one for the history books, and it will be decisive. The elite need this to "purge" their books.

Fri, 02/21/2014 - 01:31 | 4460929 Seer
Seer's picture

STAY AWAY FROM ALL FINANCIAL CENTERS AND ANY LOCATIONS WHERE INVESTIGATION OF FINANCIAL CRIMES TAKE PLACE. (sorry for shouting)

Fri, 02/21/2014 - 12:24 | 4462104 Lost Word
Lost Word's picture

Japan is one of the Tri-Laterals,

mostly linked with the US military,

servants of the Bankster elites.

Fri, 02/21/2014 - 21:59 | 4463968 deflator
deflator's picture

servants of the Bankster elites.

 I wouldn't say that, more of a mutual agreement rather than a master/servant relationship. remember Japan does not have any crude oil, natural gas or coal yet is the most technologically advanced country  in the world(they need a shit tonne of energy because technology consumes energy.)

Sat, 02/22/2014 - 02:09 | 4464478 Seer
Seer's picture

"Japan does not have any crude oil, natural gas or coal"

"is the most technologically advanced country  in the world(they need a shit tonne of energy because technology consumes energy.)"

Not a winning combination, is it?

I've been short Japan for quite a while now.  Based on resources.  People can speak "fundamentals" all they want as pertains to "economics," but in the end it all comes down to possession of physical (resources).

Sad, at one point in Japan's history it was one of the most sustainable ciivilizations that ever existed on this planet.   To... "Pokeman"...

Fri, 02/21/2014 - 01:09 | 4460882 DeusHedge
DeusHedge's picture

The fed lends out money. right? So if the fed lends money to banks, in exchange for a little interest, the real question is how much debt can everyone have (not the us government)? The answer: The US economy is more important than the amount of debt, due to decay.

Fri, 02/21/2014 - 01:39 | 4460943 Gaurden
Gaurden's picture

only extreme runaway global warming can save us now.

the lesser of two evils!

Fri, 02/21/2014 - 12:28 | 4462117 Lost Word
Lost Word's picture

Chem-trails will not be needed for global climate cooling,

as the new solar cooling phase continues,

unless the purpose is also for chem-trails global poisoning.

Sat, 02/22/2014 - 02:11 | 4464481 Seer
Seer's picture

Don't fuck with Mother Nature!

The next glacial period will pretty much wipe out everything except a few cave paintings...

Fri, 02/21/2014 - 02:01 | 4460980 q99x2
q99x2's picture

"V" is on Coast to Coast am tonight. He'll be talking about the recent deaths of banksters and economic collapse.

Fri, 02/21/2014 - 22:15 | 4464015 deflator
deflator's picture

So it is absolutely critical to our financial future that China continues to play our game.

wrong

 *China has no intention of dumping dollars*

*China will crash the status quo by being better at printing*

If you can't beat em, join em.

Fri, 02/21/2014 - 03:01 | 4461050 Manipuflation
Manipuflation's picture

Where is the asshat known as Flakmeister?  I did not forget anything that was said last night.

Fri, 02/21/2014 - 05:33 | 4461144 lakecity55
lakecity55's picture

As a non-economics professional, what caught my eye made common sense-- the lack of return on investments (non-NYSE) made investors go elsewhere, and the PRC was happy to acommodate these investors with some wild "opportunities." Indeed, who would want USTs only paying 1% ?

Fri, 02/21/2014 - 07:49 | 4461262 zippy_uk
zippy_uk's picture

So - what does this mean?

- Does China CNTR+P to cover up losses on industrial scale ?

- Do workers in China get bigger wage hikes to cover this (but probably less

faster than underlying "real" inflation)?

- Does this mean China starts exporting INFLATION instead of DEFLATION globally (there is also Japan doing something similar) and potentially EU (may be covertly also)

How best to play this ?

Fri, 02/21/2014 - 11:18 | 4461814 SAT 800
SAT 800's picture

Don't overthink it. Just put your long term savings in Silver; then you will have Savings instead of regrets.

Fri, 02/21/2014 - 08:16 | 4461292 Tyler Durden
Tyler Durden's picture

Because JPM already admitted it knew and promptly received a wristslap: "JPMorgan, Madoff, And Why No One Dared Ask "The Cult" Any "Serious Questions As Long As The Performance Is Good"

Fri, 02/21/2014 - 09:06 | 4461359 Johnny Cocknballs
Johnny Cocknballs's picture

Well, the prior suit was DOJ, this is shareholder - different standards, fiduciary duty issues.  I just skimmed their admission from the earlier ZH story and basically it seems like JPM admitted to, more or less, negligence, hence the slap, notwithstanding the incredible pain victims of the fraud themselves suffered. 

I'm not a lawyer so eagerly defer - but the  agreement between DOJ and JPM, naturally, didn't implicate upper level management, but they admitted at least negligence.  I don't know if this negligence is evidence of a breach of fid duty to the shareholders, but I'm curious to see if they want to try to rope in Dimon some how.... depose him anyway... just because he wasn't responsible for the negligence personally or as an officer doesn't necessarily mean he isn't responsible for breaches of fid duty?  I dunno.

Agreed there's not much to see here right now, but worth keeping an eye on.  And I hope Mr. Rosenfeld's good health continues, unabated. I'd expect, but again, don't know, that the potential damages are pretty limited [unless they could argue that the shareholders would have been even better off without the fraud??] but depending on who they are, maybe what they do is try to embarrass Dimon.   Any white collar law talkin' guys up in this mutha?

 

O/OT - How many times will Krugman write the same fuckin' column, and is there any chance Tyler will comment there, as ZH Tyler?

That would be cool.

 

Fri, 02/21/2014 - 22:29 | 4464055 deflator
deflator's picture

 That would be cool.

no it would not be cool, as that would give Krugman undo credibility.

Krugmans useful idiot lifespan is finished.

Sat, 02/22/2014 - 02:29 | 4464505 Seer
Seer's picture

Good spot.

I suspect that DImon will eventually leave, take the heat with him, which means it ends (and in so doing he'll get a HUGE parachute).  Any wronged shareholders will be assured that the Morgue can shake it out of the public at-large.

Fri, 02/21/2014 - 09:49 | 4461447 spellbound
spellbound's picture

Awesome!!! So we can blame the Chinese for the upcoming collapse while we smell like roses and maintain plausible deniability. Well, we did EVERYTHING we could to prevent this, such as printing moooar massive debt.

Fri, 02/21/2014 - 10:20 | 4461559 post turtle saver
post turtle saver's picture

this isn't so much a pig through a python as it is a backdraft...

Fri, 02/21/2014 - 11:44 | 4461932 moneybots
moneybots's picture

"everyone certainly knows what happened when Lehman was allowed to meet its destiny without a bailout"

 

What happened?  Nothing.  The system is still as corrupt as it was on that day.

So what is STILL coming?

Fri, 02/21/2014 - 11:49 | 4461945 SystemOfaDrown
SystemOfaDrown's picture

Nan Ting Wong Wi Dat!

Fri, 02/21/2014 - 12:03 | 4461996 moneybots
moneybots's picture

"But what could be the catalyst for this outcome which inevitably would unleash the long-overdue Chinese hard landing, and with it, a new global depression?

Ironically, the culprit may be none other than the Fed with the recently instituted taper, and the gradual, at first, then quite rapid unwind of the global carry trade."

 

The tail does not wag the dog.  Taper is not the problem, QE is.  The FED cannot taper something that does not exist.  Can't unwind a carry , unless a carry is created.  Can't burst a bubble unless one creates a bubble.

 


Fri, 02/21/2014 - 12:07 | 4462015 Orwell was right
Orwell was right's picture

Well done article...(I agree with the data and the premise).....however I think is misses one of the most obvious solutions.    A big war somewhere (anywhere)  to wipe the books clean, distract the sheeple, and let those with ill gotten gains get away scott free. 

As for the quote  "washing away decades of capital misallocation, lies and ill-gotten wealth...."

"Ill gotten wealth", often doesn't get washed away.   Those who got it, often keep it.   Everyone else gets stuck with the check...

Fri, 02/21/2014 - 12:16 | 4462054 moneybots
moneybots's picture

" Because, as noted above, if Lehman's collapse was bad, a deflationary collapse brought on by Chinese hard landing coupled with a full unwind of the global carry trade, would be disastrous and send the world into a depression the likes of which have never before been seen."

 

Lehman's collapse wasn't bad, what caused the collapse- a record credit bubble, due to reckless leverage and record FINANCIAL FRAUD, was bad and still is, as it has gone on to even greater heights "the likes of which have never before been seen."

Fri, 02/21/2014 - 12:20 | 4462079 Davilis
Davilis's picture

Classic case of over-thinking the situation.  China borrows from itself.  China buys international assets. China cannot pay itself back. An INTERNAL default occurs, but China keeps the international asset.  Collateral damage creates so much noise that no one notices a net transfer of assets to China.  China wins.

Fri, 02/21/2014 - 22:39 | 4464083 deflator
deflator's picture

winner, winner, chicken dinner! +1

Fri, 02/21/2014 - 12:27 | 4462116 elwind45
elwind45's picture

The wallpaper tell us more about the wallpaper? Is it really made of gold like Istanbul/Constantinople? R we about to witness the rise of the consumer in CHINA many decades before any thought possible?

Fri, 02/21/2014 - 12:36 | 4462140 elwind45
elwind45's picture

"WHERE'S MY MONEY"? BY TC

Fri, 02/21/2014 - 13:45 | 4462367 Chuck Knoblauch
Chuck Knoblauch's picture

The Carlyle Group's latest investments in Trailer Parks and Self-Storage Units. I think they expect drastic life changes picking up the pace in 2014 and beyond.

http://libertyblitzkrieg.com/2013/10/17/the-carlyle-groups-latest-invest...

 

Because of an aging demographic or economic collapse, you decide. I think its a combination of both.

 

Neo-Feudalism, as we see it today in South Africa, has arrived.

Fri, 02/21/2014 - 14:02 | 4462461 Chuck Knoblauch
Chuck Knoblauch's picture

Those who preach the great equality of Socialism are exempt from its slavery.

Fri, 02/21/2014 - 20:39 | 4463791 thewayitis
thewayitis's picture

 

  Ahh YES......One of the Ugliest canaries in the coal mine .....

 

 

Fri, 02/21/2014 - 23:23 | 4464211 sink critically
sink critically's picture

I tried to write an intelligent comment, but it was too depressing.

Enjoy each day as if it is your last, and one day you will be glad you did.

While you are enjoying each day, plan to live long just in case.

Sat, 02/22/2014 - 02:59 | 4464504 A Dollar Short
A Dollar Short's picture
There is no way out of this until complete collapse of the world banking system. When interest was created out of thin air, money had to be created to pay for it and, that is the story. Weapons create interest as do wars and emerging economies. There is a lot of smoke to come.  Ukraine is the latest, the CIA and EU heavily involved in this situation. Poor China. Poor US. Poor EU. Poor UK. Rich TPTB...
Sat, 02/22/2014 - 04:11 | 4464567 TheCosmicTaco
TheCosmicTaco's picture

China is paddling a sinking canoe down shit creek and Niagara Falls is dead ahead. China is going down, and it is going to make previous financial crises look like tea parties. All the baijiu and karaoke girls in the world cannot hide the fact that the Chinese emperor has no clothes. China's banks are insolvent five times over. This is going to hit the fan soon.

Chinese bankers are monkeys dancing on razor blades. All of them.

Sat, 02/22/2014 - 04:33 | 4464578 Escapeclaws
Escapeclaws's picture

This is a deeply pessimistic article, even for ZH. Time to sell gold and buy stocks.

Sat, 02/22/2014 - 04:41 | 4464583 TheCosmicTaco
TheCosmicTaco's picture

I'm long burritos, short yuan, and short Kyle Bass... this trade is gonna work... oh, I'm long Jack Daniel's too... but that one gets a little less long each day... now I just want Lauren Lyster back on air and my life is complete.

Sat, 02/22/2014 - 05:40 | 4464608 illadeljim
illadeljim's picture

In the words of many brilliant economists, "but it's different this time". 

Sat, 02/22/2014 - 09:37 | 4464733 d edwards
d edwards's picture

After the pig passes through the pithon you end up with a big pile of shit!

Sat, 02/22/2014 - 11:13 | 4464840 Johnny Cocknballs
Johnny Cocknballs's picture

meh.

 

Sun, 02/23/2014 - 03:36 | 4467323 Decimus Lunius ...
Decimus Lunius Luvenalis's picture

As one of our smartest clients told us: “the main theme in the past five years was QE. If that is coming to an end, investments and themes that worked in the past five years must therefore be questioned.”

 

Yeah, that one smartest of smartest clients told you the exact same shit you are peddling.  "And what do you do Johnny?"  " Oh I convince folks that I can predict the future."  "And that's a good living?"  "Oh yeah.  You see, my industry created a megaolithic legal structure that favors only my employers and semi-competitors.  The beauty is that is understood, to a degree, only by us, and is enforceable by the monopoly of violence that your government enjoys."  "Oh, that sounds nice.  Did you try the Belugia?"  

Do NOT follow this link or you will be banned from the site!