Distorted Markets & Disillusionment One Asset At A Time

Tyler Durden's picture

Thanks to the repression of the world's central banks, investors have exited cash and piled into "everything else," but while this is no surprise to most, Citi's Matt King warns of the possibility of an "entrance with no exit" as investors reach for yield has distorted primary and secondary markets, forced risk-averse investors into alternative asset classes, distorted markets beyond any fundamentals, and left markets incredibly illiquid. This, he concludes, sets up a problem that we are already seeing as investors are disillusioned one asset at a time...

Via Citi's Matt King

Out of Cash and into everything else... investors have been reaching for yield...

With Emerging Markets the most popular destinations... (which could be a problem as it is very crowded still)

But broad investment grade credit markets have exploded as demand beget supply and firms have doubled their outstanding debt

which fits perfectly withgout recent dream-crushing discussion of the rise in cash on corporate balance sheets


US companies are carrying far more net debt than in 2007


Another curiosity is this notion that US companies have substantially reduced their debt pile and are therefore cash rich. The latter is indeed true. Cash and equivalents are at historically high levels, but rarely do those who mention the mountains of corporate cash also discuss the massive increase in debt seen over the last couple of years.


In fact, debt levels have been growing to such an extent that net debt (i.e. excluding the massive cash pile) is 15% higher than it was prior to the financial crisis.

Too much money chasing too few assets... (not just increased demand but reduced supply)

Which has left credit amrkets totally distrorted...as Fundamentals are no longer the driver

and equity markets...

Bu, it would appear, that investors are losing faith...



The big question is - who's next?

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Dr. Engali's picture

How can the central planners possibly believe this will end well? I wonder if this has anything to do with the fed's private police force....... Nah. Back to the BarcaLounger to munch on some Cheetos and watch life unfold on my Chinese made 55% hedonically adjusted deflationary flatscreen teevee.

666's picture

They don't care if it ends well because they have already become filthy rich by it.

dow jones 20000's picture

I use adblock because your blog stinks.

SAT 800's picture

i agree with the premise of the article; conventional paper interest paying instruments will turn into roach motels; you can check in, but you can't check out.

DIgnified's picture

Cant rack up debt w/interest with a good ending.  You need to create problems that people will have to borrow money, from you, to fix.  Lots of money.  

Spitzer's picture

What happened to the reports that gold was manipulated to the tune of 50% in 2010 onward ?


Should be at around $2800

flacon's picture

Bart Chilton is on top of that one. He even wears a gold coloured tie to show that he is really, really, serious about gold manipulation. .....

q99x2's picture

I have a Citibank account. Fuck Citibank. I went in last month and the teller says oh I see you've had this account for a while over six months. Everybody is taking their money out of Cititbank. I got the account free of monthly fees not because i'm over 55 but because I'm a student. I need it to purchase and sell bitcoin. Fuck Citibank.

MeelionDollerBogus's picture

All the more reason I've said bitcoin is just a dollar derivative and friend to the banks.

You just proved it.

If bitcoin really served an anti-bank purpose you wouldn't need any account to do it at a bank, you'd have swapped goods, services & currency in hand for bitcoin. You're not. You're a speculator & likely a bag-holder at this point.

Bitcoin iz ponz1.

larry david's picture

Gold needs to be at least 5 figures in dollar terms to reflect reality. If the gold market was 100% free from dumb ass bankster manipulation it would probably be $20,000 minimum because the future is clear. there's no way out for the Fed, bitchez

starman's picture

Common gents the Fed owns the market since 09!! End of story.

mvsjcl's picture

They've always owned the "market".

Yen Cross's picture

   But this market has electrolytes... long "Brawndo the Thirst Mutilator"...  P/E ratio ~

Theos's picture

What if the top most trendline is accurate?

Just sayin.

hungrydweller's picture

Who cares that debt levels are high when the rate on that debt is at historical lows and there is a record amount of cash on the books.  Corporates will thrive while the government dies.

ebworthen's picture

Look what the FED hath wrought.

Yet another BUBBLE, the dumbfucks.

NoDebt's picture

Shocking it could happen by following a bigger version of the same policies that got us into the last one.

End of the day, just like the Russian oligarchs, those "in the know" will get out in time.  Everyone else will be left holding the bag.

Better to be out a year (or two or three) early than a week late.  


toadold's picture

Is who is saying it more significant than what is being said?

ben_bernanke's picture

Everything is a warning here. I remember reading similar warnings back in May of 2009. Wow, great job Zero Hedge.

jmcadg's picture

A profit is only realised once the asset is sold. So other than any dividend paid it's all shit until sold. If you wait for the top, good luck getting out.

But think further, how many hoops do you have to jump through to get your money.

1) Get your broker to sell whilst everyone else is selling.
Hope you've got a hotline to him/her. And you better hope he or she is a big enough shot to get it done.

2) Let's say you managed to get to here. You need to draw your funds down from here to your account. I'm hoping you are not dealing with anyone schooled at Goldman and that your account is with JPM. Ask anyone you know who dealt with MFG. You'll find they were actually the lucky ones! as they were able to get something back.

3) Well done. You're here. You didn't wait for the top. Shrewd cookie.
Now what? You need to get these funds into something of value.
Time is still not on your side, so forget real estate and productive farmland. You can do that later.

4) Get down to your local coin shop or online to a bullion dealer and on the phone to another and get some physical in your hands. Let's hope there is enough to feed your appetite at this point.

5) Whilst you were securing your financial future, you should have had your partner stocking up on your preps.

6) Take a well deserved boating trip.

7) you now deserve that beer and popcorn.

If you are already at 7) I salute you, add a greenie :)

Being Free's picture

60 days away.  Gave you a greenie anyway.

MeelionDollerBogus's picture

People still call brokers? What, no computers? Sell / limit-order & within seconds the cash-value shows and now it's time to spend. Like now.

Maybe I should pick up that brick-cell to call my broker anyways, just for fun.

Or use that old rotary phone I had as a door stop, just for good measure.

Peter Pan's picture

We just have to understand that the constitution, the workings of government and the market have all been genetically modified as have human beings with their overdose of entertainment, government handouts and calorie fortified diets.

As a result we are living through a new paradigm which has an unknown but limited life span before it drops dead as a result of cirrhosis.

If you can side step the effluent of this paradigm either by living far from it or by living in the middle of it without being dependent or infected by it, then so be it. As for the rest of us just accept that it's going to get uglier and uglier.

Don't be fooled by any resemblance between yesteryear and today. The blast off point may be the same but the trajectory is wildly different as will the destination.

MeelionDollerBogus's picture

No worries citizen, we can all farm Hopium on the Obamaville app new for Obamaphones!

It's like the Fool-me-twice-worth-2-in-the-Bush app in the old PalmOS but updated.

Ban KKiller's picture

I wish there was an entity that was in control. There isn't or if there is their goal of destroying things does not make sense to me. So I agree...if you don't know who the sucker is at the poker game it is you...us. History is a great guide and has shown over and over that big banks are the enemy.

Captain Obvious has spoken. Silver beaches and boating accidents.