Citi On The "Known Unknowns" That Are Not Priced In

Tyler Durden's picture

Looking ahead at the next couple of weeks, Citi's Stephen Englander sees multiple sources of risk which he does not think are fully priced in. Most of these risks appear to be asset market negative, involving higher US rates, more geopolitical disruption and downside economic shocks.

Via Citi's Stephen Englander,

The 5 Known Unknowns...

Payrolls – the early forecast for NFP is 188k. This implies that investors expect the April release to be not much better than the trend prior to the severe winter. The potential for upside surprise is significant in our view, carrying positive implications for the USD and negative implications for other assets.


Ukraine – crisis is hardly over. The G7 may be overestimating the impact of financial sanctions and underestimating how tempting it may be for Russia to continue to annex areas that it considers historically linked to Russia.


China optimism flies in the face of limited policy options that they have. Investors have become confident in recent days that the Chinese will apply stimulus to the Chinese economy. However easing credit conditions can hardly be attractive to Chinese policymakers and straight out fiscal policy pushes against structural reform efforts.


Japan sales tax increase hitting an economy that is already losing momentum. The trade so far is to buy JPY whenever bad news hits, whatever the source, and sell on good news. It looks more likely that economic weakness will force doubling down on policy stimulus and lead to JPY weakness.


Australian data have been punching above their weight and may reverse to the downside. Short AUD positions have been cut and there is increasing discussion of a domestic demand driven Australian economy. This flies in the face of Australian integration with China. As a share of GDP, Australia exports more to China than France to Italy and Germany combined. So there is a risk that the strong data are a statistical fluke that will reverse in coming months.

Of course, any of these will merely be met with a plethora of talking heads suggesting that central bankers will re-crank the printing presses... or not this time.

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Doubleguns's picture

But the fed will save them. Since they were saved previously they must be on the golden boys list or have more dirt on someone than the NSA. 

Boris Alatovkrap's picture

Definition of "known unknown"

You are knowing government statist and bankster is soon do something is evil corrupt and destructive, you are just don't know specificity of action.

yourfather's picture

don't forget the Unknown Knowns.


Thinks that we dont know that we already know. That's the logical extension right.

no more banksters's picture

US private military companies to suppress pro-Russian demonstrations in East Ukraine?

According to ITAR-TASS News Agency the information came from a source in Ukrainian Security Service

NOTaREALmerican's picture

Re:  US private military companies

Cool.   Gotta love Big-MIC.   

Rehab Willie's picture

World Wars fix all, for a while.

Sudden Debt's picture

I'm not going to fight in any. I'm moving out if there ever is one.

Iam Yue2's picture

Aka: It ain't over till the fat lady sings.

LooseLee's picture

"Of course, any of these will merely be met with a plethora of talking heads suggesting that central bankers will re-crank the printing presses"....

And who are these 'talking heads'? They are the PINKO Commie Fascist and Socialist 'Status Quo' that rule (or work for those who rule, corporate, et al.) the world. Until they are 'taken out' (e.g. KILLED), there can be no real PEACE or PROSPERITY in this world.....

bugs_'s picture

from a trans-national perspective these are worries.

for American non-trans-national firms many of these are good news.

but we know where citi's head is.

evernewecon's picture


I'm guessing most who SOLD the 

banks' mortgage bubble would 

see them and the other TBTF 

banks as known knowns and the

nightmare they wish they could 

forget, but there's no running away.



Ban KKiller's picture

Yeah, well, Rumsfeld is still a war criminal. What happened to the missing trillion from the Pentagon? 

That is a unknown known by all who give a flying fuck.