Deutsche Bank: "The Oxygen That Has Fuelled The 5 Year Bull Market Is Slowly Draining Out"

Tyler Durden's picture


From Deutsche Bank's Jim Reid:

We can't help thinking that as it becomes ever clearer that the Fed is pretty much fixed in its determination to stop QE late this year, the oxygen that has fuelled the 5 year bull market is slowly draining out of the market. Clearly the Fed is still buying a significant amount of bonds and thus providing a lot of liquidity but clearly only for a few more months. We think this is creating a lot more two-way tension in equity markets. Supporting this argument is the fact that those sectors that have done best since the bull market/high liquidity period started are suffering in the recent correction. If we define the beginning of the bull market as having started on the 9th of March 2009 when stocks hit their financial crisis-lows, the NASDAQ Technology and Biotech indices have gained 254% and 281% respectively. The S&P 500 homebuilders index has gained 256% over the same period. For comparison, the S&P 500 has gained “only” 177%. Tech, biotech and homebuilders are now down 5%, 19% and 12% from their YTD peaks. This compares with 3.1% retracement in the S&P 500 from the record highs posted in early April this year. So it does seems that sectors that have benefited the most from easy policy are those that are selling off the most right now.

But... what about the fun-der-mentals?

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Fri, 04/11/2014 - 09:32 | 4647067 A_Nejad
A_Nejad's picture

Now, if you read that in German, it sounds even worst...

Fri, 04/11/2014 - 09:35 | 4647073 Winston of Oceania
Winston of Oceania's picture

Wurst? Big question is when do they trim their balance sheet?


Fri, 04/11/2014 - 09:37 | 4647089 Thought Processor
Thought Processor's picture



By 'Oxygen' I assume you mean 'Manipulation'.



Fri, 04/11/2014 - 09:42 | 4647117 insanelysane
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I think that the Dems big strategy was "Income Inequality" for this election year.  However, the Repubs jumped on it and are pointing to the Fed and O's stimulus as the reason for the jump in income inequality.  The dilema is that the Dems have also been selling the "Economy is Booming under O, look at the stock market" so it looks like they are hoping that after all of the taper is priced in, the economy will turn a bit, or at least manipulate the numbers to look like the economy is getting better prior to the election.  Obamacare mandates were already pushed past election.  Of course if Repubs get in, we'll get the same thing.

Fri, 04/11/2014 - 09:53 | 4647166 Serfs Up
Serfs Up's picture

Oxygen is real.  

QE is fake.

Know the difference.

Fri, 04/11/2014 - 13:59 | 4648200 gcjohns1971
gcjohns1971's picture

Do you mean Paper-Oxygen? Or Physical-Oxygen?

Fri, 04/11/2014 - 09:33 | 4647068 Itchy and Scratchy
Itchy and Scratchy's picture

Hole in da' balloon!

Fri, 04/11/2014 - 09:35 | 4647079 NMFP
NMFP's picture

Untill they untaper the taper, coming soon to an auditorium near you!

Fri, 04/11/2014 - 10:04 | 4647221 ArkansasAngie
ArkansasAngie's picture

I'm thinking they are hoping for a rolling recession as opposed to a crash.

Me?  I'm hoping for a crash.  I've been saving despite (inspite) of those SOBs.  So ... I'm ready to buy when all those liquidty filled insolvents go belly up.

Bailouts?  Don't think they can get away with it again.

Leave no incumbants in office.



Fri, 04/11/2014 - 09:35 | 4647082 pods
pods's picture


That's what they are trying to call conjured Fedbucks now?


Fri, 04/11/2014 - 09:40 | 4647105 Doubleguns
Doubleguns's picture

Might explain the recent FDA testing of diesel fumes, they knew they were running out of oxygen. Of course where did they get that idea.

Fri, 04/11/2014 - 10:05 | 4647225 csmith
csmith's picture Without it you die.

Fri, 04/11/2014 - 09:36 | 4647083 Dr. Engali
Dr. Engali's picture

But CNBS keeps telling me that QE has no impact on the markets. The rally has been all due to the underlying fundamentals. I'm so confused as to why such a trusted network would lie to me.

Fri, 04/11/2014 - 09:40 | 4647102 Thought Processor
Thought Processor's picture



They are the happiest bunch of idiots on TV.   



Fri, 04/11/2014 - 10:18 | 4647297 ceilidh_trail
ceilidh_trail's picture

Secondest- Check out Good Morning America show on ABC on any given day for the happiest bunch of idiots. It is amazing to me that this bunch of morons stays on the air. Tons of air time for song and dance BS and not a minute to spare in a two hour timespan to mention Congress going after lois lerner for contempt. ABC = american bullsh!t channel. Do they really think people are this stupid???

Fri, 04/11/2014 - 11:20 | 4647574 alangreedspank
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They also tell you that the historical low yields on the 10Y bond has nothing to do with Fed intervention ("Because they only control short term rates therefore they have nothing to do with the housing mess!!!") but rather because of the economy being in the tank.

I wonder how they can hold both lines without their heads exploding from cognitive dissonance. Stocks are up because of good fundamentals, rates low because of bad fundamentals. 

Fri, 04/11/2014 - 09:36 | 4647084 LawsofPhysics
LawsofPhysics's picture

Bullshit.  "Tapering" you say?  QE is ending you say?

Show me the balance sheet motherfucker.

Fri, 04/11/2014 - 09:55 | 4647178 TheReplacement
TheReplacement's picture

Do quarter trillion reverse repos count?

Fri, 04/11/2014 - 11:20 | 4647453 LawsofPhysics
LawsofPhysics's picture

between what entities?

The size of the reverse repo is irrelevant when it is conducted between the left and right hand of the same organization...


It's still a "debt is money" system/dollar.  No faith means no more credit, period.

Fri, 04/11/2014 - 09:36 | 4647085 Smegley Wanxalot
Smegley Wanxalot's picture

Can't they just print more oxygen?

Fri, 04/11/2014 - 09:38 | 4647094 A_Nejad
A_Nejad's picture

Only if it's 3D

Fri, 04/11/2014 - 09:49 | 4647148 Dr. Richard Head
Dr. Richard Head's picture

I envision Yellen tightening a belt around Bernanke while he pleasures himself.

Fri, 04/11/2014 - 10:09 | 4647243 Theosebes Goodfellow
Theosebes Goodfellow's picture

Oh? 'snuff said.

Fri, 04/11/2014 - 09:37 | 4647090 Central Wanker
Central Wanker's picture

Not oxygen, but crack fumes.

Fri, 04/11/2014 - 09:37 | 4647091 Kaiser Sousa
Kaiser Sousa's picture

"clearly the Fed is still buying a significant amount of bonds and thus providing a lot of liquidity but clearly only for a few more months."

who the fuck do they think thyre foolin'...


keep stackin.....

Fri, 04/11/2014 - 09:40 | 4647098 paddy0761
paddy0761's picture

Yellen will blink.

Fri, 04/11/2014 - 10:06 | 4647233 ArkansasAngie
ArkansasAngie's picture

I'm sure she would like to.  The question is ... can she?


Fri, 04/11/2014 - 09:40 | 4647100 HRamos_3
HRamos_3's picture

You still have time to BTFD...

Fri, 04/11/2014 - 09:41 | 4647104 Al Huxley
Al Huxley's picture

What's the story going to be when inflation and dollar weakness requires the FED to increase interest rates, but debt servicing pressures and bank insolvency require them to increase QE?  I can't wait to see Auntie Janet handle this one. 

Fri, 04/11/2014 - 10:11 | 4647260 Theosebes Goodfellow
Theosebes Goodfellow's picture

Well Al, I think that is what you'd call a cuntnundrum.

Fri, 04/11/2014 - 09:46 | 4647133 Orwell was right
Orwell was right's picture

Not sure what the story actually IS here.....are we amazed by Jim Reid? for the Fed Stopping QE....I will have to see it to believe it.    My money says that after "several" months of stock market pain, the printing presses will start back up again.    The only question in my mind is "how many is several".   Can they hold out for 9 months??   Maybe even 11?? .... before printing more money

Fri, 04/11/2014 - 09:50 | 4647151 resurger
resurger's picture

Buy any dip, this market will still go up

Fri, 04/11/2014 - 09:53 | 4647164 Elliptico
Elliptico's picture

Deutsche Bank is still in business?

Fri, 04/11/2014 - 09:53 | 4647167 oklaboy
oklaboy's picture

maybe Obamster can have a fund raiser for them?

Fri, 04/11/2014 - 09:54 | 4647173 buzzsaw99
buzzsaw99's picture

douche bank

Fri, 04/11/2014 - 09:59 | 4647192 Pareto
Pareto's picture


Fri, 04/11/2014 - 10:02 | 4647206 Incubus
Incubus's picture





who knew? why aren't I being paid for this.

Fri, 04/11/2014 - 10:13 | 4647272 Caracalla
Caracalla's picture

Just BTFD is the only strategy.  Today looks like a likely reversal day anyway.  Whenever you think the markets are going down, just remember, they can always print more!

Fri, 04/11/2014 - 10:19 | 4647301 bagehot99
bagehot99's picture

If the markets tank, Ole Yellen will have a rapid Damascene conversion.

Like the dude from Men's Wearhouse, I guarantee it!!

Fri, 04/11/2014 - 11:00 | 4647464 lunaticfringe
lunaticfringe's picture

Nobody is motivated to lie more than someone who's livelihood depends on it. Think CNBC.


Occasionally he stumbled over the truth, but hastily picked himself up and hurried on as if nothing had happened. ~Winston Churchill, "ear-witness" quoting c.1936 about Stanley Baldwin, per Kay Halle's Irrepressible Churchill: A Treasury of Winston Churchill's Wit 


Fri, 04/11/2014 - 13:55 | 4648185 gcjohns1971
gcjohns1971's picture

FED:  What? Liquidity is drying up because of me?  No it isn't!  Rates are still low and we're printing...ahem... purchasing tens of billions of dollars of assets every month.    Hey!  Look over there! (points) 

FED:  (Aside in a low voice to someone off camera) Tell Draghi he needs to move up his plans for printing ...pardon.. asset purchases.   And tell him that if the Euro gets in trouble, then HE can taper, and I'll re-expand my buying!

FED: (Aloud again) Did you see what Russia did?  Wow, that's really outrageous.  OMG!  Look over there! (points to a screen where pundits discuss HFT)

FED: (Aside again in a low voice) I don't care if you DO crash the commodities markets!  Get that Gold Price dropping!  If they figure out that Gold is the only way to stop us from transferring their wealth to bankers like us, we're toast!

FED: (Aloud again) In any case the Fed anticipates current rates to continue until...ah..continue until...ah is in my notes somewhere...

FED: (Mumbling) Was it until 6.5% unemployment? No, no, no one believes those figures anymore... Was it 2015?  No, no. That's right around the corner and the economy still sucks.

FED: (Aloud again) Until the economy achieves a self-sustaining recovery... and Chicago wins the World Series?  Who put that in there?!  Your pardon ladies and gentlemen.  But we seem to be having technical difficulties.  The press conference is now over.  If you will kindly be patient we will provide you with a full transcript of what was said... well, if it had been said.

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