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That Goldman Even Has To Say This Shows Just How Broken Markets Are

Tyler Durden's picture




 

Earlier today, as part of its latest macro markets research roundup, Goldman let a phrase slip, which probably better than anything we have seen in the past few years, captures just how truly broken the "market" is. To wit: "it is important to remember that weak global growth is generally negative for risky assets." That Goldman even had to remind its clients of this dramatic observation, puts to rest any doubts about just how much central banks' central-planning has perverted the cost/benefit analysis of the world.

From Goldman:

After the price action of the last 12 months, we often encounter the perception that weak DM growth and low US yields are unambiguously good for EM assets. Of course, as discussed above, there are regimes where lower yields are clearly beneficial for EMs, especially those triggered by significant policy stimulus – notwithstanding stronger growth rates. But, in our view, the macro outcomes that can drive yields firmly lower from here are more consistent with significantly weaker growth outturns, whether from a renewed lurch into contraction in parts of the Euro area, a failure of US growth to maintain the current momentum, or even a further downshift in China growth (which is already tracking weaker than our forecasts).

 

And in this case it is important to remember that weak global growth is generally negative for risky assets, including in EM. To benchmark asset performance in periods of weak global activity, we analyse asset returns in periods in which the global manufacturing PMI – a proxy for real-time global activity – is falling. Loosely, there have been around ten such episodes since 2000, with varying durations and degrees of intensity – although precise definitions of these periods are somewhat subjective. The average fall was 5.2 PMI points, or 2.7pt outside of the 2001 and 2008 recessions. Despite the heterogeneity, asset returns over this period provide useful guidance on the distribution of risks to EM assets.

Luckily, courtesy of another side effect of central-planning none of this really matters: here is why from Deutsche Bank:

It doesn't seem that good or bad data notably alters the path of assets one way or another at the moment as central bank liquidity continues to trump everything.

Correct, and yet ironic that it has taken the big banks over 5 years to confirm what we first said in early 2009.

 

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Fri, 05/30/2014 - 09:42 | 4809173 kliguy38
kliguy38's picture

nahhhhh........its all goooooood.........so now what do ya do boyz???? You've rigged the dice and NO ONE CAN LOSE????? hehehhehehehehe

Fri, 05/30/2014 - 09:50 | 4809194 caShOnlY
caShOnlY's picture

"it is important to remember that weak global growth is generally negative for risky assets."

(goldman's warning for the bagholders: 401(k)s, muppets,etc.  For all the rest America something called "THE FED" that has something called a printing press, or equivalent, to keep their masters "investments" safe.) 

Fri, 05/30/2014 - 10:23 | 4809293 Save_America1st
Save_America1st's picture

I thought this was all because of bad weather?  It's summer time now, so everything is just fucking great, right??? 

I had some thunder and lightning and a little localized flooding down here in Florida last night, but hopefully it won't cause a huge drop in GDP or the employment rate.  ;-)

Fri, 05/30/2014 - 10:38 | 4809338 Shocker
Shocker's picture

Once it gets nice out, oh wait its almost June.

Full Layoff List: http://www.dailyjobcuts.com

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Fri, 05/30/2014 - 17:49 | 4811040 StychoKiller
StychoKiller's picture

"Zimbabwe, oh how Unka Sam's heart yearns for thee..."

Fri, 05/30/2014 - 09:41 | 4809175 Martial
Martial's picture

So....is water still wet? Goldman please confirm.

Fri, 05/30/2014 - 09:41 | 4809176 RaceToTheBottom
RaceToTheBottom's picture

Yeah, but that was before the new normal...

Fri, 05/30/2014 - 10:04 | 4809235 Winston Churchill
Winston Churchill's picture

That was CYA before the new normal, reverts to the old normal.

Seems to be a lot of CYA going around. ignore it at your own risk.

Fri, 05/30/2014 - 09:48 | 4809180 AGoldhamster
AGoldhamster's picture

We are still far far away from the stock buyback mania bubble peak.
Better get used to SnP 3000-5000. And 23xx this year.
With occasionally a dip here and then.

Then wake me up again.
In the meantime everything else is just worthless - and misleading - noise.

Fri, 05/30/2014 - 10:42 | 4809348 Chupacabra-322
Chupacabra-322's picture

But wait a minute, remember this quote from the "Sombody's Wrong About The Economy Piece:

"Negative GDP, as reported in 1Q, is “rare for expansions,”

Yes, people. The Sociopaths / Psycopaths continue to like to you.

Fri, 05/30/2014 - 09:47 | 4809186 evernewecon
evernewecon's picture

 

 

Do they realize there was a whole

selling side to the mortgage bubble

who were told push off nothing on

your full proceeds we need free 

reserves and our collateral lifted

and bank stakeholders have no skin

in the game?

 

 

Fri, 05/30/2014 - 10:33 | 4809246 LawsofPhysics
LawsofPhysics's picture

Exactly, what do bankers actually risk losing when they make bad loans?

Doing real due diligence was the only fucking "work" a banker had to do.

Now that they don't do that, why in the fuck do they compensate themselves so much...

oh wait, nevermind, answered my own question, people still using the bankers funny money.

This will turn out like it always does.

Fri, 05/30/2014 - 11:55 | 4809593 Boxed Merlot
Boxed Merlot's picture

people still using the bankers funny money...

 

As long as it has all those iconic USA images on it, (now in living color), the trust will reside in the cellulose by those who have grown up using it all their lives.  One of the most difficult tasks is to help older people to view wealth in something NOT denominated in "dollars".

I've spent the last week speaking with my mid 70 year old parents explaining gold etf products and the fact the "market" actually woke up to finding a "need" for such a device to facilitate trade, albeit in the ludicrous 401K / 1031 exchange irs mind speak. 

Bankers have sacrificed their only commodity, trust, when individual personal responsibility, i.e. swift, sure and severe punishment for the criminal conduct of control fraud was abdicated by our top law enforcement officials.  Who, by the way are guilty of far more grievous misconduct for not prosecuting these criminals, thereby not upholding the oath they voluntarily swore to us to enforce when they accepted the position.  If they can't / won’t do the job they promised they would, GO HOME!

How far will SPDR trustees get if / when their for all intents and purposes, issuance of gold backed "currency" begins to devalue? (faster than their contracted carrying costs, that is)

jmo.

 

Fri, 05/30/2014 - 09:49 | 4809190 Spastica Rex
Spastica Rex's picture

Generally negative, but in some circumstances, and for some constituencies, really, really positive.

Fri, 05/30/2014 - 09:49 | 4809191 unplugged
unplugged's picture

tell yourself that there is no market - then you will see that it is only your mind that trades

Fri, 05/30/2014 - 09:50 | 4809193 The Most Intere...
The Most Interesting Frog in the World's picture

No more sell in May and go away...

Fri, 05/30/2014 - 09:52 | 4809196 undercover brother
undercover brother's picture

i remember back in '99 when dot.com analysts were talking about how stocks pricing on mulitples of revenue rather than earnings was the new market paradigm.  goldman might be suggesting fundamentally based price discovery is the new market paradigm? oh my goodness gracious, this must be a misprint.   

Fri, 05/30/2014 - 09:57 | 4809221 BeetleBailey
BeetleBailey's picture

exactly....the asinine press was all "diversity is dead", and douchebags were crawling all over cnbc telling the sheep that "this is the new normal" (aka: no earnings/cash burning, but it's....OK)....

sooner or later....sense and rationale will creep back in....

but the free money shit show must fucking god damn STOP

Fri, 05/30/2014 - 09:51 | 4809198 Oldwood
Oldwood's picture

So when they say "risky" are they implying profitable? With every risk increase we see prices spiral upward. This has to be all good, right?

To infinity and beyond!

Fri, 05/30/2014 - 09:51 | 4809201 Dr. Engali
Dr. Engali's picture

Loosely translated: Continue to hope for weak data so we keep getting the free money.

Fri, 05/30/2014 - 09:53 | 4809207 Oldwood
Oldwood's picture

Hair of the dog?

The only the cure for a hangover is more of what caused it? That has never ended badly.

Fri, 05/30/2014 - 10:07 | 4809245 Winston Churchill
Winston Churchill's picture

Always easier to not stop, just keep drinking until your liver tries to escape.

Fri, 05/30/2014 - 10:16 | 4809269 NoDebt
NoDebt's picture

The hideous elegance of a liquidity trap.

Fri, 05/30/2014 - 14:23 | 4810336 Bernoulli
Bernoulli's picture

Yes and don't go to the toilet for days and then claim: "See, there is no inflation. I told you."

Fri, 05/30/2014 - 09:53 | 4809209 unplugged
unplugged's picture

This is what you get for intelligent analysis when it gets to the point where only 10% of the population can correctly spell their own name

Fri, 05/30/2014 - 10:01 | 4809228 buzzsaw99
buzzsaw99's picture

everything goldman says is a lie. therefore weak growth is good, and there is no such thing as risk.

Fri, 05/30/2014 - 10:04 | 4809233 unplugged
unplugged's picture

The better question and shorter answer is, who doesn't lie to you these days?  Its over when even your dog starts lying to you.

Fri, 05/30/2014 - 10:09 | 4809250 buzzsaw99
buzzsaw99's picture

<-- my dog already lies like a, er, ....

<-- i lied, i have a cat, best dog i ever had. she lies a lot too

Fri, 05/30/2014 - 10:18 | 4809242 HUGE_Gamma
HUGE_Gamma's picture

This type of insght is why they make the big bucks

Fri, 05/30/2014 - 10:12 | 4809259 kurt
kurt's picture

This is a Non-article

Fri, 05/30/2014 - 17:56 | 4811067 StychoKiller
StychoKiller's picture

So?  Read the comments for some insight (sorry, you lose there)!

Fri, 05/30/2014 - 10:13 | 4809260 jubber
jubber's picture

S&P new ATH

Fri, 05/30/2014 - 10:14 | 4809264 BIHM
BIHM's picture

Nah economy correlation to market has broken down.  Get with the times!  The economy is so passe.  You need to open your mind and let the data speak for itself.  Number one top correlation to higher markets is new day.  That's right!  If we can figure out a way to continue having new days we can keep this thing rock'n and roll'n.

Fri, 05/30/2014 - 10:17 | 4809270 SanfordandSon
SanfordandSon's picture

On Vixen, on Dasher, Dancer, Comet, and Cupid...

Who said there wasn't a Santa Clause?

Fri, 05/30/2014 - 10:18 | 4809275 Atomizer
Atomizer's picture

Lloyd Blankfein, Goldman Sachs

 

It’s Greek to Goldman Sachs

 

The good news, we are muppets.

Fri, 05/30/2014 - 10:38 | 4809335 Vooter
Vooter's picture

And to think we executed that McVeigh fella!

Fri, 05/30/2014 - 10:39 | 4809341 Squid Viscous
Squid Viscous's picture

wow Golem Sachs must be short, won't be long now...

Fri, 05/30/2014 - 10:53 | 4809400 Mi Naem
Mi Naem's picture

From Yahoo

"Home-equity loans making a comeback

A rebound in house prices and near-record-low interest rates are prompting homeowners to borrow against their properties, marking the return of a practice that was all the rage before the financial crisis." 

VIX under 12.  Everythings going to be juuuuust fine. 

Fri, 05/30/2014 - 11:00 | 4809442 cherry picker
cherry picker's picture

It appears God's workers can't forecast properly, so they are in the same league as crystal ball readers and fortune tellers, except they wear a suit and tie and have a degree.

The only thing that counts is how the middle class is doing, and if isn't, we know we are in trouble.

Fri, 05/30/2014 - 11:03 | 4809453 teslaberry
teslaberry's picture

zh ---now quoting goldman.

eeeesh.

sometimes makes me think that goldman itself runs zh as a honey pot.

Fri, 05/30/2014 - 11:17 | 4809504 venturen
venturen's picture

They aren't rickywhen you are printing and guaranteeing trillions of dollars for wall street criminals! 

Fri, 05/30/2014 - 11:25 | 4809554 nathan1234
nathan1234's picture

 

When will we hear the last of this GoldDigging GoldManupS..king scum!

Seeing /Hearing those who should be behind bars is a naseous experience

 

Fri, 05/30/2014 - 16:56 | 4810664 Radical Marijuana
Radical Marijuana's picture

Goldman Sachs is "leading the way" for idiot savants, or functional autistics, to increasingly dominate the world.

Here is a link that is a few years old:

http://unmasker4maine.files.wordpress.com/2011/05/analysis-of-a-country-embezzled-edited.pdf

ANALYSIS OF A COUNTRY EMBEZZLED

Six page summary of the history and concepts regarding the depredations of the banksters' globalized FRAUDS. Nothing new there to most informed Zero Hedge readers. However, it provides some detailed background to how we gradually got into the runaway predicament where enforced frauds are the foundation of the entire economic system. It is inside that context, where the successful application of the methods of organized crime to dominate the political processes have resulted in runaway systems of legalized lies, backed by legalized violence, which automatically get more insane every day, that idiot savants, or functional autistics, inside of institutions like Goldman Sachs, are making "money" through being brilliant in ways which are overall profoundly stupid.

"... central banks' central-planning has perverted the cost/benefit analysis of the world ..." MORE THAN CAN BE FULLY COMPREHENDED. Furthermore, the more globalized that becomes, the more completely crazy the consequences will be! The "central planning of central banks" is due to the success of organized crime controlling civilization with enforced frauds. The people at institutions like Goldman Sachs are brilliant in the ways that they take advantage of those established systems. However, they are able to deliberately ignore the overall context in which that occurs!

The problem is NOT with the abstract theory of "central planning through central banks." The problem is that the REALITY of that manifests through enforced frauds, whereby the central planners are professional liars and immaculate hypocrites regarding what they are really doing, which returns to my point that the people working for Goldman Sachs are like idiots savants, or autistics, who may be extremely proficient at executing their obsessions, but utterly unable to think about the bigger picture regarding what they are actually doing in the world as whole.

The globalization of the privatization of the public "money" supply has created fundamentally fraudulent financial accounting systems, which work very well for the autistic idiot savants that are able to understand those mechanisms best, and thereby take the most advantage of them. However, their "success" drives irreconcilable social polarization, and even worse irreparable environmental destruction.

Quotes like the ones in this article above provide surprising indications that those autistic idiot savants making "money" at Goldman Sachs are becoming dimly aware that there is a bigger picture that they should be considering. The globalized "success" of enforcing frauds has created an inverted pyramid of risks, balancing on its tip. The "risks" are due to the banksters being able to make enough "money" out of nothing, to use to speculate with, to have become at least 100 times greater than all the physical collateral that has been rehypothicated to hell in order to achieve that balancing act, of globalized systemic risks, which are actually far worse than merely a house of cards built on shifting sands, since it has become an upside down house of cards, built on the basis of deliberately ignoring the risks of any future sand storms.

Anything that prevents the exponential growth of strip-mining the planet's natural resources, such as reaching some relevant tipping point of diminishing returns from being able to continue to do that, is going to crash the banksters' systems. We have already reached the point where ONLY the sheer insanity of their systems are able to keep them going, since the consequences of those systems collapsing into crazy chaos are too terrible to be comprehensible.

Human civilization has become almost totally based on backing up lies with violence, magnified many orders of magnitude! Banksters like Goldman Sachs are the brilliant, but autistic, idiot savants who have been developing those systems, in order to make more "money" out of nothing, in order to gamble with. Neither they, nor the people they thereby defraud, appear to have much deeper understanding of the degree to which everything happening is based on systems of enforced frauds, and therefore, how extremely fragile such systems are to anything that pops their delusional bubbles.

Since the real world is actually controlled by legalized lies backed by legalized violence, paradoxically there is NO practical political difference between facts versus fiction. After the real world gets to be so totally dominated by the legalized lies, or the enforced frauds, of making "money" out of nothing, in order to control everything (which was basically the industrial revolution strip-mining the planet's natural resources), civilization as a whole has a foundation of fraud.

Given that the lives of almost everyone depends upon keeping those legal fictions going, relatively more objective facts get pretty well deliberately ignored. After enforced frauds have become so dominate in their ability to control civilization for generation after generation, and thereby achieved their degree of globalized privatizations of the profits from frauds, along with socialized environmental losses from those frauds, there is barely any realistic political role for more objective facts within those established systems. Since the entire system is based on triumphant fictions, those enforced frauds are only able to continue because they are operated by autistic idiot savants, while the vast majority of the people being defrauded are also mostly political idiots.

The tipping point for the foreseeable future appears to be when the strip-mining of the planet turns towards a sufficient level of diminishing returns that the entire globalized Ponzi scheme is no longer able to be sustained. So far, all the other previous little booms and busts have mostly been artificially engineered by the banksters, who rode them up and then down, while still in control of the civilization that was directed by "central planning through central banks."  However, we are approaching the point where the totally globalized system of enforced financial frauds is going to have its boom go bust in ways which will no longer be under the control of those central banks, because the basic systems of legalized lies will reach their tipping points, where their basic social insanity reaches its Looney Tunes Wile E. Coyote Moment:

Of the many Wile E. Coyote Moments, I liked the one at the 1:25 mark of this:

http://www.youtube.com/watch?v=8VvQY2pMaEM

The Solid Tin Coyote

Coyote steps around the back of a bizarre mirror, only to then discover he has walked off the cliff! Which reminds one of the absurdities of 'markets,' where confidence in financial frauds was needed in order to nevertheless keep 'markets' working!

We DO live in a Bizarro Mirror World, which is so totally dominated by enforced frauds, that everything is pretty well totally backwards. The people who work for Goldman Sachs are like autistic idiot savants who are still able to find their way through that increasingly absurd Fun House Bizarro Mirror World Maze. Inside of that context, I would say that worrying about "weak global growth" being BAD for "risky assets" is a gross understatement, which is only able to be stated in the way that it was above by autistic idiot savants.

"Weak global growth" is mainly about reaching the tipping points of diminishing returns from being able to continue to strip-mine the natural resources of the planet at an exponentially accelerating rate. Since the entire established system is based on enforced frauds, while the relatively more objective social and environmental facts about that system mean nothing to its triumphant frauds, (since rational evidence and logical arguments outside of the frame of reference of the triumphant enforced frauds mean almost nothing to those systems), there is virtually no public sense of the degree to which almost everything built on that foundation of enforced frauds are "risky assets."

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