"Cluster Of Central Banks" Have Secretly Invested $29 Trillion In The Market

Tyler Durden's picture




 

Another conspiracy "theory" becomes conspiracy "fact" as The FT reports "a cluster of central banking investors has become major players on world equity markets." The report, to be published this week by the Official Monetary and Financial Institutions Forum (OMFIF), confirms $29.1tn in market investments, held by 400 public sector institutions in 162 countries, which "could potentially contribute to overheated asset prices." China’s State Administration of Foreign Exchange has become “the world’s largest public sector holder of equities”, according to officials, and we suspect the Fed is close behind (courtesy of more levered positions at Citadel), as the world's banks try to diversify themselves and "counters the monopoly power of the dollar." Which leaves us wondering where are the central bank 13Fs?

While most have assumed that this is likely, the recent exuberance in stocks has largely been laid at the foot of another irrational un-economic actor - the corporate buyback machine. However, as The FT reports, what we have speculated as fact for many years now (given the death cross of irrationality, plunging volumes, lack of engagement, and of course dwindling credibility of central planners)... is now fact...

Central banks around the world, including China’s, have shifted decisively into investing in equities as low interest rates have hit their revenues, according to a global study of 400 public sector institutions.

 

“A cluster of central banking investors has become major players on world equity markets,” says a report to be published this week by the Official Monetary and Financial Institutions Forum (Omfif), a central bank research and advisory group. The trend “could potentially contribute to overheated asset prices”, it warns.

 

...

 

The report, seen by the Financial Times, identifies $29.1tn in market investments, including gold, held by 400 public sector institutions in 162 countries.

 

...

 

China’s State Administration of Foreign Exchange has become “the world’s largest public sector holder of equities”, as the report argues is “partly strategic” because it “counters the monopoly power of the dollar” and reflects Beijing’s global financial ambitions.

 

...

 

In Europe, the Swiss and Danish central banks are among those investing in equities. The Swiss National Bank has an equity quota of about 15 per cent. Omfif quotes Thomas Jordan, SNB’s chairman, as saying: “We are now invested in large, mid- and small-cap stocks in developed markets worldwide.” The Danish central bank’s equity portfolio was worth about $500m at the end of last year.

Read more here

So there it is... conspiracy fact - Central Banks around the world are buying stocks in increasing size.

To summarize, the global equity market is now one massive Ponzi scheme in which the dumb money are central banks themselves, the same banks who inject the liquidity to begin with.

That would explain this.

 

That said, good luck with "exiting" the unconventional monetary policy. You'll need it.

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Sun, 06/15/2014 - 20:20 | 4859604 Headbanger
Headbanger's picture

Stupid is as stupid does

And you can't fix stupid:
http://www.youtube.com/watch?v=fL6wbsGx9qw

 

 

Sun, 06/15/2014 - 20:22 | 4859615 wee-weed up
wee-weed up's picture

Yep, this will make the coming stock market crash...

A real global economic annihilation!

Sun, 06/15/2014 - 20:23 | 4859625 SafelyGraze
SafelyGraze's picture

when those same CBs buy 29T of goods and services from the companies whose stock they own, the corporate profits are going to shoot to the moon

P/E will go from 50-to-1 down to 5-to-1

and then we will better appreciate the wisdom of having bought all those stocks!

they are the smartest people in the room!

fundamentalz ruul!!!

Sun, 06/15/2014 - 20:29 | 4859635 0b1knob
0b1knob's picture

Does that include Greenpeace's big lose on the Euro fx market.

http://www.maxkeiser.com/2014/06/greenpeace-employee-gambles-in-forex-ma...

Rogue employee or are they just that stupid?

Sun, 06/15/2014 - 20:37 | 4859659 Chris Jusset
Chris Jusset's picture

OMFG ... This is the BIGGEST story in the past 5 years!  ZH WAS RIGHT ALL ALONG!  Everything about the current BUBBLE ECONOMY is totally fucking manipulated.

Sun, 06/15/2014 - 20:38 | 4859667 Bindar Dundat
Bindar Dundat's picture

The market is doomed.  We are fucked.

Sun, 06/15/2014 - 20:40 | 4859672 knukles
knukles's picture

Heh he heh
Lotta Money On The Sidelines!

Sun, 06/15/2014 - 20:46 | 4859691 i_call_you_my_base
i_call_you_my_base's picture

Actually, if you make new money, it makes more sense.

Sun, 06/15/2014 - 20:49 | 4859705 Newsboy
Newsboy's picture

So this means the bubble need never collapse?

How does that work again?

Sun, 06/15/2014 - 20:54 | 4859725 jbvtme
jbvtme's picture

when the time comes to disembowel these reprobates, my question is whether my leatherman will be up to the task

Sun, 06/15/2014 - 21:09 | 4859757 Dr Benway
Dr Benway's picture

And in Australia, a central bank board member is openly bribed by a criminal fund management company. So there's money to be stolen at every point in the system. Check out my blog, now banned in Australia.

http://drbenway.blogspot.com/ncr

Sun, 06/15/2014 - 21:19 | 4859801 The_Prisoner
The_Prisoner's picture

Great job, as usual, Doc.

If they are coming after you, it means you're causing pain.

Sun, 06/15/2014 - 21:40 | 4859846 Keyser
Keyser's picture

No wonder it doesn't matter that tapering of QE is taking place. The Central Banksters have conjured $29T out of thin air and dumped into equities. As Tyler eluded, where are the CB's tax filing on profits/losses? 

 

Sun, 06/15/2014 - 21:54 | 4859888 max2205
max2205's picture

The Danish position couldn't buy the US embassy in Bagdad. ....big wooop

Sun, 06/15/2014 - 22:47 | 4860031 jeff montanye
jeff montanye's picture

well, speaking of big wooops, the total value of the world's stock markets is under 60 trillion,  http://www.aei-ideas.org/2013/01/world-stock-market-capitalization-at-54... the central banks own more than half, in a sense (we are not sure, at least i'm not, who their intermediaries are).  

but like knukles said, there's a lot of money still on the sidelines. and, at this rate, there always will be, since they can make it at whim.  don't even have to grow a money tree.

where in the substance of the mind of god (hat tip to thornton wilder) is buying the stocks of private corporations (for five fucking years) an apparently existential part of the mission of this republic?  oh brave new world that hath such people in it.

Sun, 06/15/2014 - 23:50 | 4860105 economics9698
economics9698's picture

For those who do not understand the central bank mafia are doing the same thing the KGB in the USSR did, control everything so that when it crashes and reemerges they own everything worth owning.  That is the plan. 

Best defense is to form new countries using gold or silver as money. 

Hang the bastards, strip every central bank owners of every dime they have. 

When the civil war starts understand fighting police is a waste of time.  That is their game.  Don’t play their game.

The next civil war the winner will be the one who understands killing the right people is 10x more valuable than winning a battle.  Understanding and executing.

Mon, 06/16/2014 - 00:11 | 4860228 Manthong
Manthong's picture

WTF is the news here?

It is all banker Monopoly money..

Good for them, bad for you.

Enjoy the slums of Vermont Avenue whilst they sip Dom and munch on caviar on Park Place.

BTW, it is not about smarts, it is about who you blow in that realm.

Mon, 06/16/2014 - 00:22 | 4860262 macholatte
macholatte's picture

 

Let me see if it got this right…..

The central banks create “electronic bank notes” and then trade them on the electronic exchange for “electronic stock certificates” created by companies …… all of it out of thin air.

 

Fuck me…. If this keeps up, we’re gonna run out of air!

Is that why the Chinese are putting it in cans?

Mon, 06/16/2014 - 00:30 | 4860279 Manthong
Manthong's picture

Um, yeah..

The air here is so thick with black muslim white whore house taliban loving illegal hispanic gang caca that one has a hard time taking a breath without gagging. 

Mon, 06/16/2014 - 02:03 | 4860425 Say What Again
Say What Again's picture

I suggested this idea a few weeks ago.

 

I suggested this idea back on 5/30/14: http://www.zerohedge.com/news/2014-05-30/buy-bonds-stocks-may-buy-every-...

And again on 6/05/14: http://www.zerohedge.com/news/2014-06-04/who-was-buying-stocks-when-bond...

 

They print money out of thin air, place it into an account at Citadel (or any of 100 or so trusted Hedge Funds), and start buying equites in size.  They never go on margin, because they simply print more money to place into their account.  And the real kicker is that they know when they will stop the print/buy cycle, they will unload at the top -- but not before they position themselves with all types of Puts on the SP500, RUT, etc.

I really do like the way they Central Bankers are taking care of all of us.

Mon, 06/16/2014 - 06:55 | 4860594 Scarlett
Scarlett's picture

"Stocks have reached a permanently high plateau"

--Irwin Fisher, the paul krugman of the first Great Depression

Mon, 06/16/2014 - 07:17 | 4860617 Pinto Currency
Pinto Currency's picture

 

 

This has been going on for a very long time.

Why has the FT waited until now to tell us about it and why tell us about it now?

 

Mon, 06/16/2014 - 08:44 | 4860790 sleigher
sleigher's picture

Maybe it's like when a 3 year old dumps that bowl of cereal off the table again just to see what mom does?

Mon, 06/16/2014 - 08:56 | 4860821 SoilMyselfRotten
SoilMyselfRotten's picture

I'll take 'Imminent Crashes' for $2000 Alex

Mon, 06/16/2014 - 09:29 | 4860926 Manthong
Manthong's picture

13F’s?

13F’’s?

We don’t need no stinking 13F’s.

Mon, 06/16/2014 - 11:08 | 4861254 dontgoforit
dontgoforit's picture

Whoops, there it is.  In black & white.  Confirmation # 666.  MF'ers. 

Mon, 06/16/2014 - 13:28 | 4861751 screw face
screw face's picture

Moar plunge control...bitchez

Mon, 06/16/2014 - 07:02 | 4860598 Squid-puppets a...
Squid-puppets a-go-go's picture

what i think is so glaring about the govt purchase of equities is that it is Nationalisation by deception

its another facet of socialism, bought to you by all the same guys that would economically sanction you if you traded with Cuba

scuseme?

 

secondly, though, the prospects for gold to skyrocket are enormous - if only 1% of this $29T was sloshed into gold - even over the space of only a few months - BAM

Mon, 06/16/2014 - 09:34 | 4860941 Manthong
Manthong's picture

I think you are right.

Nationalism,, socialism…

National Socialist Party..

Has a nice ring to it.

We are there.

Mon, 06/16/2014 - 10:05 | 4861031 SamAdams
SamAdams's picture

Martin Armstrong says debt bomb 2015.75 based on human nature and PI.

Messianics think September, 2015 based on Sokkut blood red moon.

I say before 2017.

Mon, 06/16/2014 - 23:23 | 4863929 SgtShaftoe
SgtShaftoe's picture

He's said a lot of shit, and set a lot of dates over the last years since 07-08.  I'm not saying his stuff is not worth reading, but his fucking head is the size of a supernova, oh, and half of the shit he says, especially with dates is straight out of his prison-penetrated ass. 

Mon, 06/16/2014 - 00:13 | 4860242 saveandsound
saveandsound's picture

First of all: do you really believe, that CBs let the equity-markets collapse while they are holding about half of it?

Second, the FT wrote:

Overall, the Omfif report says “global public investors” have increased investments in publicly quoted equities “by at least $1tn in recent years” – without saying from what level, or how the figure is split between central banks and other public sector investors such as sovereign wealth funds and pension funds.

It's not just CBs. And it's not $29tn in the recent years.

Third, I would like to see the Omfif-report in more detail.

That said, if you want to be prepared you need to own a diversified portfolio. That includes PM but doesn't exclude equity, land, real estate and cash.

jm5c

Mon, 06/16/2014 - 00:22 | 4860257 Manthong
Manthong's picture

BTW..

All of that “book balancing” and other feints towards fiscal responsibility..

All bullshit,

The Fed et al al just creates megatons of crap fiat that never gets accounted for.

It is all a hoax/Ponzi.

Be prepared and good luck when evading reality meets the consequences of reality.

..that was Ayn’s premise.

Mon, 06/16/2014 - 01:00 | 4860339 saveandsound
saveandsound's picture

Yes, so we need to get grip on real assests, don't we?

However, you also need a little bit of cash to stay liquid. There might be another deflationary shock, or one might be forced to pay a bill and doesn't want to liquidate an asset for that.

Oh, and looking at the Middle East, Ukraine and so forth: weapons, ammo and cigarettes used to be a real investment, too. 

Mon, 06/16/2014 - 09:54 | 4861006 SamAdams
SamAdams's picture

"They print money out of thin air, place it into an account at Citadel (or any of 100 or so trusted Hedge Funds), and start buying equites in size. They never go on margin, because they simply print more money to place into their account. And the real kicker is that they know when they will stop the print/buy cycle, they will unload at the top -- but not before they position themselves with all types of Puts on the SP500, RUT, etc."

Get it?

Mon, 06/16/2014 - 09:55 | 4861012 SamAdams
SamAdams's picture

"The central banks create “electronic bank notes” and then trade them on the electronic exchange for “electronic stock certificates” created by companies …… all of it out of thin air.

 

Fuck me…. If this keeps up, we’re gonna run out of air!"

We need a little humor in times like these...

Tue, 06/17/2014 - 02:50 | 4864158 disabledvet
disabledvet's picture

The whole thing one...GIANT...FlusteredBuck!

The whole thing!

Mon, 06/16/2014 - 00:21 | 4860261 economics9698
economics9698's picture

The central banks could care less about the value of stocks, they print cash.  All they are interested in is owning assets when it crashes.  Stock prices are for the little people.  If it bankrupts the 401K crowd they could care less.  Ownership of assets is all that counts.

Mon, 06/16/2014 - 00:56 | 4860331 saveandsound
saveandsound's picture

agreed

Mon, 06/16/2014 - 09:56 | 4861016 SamAdams
SamAdams's picture

Rinse and repeat....

Mon, 06/16/2014 - 04:02 | 4860495 BorisTheBlade
BorisTheBlade's picture

It used to be that the value of currency was backed by physical PMs. On that basis CB had to balance its books versus actual availability of gold/silver, whenever there wasn't enough, currency would drastically depreciate. Nowadays, CB has to do to do nothing of the sorts. Currency, which is a liability on the CB balance sheet is balanced against paper 'assets', i.e. promises of future profits be it bonds or equities, which are in turn backed by appreciation of other 'assets'. CB can inflate is liability side of the balance sheet only to find out there's a huge hole in it thanks to equities and other assets value being lower than its book value.

It is only thanks to the fact CBs aren't really transparent on their asset side of the balance sheet that they have absolute liberty to issue as much currency as they deem necessary. The fact that this process was allowed to run as far as it did, shows how much unwaranted power CBs have accumulated over the decades. However, they find themselves playing a game with the market where they are the main market-maker, i.e. if they withdraw, the market will collapse first well below fair price and then bounce back a little while causing a real depression and dramatic shrinking of demand for everything.

So, where it leaves us, currencies' values (not just USD) are artificially inflated courtesy of inflated asset prices backing it. In real terms, there is no way to keep that from manifesting itself in the form deprecation of currencies versus 'real assets', the ones that cannot be printed: commodities and PMs. However, simultaneously CBs are engaged in 'quiet' suppression of commodity and PMs and that's the second piece of a puzzle that ZH is beating its drum on and where it's also totally correct, however that's the only thing that allows masses to buy anything of real value for the currency they have.

Mon, 06/16/2014 - 06:05 | 4860553 overmedicatedun...
overmedicatedundersexed's picture

when PHD's with nobel prizes are running the show what could go wrong? Long Term Capital Management is a company that some how rymes or repeats history or something. TBTF, until you do.

Mon, 06/16/2014 - 06:36 | 4860574 BorisTheBlade
BorisTheBlade's picture

CBs and their PhDs, economics in its current form is not a science, but a form of religion. Organized worship of central banks' so called independence, which would be a good thing if that was the case. LTCM sticks out of every incontinency of former or current Fed chairman gibberish, they didn't fix it, they adopted it on a grand scale.

Tue, 06/17/2014 - 02:58 | 4864161 disabledvet
disabledvet's picture

This bull is a MONSTER.

https://www.youtube.com/watch?v=w1FLZPFI3jc
thank God we put the mad scientists in charge.

Mon, 06/16/2014 - 03:20 | 4860243 Supernova Born
Supernova Born's picture

I'm 100% sure the only return possible is via submission to the money printers.

They'll always be richer than you, but you'll have more than if you attempted to resist their near absolute power.

100%.

Mon, 06/16/2014 - 00:21 | 4860255 macholatte
macholatte's picture

oops

 

Mon, 06/16/2014 - 00:40 | 4860305 Four chan
Four chan's picture

the feds dual mandate to its true creators and owners.

1. capture all assets through boom and bust it creates with money printing.

2. enslave every person to inescapable debt.

Mon, 06/16/2014 - 01:00 | 4860336 WVO Biker
WVO Biker's picture

If CBs start buying small business loans and consumer loans in order help commercial banks they will in fact end up owning people. -> modern day slavery. 

Mon, 06/16/2014 - 21:21 | 4863582 Peak Finance
Peak Finance's picture

I am assuming that WVO is "waste vegitable oil" ?

What kind of bike runs on that? I want one! 

Mon, 06/16/2014 - 09:37 | 4860951 elephant
elephant's picture

"so that...they own everything worth owning"

ask yourself who were those oligarchs (who bought up everything at fire sale prices)

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