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Citi: "The Limits Of Investors' Faith That Central Banks Can Push Up Asset Prices, Are Increasingly On Display"
Some interesting insights by Citi's Matt King recapping last week's Citigroup credit conference.
... [D]espite one panellist’s suggestion that “perhaps corporate bonds were never meant to be a liquid asset class in the first place”, and universal admissions that when you buy a bond these days you have to be prepared to hold it, there were other signs that at least some degree of secondary trading remains alive and well. The well attended sessions held by both our IG and HY analysts are not merely a sign that investors are paranoid about stepping on the next corporate landmine; it also suggests investors’ desire for alpha from traditional single-name trading is as keen as ever.
Interest in other ways to pick up yield was not quite as intense, to judge from attendance at the structured credit stream. Perhaps people are just frustrated that the ECB is hoovering up all the interesting ABS – or maybe on the synthetic side they perceive that, given the annual doubling in option volumes – all the opportunities have been exploited already...
... [I]t is hard to think that concerns about defaults in the US HY energy sector will go away any time soon – even if we think that some of the statistics we have heard being bandied about lately (“40% defaults in two years with oil at $65”) pay insufficient respect to companies’ ability to rein in capex and other expenses. On the political front, Tina Fordham raised the question as to whether markets are overestimating the ability of liquidity to override the secular shift in geopolitical risk, given the way nationalism is increasingly being used as a tool to counter growing resentment at rising inequality.
... it is probably fitting that the conference ended, as it began, with secular stagnation. Greenspan was perhaps more tactful in his criticism of today’s central bank policies than we might have expected (reserving his ire for the intractable heft of Dodd-Frank, saying he “couldn’t even lift” its 2300 pages). But his musings on the futility of QE (“You mean, if the first $3 trillion didn’t have any effect, do I think we should add another?”), and on the way the accumulated stock of debt is creating so much uncertainty that it is holding back capex, both accord very much with the way in which we see the world – and yet are at odds with today’s central bank orthodoxy.
... It is hard to sum up a conference featuring fifty-eight different sessions spread across eight different streams: everyone’s impressions will inevitably be personal. Ours, though, is that investors remain united in their faith in the central banks – if not for their ability to create growth, then at least in their ability to push up asset prices. And yet the limits of that faith are increasingly on display. Not only are there signs of trouble at individual corporates on the ground. There is also a growing realization that the central bankers themselves – be it the ECB today, or the past and present Chairs of the Fed – subscribe to different theologies.
For now and for next year, we think the grip of the Inner Party seems firm, and (provided they are prepared to wield it) liquidity will keep pushing up prices. But whereas Orwell’s processes of Learning and Understanding led inevitably to an ending involving Acceptance and Reintegration, the real world’s liquidity addiction feels to us merely like the end of a chapter.
And when Citigroup compares the "theology" of central bank religion to the party controlling the Thought Police in 1984 - as in tells the truth - and furthermore, dares to insinuate that "the limits of faith" in said theology are increasingly on display - surely the biggest sin for any organized religion, economic or otherwise - one can't help but wonder what do they know that suddenly one of the biggest beneficiaries of said theology is willing to finally speak up against its Keynesian god, and just what is really headed this way?
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New banker murder mystery.
http://beforeitsnews.com/alternative/2014/12/top-belgian-banker-found-de...
Banker Geert Tack nailed.
Welcome to the "Banker's Ball" where the music only stops when your chair has been eliminated...
One of the glaring symptoms of our insanity is the willingness to speak freely and frankly about our insanity. If this is the case, Citi is particularly afflicted with a severe case of rip roaring group insanity.
Of course I am insane. Everyone is. And your point is........?
Yeah all the "BOND-TARDS" (SM BY HEADBANGER 2014) got together at this pow-wow to reassure each other of their mutual insanity to keep it going
Otherwise they'd have to face the fact, as they soon will, that insanity has its consequences!
"Safe investment" "liquidity" https://www.youtube.com/watch?v=G2y8Sx4B2Sk
They know what they're doing. Looting the last items before the store burns to the ground.
Boating accident. Move on. Nothing to see here. Nothing of value lost.
Theology - Protocols – One Page Summary
http://understandingtheworldtoday.wordpress.com/2014/12/06/protocols-of-...
Making lists of desires is one thing - having them happen exactly is another. Goodluck in their David successor, world King idea but really it's pea shit at best.
We lost some Banking Folks
citi is proof of life after death so it is no small wonder that they believe the fed is god
Arrest Central Banksters for treason. Thow them into prisons. Replace them with open source software. Arrest Loyd Blankfein.
They're more deserving of the gallows
hmmm something is definitely cooking in the background (even a sheep can feel something is very different these days) , could it be that we are very close ?????
It has felt that way for years, yet the markets keep going up. I no longer think the end is close, at least not in the US. Capital from around the world is flooding into the US, and the totally Obama-appointed Fed board will want to keep rates at zero to elect a Democratic successor in 2016. If the yen does blow up, the capital flow into the USA will be truly epic. Stocks could double or triple from here. But if a Republican gets elected, watch out !! Expect the Dem Fed board to pull the plug so that the GOP gets the blame for the recession of 2018.
The whole system is terminal. The fiat thats flooding the US is not true wealth. Jim Grant pointed this out in his recent CATO speech. The Swiss have printed billions of Francs out of thin air, bought billions of Euros with it, turned around and bought billions of US dollars with those Euros, and now own $27 billion worth of US stocks. The Fed has done the same. This is blatent fraud. The entire system is based on theft. The amount of theft taking place today is legendary...and it´s all above the laws of our current civilisation. All you can do as an individual is to accumulate hard assets that can´t be printed into existence at will and also have a store of value. Physical gold and silver, supplies, land, your own dwelling, ect. It´s a no-brainer option in my book, and the only real alternative to the madness which is hapening day in and day out. Your being reckless with your own future if your not stacking.
All true...but to think it will be sooner than later is no more than an anarchist's wetdream...
Thing is, nobody knows how much time is left until the Great Reset commences. It could be another year, but it could easily be tomorrow. Printing trillions of dollars worth of fiat out of thin air has lengthened the fuse, but the amount of derivatives now in existence have expanded as well and has long surpassed the quadrillion dollar mark. The entire world doesn´t have enough cash to cover those bets. Prepare accordingly
What's cooking in the background is the $quadrillion derivative market counter-party risk.
Don't Drink that Eggnog Eugene!
Of course the central banking ponzi scheme needs constant fresh and increasing borrowing in order to maintain it's viability. With joe public maxed out, and most governments running nose-bleed levels of debt relative to gdp, we are left with the question; "who is left to borrow in massive quantities?"
Corporations are doing their part with share buy-backs, and the banks are massively leveraged to the markets, but both of these entities have limits and the question becomes "are we there yet?"
When the light turns from green to red, there will be a world-wide stampede the likes of which human history has never seen.
The answer is WAR my friends.
You can feel it in the wind.
I wounder if the Fed/ ECB are about to fuck the
Japanese/ BOJ
Ie strong US data, increasing pressure on US rates
and ECB kind of said no change for 3 months,
Which leaves the BOJ vulnerable to
excessive weak yen and the panic in JGB.
ie so FED/ECB will quicken the yen liquidity move into their
markets and the amount of assets the Japanese funds can buy
will be greatly reduced ( form 75 to 121.5 already)..
This could be used as a valve to show people in US / Europe
that they need / want fiscal consolidation ( avoid Japsnese situation (.
Also JGB are all owned by Japanese ( so Fed/ECB) not worried about their
domestic losses.
Lastly if the Japsnese were allowed to monetize 1/2 their 10 trill debt
at a good rate it would give them too much ownership of
foreign assets, so FED/ECB have an interest to blow them up ..
The well attended sessions held by both our IG and HY analysts are a sign that investors are paranoid about stepping on the next corporate landmine;
Some folks printed about 10 trillion in about 5 years. Some folks can always print another 10 trillion in a couple years.
And do what with it!?
Keep bailing out one failed asset bubble after another as they all implode?
DUH!
Going to have to give the printed fiat directly to the people through "cash tax credits" or direct check for "Education". Essentially imitate Evita and just throw fiat bills into the heaving masses.
We fiat'd some folks.
"... what do they know that suddenly one of the biggest beneficiaries of said theology is willing to finally speak up against its Keynesian god, and just what is really headed this way?"
What is headed this way is the collapse of the biggest credit bubble in history. Like a train wreck in slow motion, everyone can see it coming but no one tries to get out of the way. They just keep staring into the oncoming light.
http://www.globaldeflationnews.com/anatomy-of-a-bubble-how-the-federal-r...
Weren't asset prices supposed to collapse after the Fed claimed that QE had ceased?
Well they did, for about two weeks in early October, until call it QE or not the Fed stepped back in.
Nor have interest rates moved up since then.
I will pay a lot more attention to what Greenspan has to say during the speech right before his public execution.
1984 is one of the most amazing books I've ever read. However, I struggle to get away from the idea that it was another brainwashing tool, before they could make all the predictive/headf... movies. Orwell was secret society connected after all.