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Indeed This Time Is Different: Because It’s Far Worse
Suddenly the narrative that “everything is awesome” is showing to not be as “awesome” as it was first proclaimed. Merely a few months have passed since the ending of QE and praises of awesomeness everywhere are morphing into questions more akin to “Oh no: not again!” And with that we are now watching those who pushed, pulled, and levitated that narrative scramble desperately to push another narrative back onto the stage that worked so many times before: “Every sell off over the last 6 years has shown to be a profitable buying opportunity.” i.e., Just buy the dip (JBTFD). Yet it would seem these dips; are far different.
Just for context, over the past week, if you were one of the few remaining “home-gamers” still watching CNBC™, you would have been delighted to see once again their host Jim Cramer go through great pains to explain why he discounts the idea that we’re in a bubble to once again like ringing a bell (he uses buzzers and gongs I believe) the indexes sell off in dramatic fashion bringing back memories of Bear Sterns. As of today any gains for the year have been quelled. But not too worry, for he also contends you should have “dry powder” at the ready. i.e., Be ready to “JBTFD.”
My thoughts? “Investing” isn’t going to be so easy this time. Why? Let me be so bold to use the same meme touted by the likes of those who sold it: Because, it truly is – different this time. Without QE, not only is there no one buying. What’s far, far, far, (did I say far?) worse is: There’s no one to sell too!
Effectively through the interventionist policies over the last 6 years via the QE program what the Fed. has accomplished, whether intentionally, or merely complicit in the results were: to systematically exterminate the dreaded “Short sellers.” Today everybody is currently on one side of the market. And that side is: long.
The dreaded “Bears” that would even out the markets taking positions on the other side are all about gone. Every empirical statistics, every indicator measured whether it be Investor Intelligence™ data and the like shows, historically – they’ve never been so lopsided. Ever! But that’s only the beginning.
During this month another note worthy point in history is celebrating its first anniversary; the release and uproar to Michael Lewis’ Flash Boys: A Wall Street Revolt (March, 2014 W.Norton & Company)
Here was when the public at large first heard about what a lot of us have been trying to both articulate, as well as warn about. Here for the first time on the media’s big stage the parasitic nature plaguing the financial markets via high frequency trading (HFT) was brought under lights. It sent many of these firms scurrying for cover.
It was shown in great detail if you did try to mount a defense of why they (HFT) were “good for the markets” you would only dig a deeper hole to bury both your reputation, as well as dignity. This was demonstrated with the shameful, as well as lie exposing public display of the then CEO of BATS™ during a televised skirmish with Brad Katsuyama of Flash Boy’s fame. Showing everyone just how broken the integrity of the markets had become. Both functionally, as well as ethically. He vacated his position in disgrace weeks later, but the HFT parasitic machine has since only grown ever larger. So much so the only thing left for this beast to feed upon might in turn be – its brethren.
Now it being reported one HFT firm is suing another for “Egregious Manipulation.” You just can’t make this stuff up. Nonetheless what you can “up” is the level and lengths to which one HFT firm will pursue to have the advantage to front run “provide liquidity” quicker than its competitors because; they’re upping their game with the advent of lasers in an all out arms race to see just who will be faster to the “average investors” blood supply. Why? Easy…
Lasers are faster than microwaves. And when the game is to “view” the other fellows hand before they can blink: You win! Because trading is not about fair play – it’s about winning. Just ask a company like Virtu™. A HFT firm that’s had only 1 (no that’s not a typo) losing trading day in 1485 (neither is that one) trading days and counting. Who knew legitimate, ethical trading could be so “awesome!” I ‘ll bet dollars to doughnuts Bernie Madoff muses: “My 12% returns set off alarm bells and here I sit? WTF!”
But the HFT story along with the Fed. have created another unintended consequence that might prove far greater than the “riding the tiger” analogy invokes. What they’ve created may have more in common with a laboratory monster that becomes uncontrollable, precisely at the wrong time turning on its masters. For the once vast legion of (human) veteran traders who spent their lives on the floors of the exchanges and in the “pits” are all but gone.
What was once possibly the greatest “buffer” as to understand and take positions for, or against irrational selling or buying behavior has disappeared. Much of it stems with the advent of HFT fueled by QE money. But there have also been other issues right alongside running in concert that forced many human traders out of the markets. Not only was there the sheer onslaught of mechanized stop running prevalent that human traders needed to be concerned with. They could also wake to find the company that held their resources for those positions goes “poof” in the night. e.g. The MF Global™ debacle under then CEO Jon Corzine. Is it any wonder why volumes are so anemic?
Within that group of displaced traders (in my opinion) is the one set you’ll need more than anyone in a bull-run going bad: Shorts who need to buy as to cover their positions.
After 6 years of this incessant rewarding to JBTFD with free money supplied by the Federal Reserve fueled with the ever parasitic nature of HFT, the vast majority of this once prominent group; has been all but annihilated. Today, no longer are there “people” to help slow or quell a sell off. Only machines.
What I also find both fascinating as well as frightening is the sheer fact that HFT and all it entails is both manned as well as programmed by math aficionados – not veteran traders. It has been a well-known fact if you are a “veteran trader” looking for work – you need not apply. If you’re a math Ph.D with no trading experience (or even right out of school) the HFT world is your oyster.
Let me ask you this dear reader: Just how well do you think all this HFT and program trading is going to perform when it’s been both formulated, as well as only tested, in a “bull” market environment that was fueled with “free” money? Along with the people creating these programs and orders for execution quite possibly – have never witnessed a true sell off. Ever! Welcome to the pinnacle of “the rise of the machines.”
Remember that immortal line from Trading Places (June, 1983 Paramount Pictures) when the Duke’s were losing their fortune “Turn those machines back on!” Will we need to do the exact opposite when the machines suddenly sell into an empty “pit” of buyers when as its been documented by NANEX™ liquidity vanishes? So much for “providing liquidity” when that liquidity is their own fortunes bleeding from the screens. Plugs will be argued (if not begged) too be pulled.
And that’s just the start of why “this time it’s different.” Monetary policy on a global scale is now becoming unhinged and the carry trades associated within the currency markets are just beginning to show their distress.
Today the Euro is not falling – its plunging. Plunging in a way that is reminiscent of a monetary policy that is coming unglued. The so-called “smart crowd” all professed how the weakening of a currency helps, not hurts a country for both its exports as well as its competitiveness on other fronts. So how can all this “good” be so bad you ask? Easy, when it does exactly what it was expressed it shouldn’t do. Plunge – in what has all the appearance of an uncontrollable rout. You’ll know it’s fully off the rails if we here reports supermodel Gisele Bündchen no longer wants to be paid in Euros. But I digress.
China’s economy is showing contraction. Central Banks around the globe have cut and are still cutting interest rates. 24 to date, and that number is expected to grow because everywhere there was supposed to be growth – is contracting, if not out right falling off a cliff. e.g. Look to Australia as just the latest example.
Mario Draghi’s latest “bazooka event” is shaping up to be a total disaster of unforeseen consequences. The where, what, and how all that buying spree of “whatever it takes” is now showing far more concerns than the irrational exuberance everyone envisioned when they had to guess what a true “Full Monty” was going to reveal. Now that it’s been shown, it seems it’s not going to perform as well as anticipated. Well imagine that. Who’da thunk it?
The list goes on, and on. But (and it’s a very, very big but) just when you think it couldn’t get any more narrative busting than the above portends, you have the Federal Reserve’s FOMC meeting this coming week. Here is where everything (and I do mean everything) can come unglued, unravelled, _____________. (fill in your own favorite descriptor)
This meeting is probably more important than any meeting since former chairman Bernanke’s famous (some of us still view it as infamous) Jackson Hole speech of 2010 where he announced the implementation of QE2 and implied QE4ever. And the markets haven’t looked back (or down) ever since. However this time “it’s different.”
The Fed. as of today has pulled the plug on QE, and implied it’s time to raise interest rates. All at a time the global economy is showing just how addicted it truly was to the Fed.’s QE policy of “free” money along with near zero interest rates leaving the Fed. with the difficult choice of exactly which policy are they to enact. For both will have dramatically different results.
One is to go back on all they’ve said, admitting they got everything wrong via the signaling that not only will interest rates not be raised; but in addition the possibility for more QE is at the ready, sending critics of the Fed. spiraling into a concerted effort demanding both an audit as well as hearings. Or…
They stick to their guns, signal the intent to raise rates sending the global economy and markets into a tail spin of unraveling carry trades, currency wars and quite possibly a full-blown currency based Armageddon.
Who knows what will transpire. But one thing is certain: This time is – truly different.
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"After 6 years of this incessant rewarding to JBTFD with free money supplied by the Federal Reserve fueled with the ever parasitic nature of HFT, the vast majority of this once prominent group; has been all but annihilated. Today, no longer are there “people” to help slow or quell a sell off. Only machines."
Automated response #1.
They have sucedded, because nobody gives a rats arse. Including me. Gloom and Doom porn is growing tired.
Someone is buying. Everytime an 'important' time point rolls around, i.e. S&P just broke the 100dma or it's 3:15 on Friday and the market is down for the week, someone is there to buy the ETFs. You can tell when it's started. The algos start jacking up the price of the illiquid components when no shares are traded for those stocks. They see the inflow of money and know that in a minutes or so those stocks will start a rise of one or two percent within a half hour max. Ignition achieved. Somebody buy those dips and that somebody has very deep pockets. I wonder who it is.
The big question is what will it take to overwhelm those deep pockets, and when.
"Today, no longer are there “people” to help slow or quell a sell off. "
But that sounds like the definition of the plunge protection team.
We do have the effects of QE(4), it's just "patiently" waiting - as Janet Yellen puts it. Maket will rally on Wednesday when she pushes the prospect of tightening out to September - meaning the market needs to discount the effects of coming QE4. Besides everyone sees King Dollar and knows the Fed needs to stimulate to reign it in.
And we the people will bend over and pay for this stupid shit. We deserve it
"We deserve it"
BULLSHIT
WE have been dumbed down, lied to, used and abused. Yes, you can say that we (the herd, the unawakened) have not been vigilant enough but we do not "deserve" this at all. Just because a few of us seem to be aware, that does not mean the rest are deserving of the abyss. Afterall, is it not the fault of the awakened to have not awakened the rest? Are we not equals with them?
THEY - the despicable criminals reigning over the world of human events - deserve what payback WE give them.
WE - are just seeking to live out our lives in relative peace and guilty only of trusting THEM.
THEY - are the criminals who deserve to be punished.
Having said this, there are lessons to learn all around here. Who knows what all of this is for in the end?
The Fed is all powerful, that is a given. But so mch is eroding elsewhere as to lessen the impact of what they may or may not do.
Greece?
German 5 bunds?
China's implosion?
Etc.
King Dollar is the canary in the coal mine right now.
Would that be a black canary ?
Can a dead black canary sing in a coal mine?
Can you tell the difference between black swans and canaries in a black coal mine ?
Well, at least a bit sooty.
Unfortunately there IS no going back...we know it, they know it. Like Anyone that has been in debt and desparate in life knows where the fed is.
Counting coins, stealing their kids piggy banks, cheating on taxes for an early refund, not paying the car insurance, defaulting on debt, anything to keep the circus afloat...
But King Obama says we are in a great recovery!
If you have only one losing day in 1485 days of trading, then what you're doing isn't really trading.
You're the guy sliding the soap across the floor of the prison shower. . .
We're gonna need a bigger war.
Don't worry, the script's been approved, you'll have it want it or not
closer too, like right here at home
7 years and hoping still no collapse. how many headlines like this have I seen in last 5 years. "this time it's worse" Yeah yeah. maybe maybe not. Am I the only muppet pointing this out?
7 years ago we talked about the US being the last to experience the reset. Things have only started elsewhere, we have a bit to go.
Your prayers should be for those already getting the beatdown in Ukraine, Greece, Venezuala, Brazil. I do not pray for that kind of future.
Phoenixdark,
It works as long as America can keep borrowing. Then it doesn't. When will America be unable to borrow? Beats me.
When they are out of metals.
Still wonder why Madoff was the only one to go to jail. Brazil has more balls than the people here and we want to fight over race. This is a sorry as country I live in what happened while I was out workng my ass off and suporting a family and woke up in 09 busted broke cause my wife had cancer and we lost our insurance. I am so pissed and not anything I can do but read fucked up stories about liberty movements doing not shit. Again today the Brazalians rising up and we sit here and read
SAD AMERICAN PUSSY
We thought if we woke up enough people ...
You seem to have some kind of more productive solution in mind. What should the liberty movement have done?
We are starting to form mutual aid societies. That seems like it will be useful - if the government doesn't kill us all in our sleep like the Black Panthers and others.
So you didn't support any Bushes or Clintons, Gore, Kerry, McCain, Romney or Obama? You've supported no Democrats or Republicans exccept Ron Paul? You've been a libertarian 20 years?
I have not supported any of them and if everyone showed up in Washington and demanded an end like last year when nobody showed up maybe just maybe that could have worked not fully supported that patriot movemnt but I showed up then left it will take 1percent of 300 million to make a point talk is cheap writing is cheap I dont have an answer and am willing to die for what the constitution says is to be so do I fear them showing up at my door no. When I was born here I was guaranteed a set of rites and was taught them in school so I learned early on that this system we now have is for shit but my fault is I am just 1 and to talk to people live I have 3 heads and well fuck it. I just sit and read about what these sites peddle and well here I am
"I dont have an answer and am willing to die for what the constitution says is to be "
You would die for the principles behind the Constitution - not the Constitution itself, right?
From the link I provided: "I didn't sign the Constitution. Did you? Nor would I sign the Constitution because either the Constitution authorizes the government we have or has been unable to prevent it."
It is true that it is hard for one person to make much difference on his own, but read the science fiction novel WASP to see just how much one person can do.
You mean when you talk to people about how it really is they look at you like you have three heads? I don't usually get that, even when I talk about 9/11. It is just a skill that can be developed.
When so few are making any effort at all, even a small effort makes a difference. I feel confident that I have made at least some difference for hundreds or even thousands, but of course, that is not enough.
That's easy.
The banksters stole from working people, grandma's on social security, etc. They don't matter. That's why no one went to jail and why they are making more money than ever.
Madoff stole from the 1%, and that's why they went after him like a pack of rabid hyenas.
Ready for another week of gold going down the toilet and equities reaching further into the heavens?
I am!
Let it go lower.
The lower it goes, the closer you are to the Explosion.
Yes you can.
Yes it is. Is it worse, or is it better? Look, maybe the Federal reserve has found a stargate to perfect communism, why should the people own the means of production when instead, the government can just own all the money?
The scariest thing in the world to the old school commentators is if this time it's different, and it's not worse but at least semi-stable. And since we're going into year seven on this shit, well, maybe we should figure out how we've gotten so much farther than anyone expected, even The Bernank.
ps - beware the ides of March, and happy day after pi day.
The economy is so bad right now that my local coin store is giving out free Gold Eagles to the first 100 customers each day in a futile attempt to lure enough suckers to keep its doors open.
I found several of these shiny - but otherwise useless - baubles in the parking lot that folks had discarded like so many old Burger King wrappers, not even fit enough to ride along on the soiled carpet with the other detritus.
Meanwhile, after years and years of supposed "debasement" - according to Zero Hedgers - the dollar is getting stronger by the day. What does it mean?
America!
Sweet Land of Liberty!
How I love ye!
Well , did anyone else see the trick ? :
"Without QE, not only is there no one buying. What’s far, far, far, (did I say far?) worse is: There’s no one to sell too!"
"Without QE, not only is there no one buying. What’s far, far, far, (did I say far?) worse is: There are no buyers!"
It just seems like there's too many leaks in the dam and not enough fingers to plug them at this point. Hard to say how big the unseen cracks are but as I've believed all along, when it goes it'll be big. I agree, beware the ides of March. Dow below 17,000 before weeks end.
No way Yellen lets thst happen Dow 19,000 cause you forget Japan and the EU are the buyers and if not the Fed will
Hold yer horses. I was admiring Iceland for arresting Baksters and telling the EU to go get fucked, but just learned of this...
Icelandic parents facing daily fines over daughter’s namehttp://www.icenews.is/2015/03/15/icelandic-parents-facing-daily-fines-ov...
A mother and father in Iceland are facing daily fines after the country’s authorities rejected their application to name their daughter Alex.
All names in Iceland must be approved by the Icelandic Naming Authority, and mother Nanna Thordis Arnadottir explained that when she registered her daughter’s name as Alex Emma after giving birth to her in August 2013, she was told by Registers Iceland that the name had never before been used as a girl’s name in the North Atlantic country.
The committee rejected the name request a few months later on the grounds that “Alex” had neither been used historically or traditionally as a girl’s name in Iceland before, therefore, it was not suitable now; however, it was also noted that the name did not violate the country’s language structure....
==========
Dear Iceland, stop making us look good....
I seem to recall that Germany has a somewhat similar policy but more focused on not naming your child "Coca Cola" or something bizarre like that.
Hohoho, True: my wife retired from teaching. She taught kids named: Hitachi, Sony, Mer-ce-des, Taiwan, and many other similar names!
Then name her Alexandra or Alexa and there ya go.
Her nickname can still be....Alex!
In France you can't name your child Nutellla [ google for story].
The BS ends once they can't or are not willing to part with yellow metal anymore. When that is, is anyone's guess. Till then they paper paper and contr+P full retard.
The fact that a .25% increase in rates can throw things into chaos tells you all you need to know about the fragility of the system.
I'm just reading the first bit. This was interesting:
"Effectively through the interventionist policies over the last 6 years via the QE program what the Fed. has accomplished, whether intentionally, or merely complicit in the results were: to systematically exterminate the dreaded “Short sellers.”
Manipulated Market Proof... along with record gains since the low to all time highs and low volatility.
Nothing's gonna come out of the next FOMC meeting.
Maybe the Fed will provide some excuse why raising will postponed "for a few more months." Most likely they will not raise without providing any explanation.
There is already a global run into the USD, caused by sanctions against Russia, the Greek farce and other EUR problems, and the China and derived from that also Australian slowdowns. That will self-amplify even without a rate raise, and doing a rate increase would likely make it get completely out of control.
While the strengthening of the USD is not really a current concern for the Fed, the following reversal in a few years could really mean the end of reserve currency status, if the amplitude of the pendulum becomes too extreme in both directions.
A universal emotion is the angst at how long it's taking to run out this scam. Don't ask me to "study" what's working here. The fact it's taken us down this full fuckard for so long only means the pain will be commenserate wihl delay. It's cosmic economic law.