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"Wall Street Has Been A World Of Pain Trades Since The End Of QE"
In his latest "Twilight Zone" comment piece, BofA's Michael Hartnett notes that YTD global asset returns, paltry as they are, are as follows: US dollar 7.3%, stocks 2.0%, cash flat, fixed income -3.0%, commodities -3.8%, and are summarized in the table below:
But most curious was the following:
These mediocre asset returns disguise treacherous trading conditions in past six months. Indeed, Wall Street has been a world of Pain Trades ever since the Fed signaled the end of QE early last year (Table 2). The end of Max Liquidity means the end of Minimum Volatility, and the lack of strong economic growth in recent quarters has caused the cyclical upside to asset prices to fade.
Which is why when the Fed's members say:
- BRAINARD: FED WATCHING DEVELOPMENTS IN GREECE, CHINA CLOSELY
What they mean is they are watching both the 200DMA and any surges in cross-asset vol, which in the aftermath of China, and Greece, has been surging, and what's worse, cross-asset correaltion is soaring and rapidly on its way to 1.000.
Which is why those more cynical inclined have been asking: since the only reason the Fed is hiking rates is to have an "economic" alibi to justify QE4, so as to remove the "world of Pain Trades" for its shareholders, namely Wall Street, is the recent dramatic surge in volatility in Europe, and near crash conditions in China enough for the Fed to completely put away the "rate hike" facade, and permissive enough to launch QE.
The answer: probably not yet. Keep a close eye on appearances and statements by Bullard: if and when the time comes, and the S&P is about to enter correction, he will warn the market just when the next round of quantiative easing is around the corner.
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Without the crack of free money from the Fed, making money becomes so much more challenging
You Can Thank Ben Bernanke for 100% of the Stock Market Gains Since 2009 10/17/2013Here is the most important factual find about the stock market I’ve learned for some many years: More than 100% of equity market gains since January 2009 have taken place during the weeks the Fed purchased Treasury bonds and mortgages.
And conversely, during the weeks when the Fed did NOT buy Treasuries or mortgage backed bonds, the stock market declined.
http://www.forbes.com/sites/robertlenzner/2013/10/17/dont-fight-the-fed-...
There is a message in there for the Chinese in how to manipulate markets higher
They can't call it QE since that doesn't work anymore, but not to worry, Madison Ave. isn't that far away, so I'm sure they'll come up with another nifty new name for sodomy......
ha. Quantitative Buggering. grab your ankles, chaps. I've got some channel stuffing to do.
I'm feeling a bit weepy <sniff>
Let's start a donation jar
Unreal isn't it. Most of the time in business you have a 50:50 chance of success or failure, it's bank accts, or bankrupcy.
"... But is that fair?"
Nooooo! ... they must not suffer the pains of a real market! ... quick! get them some hard-arm drugs! ... go on! ... give it to them! ... you can see they needed it! ... they won't get addicted!
Cold turkey is the only way back, if it was in fact a real market. If they can't cope with the realtive normality of zero QE (assuming it is zero, which I doubt) how the hell can they ever deal with rising rates, or mark to market?
It will ABSOLUTELY have a new name...but more of the same...
Just when I start feeling good about my boatload of Jan '17 XLF puts, someone goes and reminds me that more QE is coming down the tracks.
On the bright side, I don't think people will even wait for the official end of the next program to begin selling. I still believe that these interventions are getting very long in the tooth and the gig will soon be up. Hopefully, before my puts expire worthless...
Volatility:
If the fall in oil prices were due to depressed future demand from China, and the Chinese situation isn't really fixed just because 50% of stocks are frozen, then why are oil prices up $1.50 today?
It's complicated.
Gee whiz! Thanks, dad! I can't wait for you to explain the bird and bees to me!
Wally Street's PAIN is my/our GAIN.
There are no non-correlated asset classes. We've spent 30 years with everything going basically one direction- up.
Diversification only helps insofar as it allows you to answer the question: "Do I want to lose my money all at once or slowly over time?"
Translation: QE did not work. [What goes up must come down, mean reversion, etc etc]
The Fed desperately needs to raise rates so they'll have room to bring them down when the real shit hits the fan. No corrections allowed (a la yesterday) 'til they get what they want. The Fed will raise those rates come hell or high water; probably both. Nothing left now but an asteroid.
Where would ZH without the Daily Doomer?
One up day here and it's "radio silence!"
"All economics is local"...and that's a fact.
Folks go where they can in fact live and find reward...at least in the States they do...and when the typical Fascismo Fuck Overlord Bitchtard the ordinary American picks up stakes and moves.
So the same structural issue remains in the USA remains ever since the Wagon and Horse appeared: "when it comes to Americans be wary of extending credit or ever going into any debt PERIOD.
They'll just take to the Ocean."
No wonder Mr Market is consumed with TESLA TERROR.
Free energy is like free grass to a Mustang. "I'm eating just fine puny human. How u doin?"
all the fed & c-banks around the world have done is pulled gains forward. nothing more, nothing less (with regards to equity markets). unless we start growing here in the states around 15-17%, theres no-way the debt gets paid back & absolutely no justification for the move from 6500 up to 18000. once this thing fails, markets will fade & most likely trade sideways for over a decade. thats IF "they" allow for that to happen.
Has nothing to do with AAPL being down 5% since Feb and their watches leaving burn marks on users wrists. Nice O shaped building though, but Mr Cook you coulda built a desal plant for CA instead.
http://www.dailymail.co.uk/sciencetech/article-3154660/Apple-feeling-bur...
Until there are bodies in the streets, there is not enough " World Of Pain"
The body in the street is BofAML, step over it and plug your nose and keep in mind that any sound it makes are just gases escaping a rotting corpse.