This page has been archived and commenting is disabled.
When The Yen Was A Last Resort Safety Bid, You Know It Was Bad
Submitted by Jeffrey Snider via Alhambra Investment Partners,
It looks like the reversal of Monday’s dramatic and frightful liquidation has held and gained in the past few days. From that we can infer, of only the near-term, that those forced repositions were enough to square the liquidity imbalance from the latest “dollar” run. The two words are related not just in a common semantic root, as liquidations are the necessary condition of illiquidity where base financial conditions are detrimentally misaligned. Every panic that has ever existed is in one form or another a systemic of near-systemic liquidation of financial positions in favor of present claims in the face of indiscriminately redirected basis (typically implosive). Even wholesale “supply” complications don’t change that but only perhaps enhance the instability of the reversions since there is no obvious and clear mechanical means (what is being converted to what? We know what is being redirected as a result, but that is derivative to the actual seeds of disruption deep within the aggregate eurodollar inner workings) to interpret the size and reach of the reversal.
The difference between such a liquidity “event” and full-blown crash is simply one of magnitude on both sides: gaping liquidity supply which forces disorderly, widespread and momentous squaring to some greatly diminished settled state. The relative degree of chaos is just the last resort method of that realignment.
Given the widespread nature of this latest disturbance, and especially the appearance of a broad-based fear bid (gold, franc and, actually, yen), this was the most disruptive to date; the larger the run the greater the liquidation, and the more raw fear focused on stark hedging, necessary to accomplish its end. Obviously, given that near-term end, the dominant, conventional position remains that there is nothing wrong except specific problems here and there. The state of denial survives as connecting the continuous ripples of liquidiations to a unified and decaying foundation is too far outside recency bias. The fact remains, however, that the next one continues to be bigger and sharper than the last.
It goes until the “big one” shows up “out of nowhere” because everyone studiously ignores these events as if they can’t possibly be what they so obviously are: continued warnings. This week’s GDP report truly won’t help because it seems to confirm the status quo even though it contains the seeds (inventory) of the big part of any contraction that may yet come; to which GDP hasn’t been close to the mark in the face of all the other accounts. Anything comforting is still acceptable to the backward base case; anomalies are still taken as discrete anomalies no matter how frequent and regular, and very much linked; all those do is tighten the grip of self-delusion.
Until the dominant dynamic changes, the “dollar”, we should keep going until these warnings stop being warnings and start being “it.” It is impossible to say what the final turn will be, as you can’t predict the level of “necessary” liquidations going too far because liquidity supply is totally hidden and derivative. The fact that one central bank after another continues to fall victim to the same connecting degeneration is cause for still deeper pause and reassessment, but that isn’t any fun for the bull bubble and the “easy money” mindset. In any case, when the yen functions as the last resort bid of safety, you can pretty well assess just how messed up everything got – and start to make some determination about just how close to the precipice.
- 8742 reads
- Printer-friendly version
- Send to friend
- advertisements -



This little circus would make no sense, except that Japan is a great cut-out for money in the great manipulation game.......
Market just kind of meandering today, but what happens Monday?
TV news killer saw ‘swinging by’, ‘in the field’, even Slurpees as ‘racist’
http://tinyurl.com/nhsorxq
When a currnecy of a country of debt to GDP of 250% is the last resort of safety, you are not close to the precipce, you have fallen over it
In its latest Fiscal Monitor report, the IMF also revised up its near-term projections for Japan’s debt-to-GDP ratio, to 246.1 percent in 2015 and 247.0 percent in 2016, up by 0.7 percentage point and 3.1 points, respectively, from the previous predictions made in October.
still a creditor nation. As is Europe on net.
The dirtiest shirt is none other then the USD but trying telling someone facts in the middle of a bubble...
Reckon the only thing a central banker can do through government intervention is close down all free trade and put in controls restricting the money flows in and out of a nation.
THEN YOU DO QE AND NOT BEFORE.
When the FED did 80 billion MOM QE the money just flowed out of the country alot of it to Europe ... a waste of time and what happens if you do QE without the controls in place.
The US dollar is a risk asset now
http://jessescrossroadscafe.blogspot.com/2015/08/jpm-customers-issue-and-goldman-takes.html
The receipts for another large chunk of bullion changed ownership from a JPM Customer to the Goldman ‘house account’ at $1,122 per ounce.
With all the usual caveats, and just taking note.
This is especially intriguing since Goldman has been publicly beating the drums for gold to drop well below $1000. Perhaps, like Rick who moved to Casablanca ‘for the waters,’ they are merely misinformed.
We ought not to presume anything about how naive the customer might be, or the sly cunning of any particular buyer. For all we know the ‘customer’ could be a large and highly competent ETF or fund, and not some naive or desperate or perhaps whimsical individual.
And as for the buyer and its motives, my friend Dave offered some possible insight on this phenomenon here.
Still better than holding dong
Nope still prefer my dong
The King of Saudi Arabia believes they've been backstabbed by the U.S. because the long term plan by Pentagon Officials to bomb Iran has fallen through.He knows big oil is waiting to pour into Iran and develop some of the biggest oil and gas fields in the world.So what you say?Well that would give Iran a lot of currency to buy advanced weaponry.We all know that both the U.S. and their puppet Saudi Arabia have been financing Al Qaeda and their predecessors since the Soviet invasion of Afghanistan.Those to sects of Muslims don't like each other.Plus,chances are that Iran will be trading in Yuan and dealing with China within their new EurAsian Trading Agreement.