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The Barclays Liquidity Gap Infographic - "This Could Lead To Potentially Severe Losses"
We have been covering the collapse in bond market liquidity since 2013. Some, and we envision mostly those residing at the Marriner Eccles building, still don't get it. So for their benefit, here is the problem with "liquidity gap" as explained in a one Barclays infographic.
From the bank: "The decline of fixed income liquidity in 2015 can be seen as a gap between supply and demand. Banks are supplying less liquidity, yet investors are still demanding more of it. The result? Potentially severe losses in fixed income."
This, in pictures:
Barclays' implied message? Bonds are risky, but stocks are safe, so please "rotate greatly" finally, and sell your bonds using the proceeds to buy risk free stocks. After all, the 0.1% - aka Barclays' clients - has about $20 trillion in stocks and they are quite desperate to liquidate them now that a global recession ist just around the corner.
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So Barclays has resorted to cartoons?
Well, I guess that's fitting for the economy...
We're looking for traders who have experience using the BARX platform (if anyone actually used it for FX) http://eliteeservices.net/jobs/barx-fx-trader/
YEP - JUST THE WRONG CARTOONS.
Shoulda been The Road Runner as Barclays, and everyone else - especially investors, pensioners, and the general public - being Wile E. Coyote.
The ideal illustration of this concept would be done with Muppets.
Today my dad went to the veteran hospital and after being treated he was asked alot of question about his economic status , like how he was managing his money how much money he had in the bank ect. Weird
Funny how they always talk of Liquidity as selling an asset with little price change, but when your stuck with a piece of shit asset, if you ever really do sell it.. there will be a significant change of price, so yes when everybody has shit on their hands, only way it will sell is with a big discount.. reality sucks.. but it's still real.
I don't understand the whole liquidity thing. If you have something people want, you will be able to sell it, if you don't you can't sell it.
As always, it comes down to price.
Say's Law states that "markets clear."
Today, thanks to massive intervention, there are no longer any true markets left. Only bets on the Fed's ability to intervene further.
(Oh, and I did not junk you. Nor do I have any idea why anyone would find your comment worthy of such treatment.)
Let me put it like this. It's a simplistic but the principle is clear enough.
Your argument doesn't make sense in a illiquid market because there is no guarantee what you have will be demanded by others for purchase. Similarly there is no guarantee someone will sell you what you demand. That is the essence of a liquidity crises. People get locked into asset classes they don't want or get locked out of asset classes they do want because of extremes in investor sentiment.
I hope that clears up any problem you have with understanding liquidity.
It's simple logic really if people don't want to buy your shit you will struggle to sell your shit.
What fucking first class piece of shit cunts!
Maybe if people would start THINKING before buying, they wouldn't be the idiots holding the bag in the end. Maybe they forgot what INVESTING means?!
It's not about generating risk-free profit, but being rewarded fairly for taking risk. There is no economy in re-selling stocks to each other for ever-increasing prices, it's not generating anything valuable for society, it's nothing but a huge circlejerk.
Everyone who gets caught in the next crash fucking deserves his fate and I will have a drink or two on all of those poor fucks who lost it all.
Fucking cry-babies.
Looney Tunes more fitting.
When it hits the fan, no amount of liquidity will help.....
Its OK glad its explained in a nice easy to understand leaflet.
So hey about that Obamacare success..
http://www.heritage.org/research/reports/2015/10/2014-health-insurance-e...
Yellen: I jounced the limb.
oil companies will give you all the fixed income you want...or maybe a nice CDO from goldman....they have lots of stuff.
Saw this when they sent it around the other day and assumed it was either:
A) a joke
B) written by a middle-school intern they had recently hired
FUCK OFF BARCLAYS!!!!
Liquidity issues? MOAR HFTs!
I'm just a retired average joe. I don't like stocks. I managed to lose money on Microsoft in the late 80's. All my working career I was very happy with the 5% we were earning on our money market. Today I earn as much as 3.71% on a 1 year Mexican government CD. For my US IRA I just bought a (quality) corporate bond ladder going out 10 years. People talk about 'bonds' like the are all the same thing. We hold our bonds to maturity. What am I missing ?
Why, purchasing power, of course.
Yes bonds are normally very good investments for retirees. However as mentioned you lack purchasing power. If inflation is oh I don't know 5% and your bonds return 3%, you have real negative return on investment of -2%. This erodes the purchasing power of your investment and restricts liquidity for the percieved safety of the investment.
This is because your investment is made in a currency that is depreciating. This practice of maintaining low interest rates in conjuction with high inflation is called financial repression and it is a tool for governments to control interest payments on debt.
By sitting in bonds, not only are you probably earning negative real returns, but you are also forgoing higher returns in other assets (with more risk probably). Moreover, you are also exposed to the very real risk that those bonds may not come through due to default. Bonds used to be much more reliable than they are today. Unfortunately, there isn't much alternative for people in your situation.
The best you can do is hold your retirement in a currency that does not depreciate (at least as much) and in an asset/security that gives you positive real returns with a level of risk you are happy with. People will tell you that's gold, stocks, foreign currency or other instruments.
Really it's up to you and what you feel is a good investment. Today the only thing approaching a panacea is gold, but its risky in it's own way and you should always always always diversify your portfolio. Exposure to only one asset class could be disastrous for your retirement.
Thank you so much for your thoughtful reply.
To be honest - we could probably live the rest of our lives on our principal alone. We very nearly can live on the interest from our Mexican government CD's. Whatever is left over on our demise goes to the Shriner's hospital.
So we have about 1/3 of our monies based in pesos - yes we have taken a beating this year - but the pesos are right here - nobody can tell me I can only move say $7K per day etc. And as I mentioned earlier we are getting as much as 3.71% interest (before taxes).
We have also started purchasing Mexican coins - although gold coins are kind of hard to come by.
Regarding purchasing power - I suspect that old folks like us don't really spend as much,
Regards
Why is it everything that is being hyped, or has ever been hyped, in the financial world is a rigged trap?
Everything always looks so promising on the way in...
Where's your investment today? Oh, it's safe. There's just no liquidity, so if you want to get out, you lose your shirt.
There's a once widely published article on the web, I won't bother to link it. It's signed by scores of PM "analysts" (hucksters) written in 2011 claiming gold is going to $5000 an ounce in 2012. The latest incarnation of this spiel predicts a $64k price for an ounce of gold.
Who's fooling who?
And of course we've had a solid decade of prediliction about the collapse of the dollar.
Poof! And your wealth is gone. That's the sound it makes. The sound emanates from between your ears.
Everyone should know better than to rely on other people to give them so many false assumptions. Buying an annuity during a time of rapid inflation is getting what you bargained for, or better yet, from a company that subsequently files bankruptcy. Or working for a company because it has great retirement benefits, and just about enough life left in it to get you to retirement age. Those companies are getting more common by the day.
When you get to a certain age, your health is really the only determinate of wealth. And regardless your ideas to the contrary, you cannot purchase health from a doctor. It's all hype. Health care is a crap shoot on a firing range.
It makes me wonder why there is a market for all the health-destroying products in the marketplace. People love their dope. They love their booze. That's what makes it dope, and booze, and why the consumers of dope and booze are often left holding the short end of the longevity stick. These foul fucking energy drinks so popular today are new in the class of health-destroying products.
If your five y.o. kid is drinking Pepsi's Mountain Dew by the 2 liter, understand, when I was a kid, the largest CocaCola sold was six ounces. You read that right. That is the truth. WTF is going on?
Barclays? Sounds like an investment firm that caters to dogs. Or maybe the analysts are all dogs. Woof, woof!