Rabobank: "Everyone Rational Wants To Sell, While Everyone Official Has Been Told To Buy"
The best summary of what happened overnight comes courtesy of Michael Every, head of financial markets research at Rabobank Group in Hong Kong, who was quoted by Bloomberg as follows:
While the government helped boost stocks at least twice last week, according to people familiar with the matter, equities extended declines into the close on Monday. Even if state funds come in to defend the 3,000 level, it may not ultimately work, according to Michael Every, head of financial markets research at Rabobank Group in Hong Kong.
“Everyone rational wants to sell, while everyone official has been told to buy,” said Every. “By throwing good money after bad, it just delays the inevitable.”
Every was referring to China; he could have been talking about every central bank anywhere in the world.
And then, a close runner up, is Deutsche Bank's Jim Reid who in his overnight note, explains just why "everyone official has been told to buy"
A map, a compass, or even a satnav wouldn't make navigating current markets much easier at the moment. While I was on holiday I couldn't help be interested by the Nevsky Capital letter explaining why it had decided to close down after 15+ successful years. The letter is worth a read but basically they suggest a lack of transparency and liquidity are making it very difficult to predict the future in a manner that allows for adequate risk adjusted returns. Transparency problems abound in EM with China at the forefront. They also argue that an increasing number of important EM countries are conducting 'nationalistic' policies over what had been a more transparent 'Washington Consensus' policy bias in the decade or so pre-GFC. This adds to the unpredictability. The liquidity issue is blamed on regulators and the rise of index funds and algos meaning that trading volumes have declined and badly executed trades can start an unintended trend in markets.
It doesn’t paint a particularly joyous outlook for global investors and supports our view that financial markets are broken but have been propped up by immense artificial central bank activity. We still think central bankers can still be relevant when inflation is so low (assuming no policy error) but we do think we're late cycle. Our view in the outlook was that we may have one more year left in the cycle before more difficult times arrive. Obviously the start of the year trading has increased the risks that this is too optimistic but we maintain our view for now. All in all it is a low visibility financial world with China having the ability to dictate performance with limited ability to analyse it properly in real time.
Because handing over the fate of the world economy and capital markets to a closed room of career economists... why what could possibly go wrong?
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Bad Money = Green Spank ?
i remember seeing that cartoon picture in the 80's. some things never change.
The word is getting around in Britain now.
Sell everything ahead of stock market crash, say RBS economists | Business | The Guardian
Heard on the street many years ago about a market like today’s market (as best I can remember it) “…when everyone has a whale of a gain in market you can see it begin to roll in different directions. Then if the whale gets propped up artificially for too long the whale eventually collapses and slams back to earth…Then people are heard blubbering about their losses…”
The comics from the Economist 1987 ?, but so timeless.
I don't find much difference between the centrally planned economy of China and that of the USSA. Both propagate their agenda which contradict facts. Both fabricate all data. The citizens of the USSA either are benefitting from the fraud or too fearful to reject it for what it is. I wonder if the Chinese citizen is just as lame?
Any way you look at it both nations are essentially Communist/Fascist/Oligarchic. Americans 'pretend' that their country is democratic and based on the rule of law. It is not. It is amazing how we scorn our enemies for being what we are but 'pretend' we are not. Such hypocrisy!
The only way for America to return to its roots is for The Status Quo Has Got To Go. ANYONE who proclaims we can 'change' the current system is part of the problem and must be eliminated. The current system is criminal to its core. It cannot be changed. Its essential character is fraud based on fear/greed and enforced by violence. It has no 'opposite'. The 'opposite' is the cessation of it.
Starve the Beast and 'end' the 'system'. It's death will bring Freedom and a new beginning.....
Good comment.Thank you!
Yes. But yr message is lost to drugged mules everywhere. The 1% know how to entertain, divide and trap. It is down to the individual who can still run and not about carrying the hopeless wounded.