Trader: "If You Take Away QE's Greater Fools, You'll Get A Market Resembling The Pit Scene From Trading Places"

Tyler Durden's picture

By Richard Breslow, former FX trader and fund manager who writes for Bloomberg

You Don’t Need a Taper to Price for the Event

Yesterday’s article on potential ECB tapering of their quantitative easing activities was important - even if you discount or outright dismiss its likelihood. No one was prepared to fade the news on the day and the reverberations were far and wide. If you were a bond market, of any stripe, and open for business, you got sold.

Investors are long global bonds and other bond-infected assets in outsized size, and not at all sure why, other than that central banks will keep buying and nothing will ever change again

As QE gets long in the tooth, it has increasingly relied on the greater fool theory to maintain itself. Take that assumption away and you’ll get a market resembling the pit scene from “Trading Places”

Rather than dismissing the news (or trial balloon) ask yourself what would happen to your portfolio if global yield curves began to normalize. Which doesn’t require outright tightening to happen. Something to at least consider when submitting your bids for the next super-longs. It takes a lot of rolling down to get home scot-free from a 50-year maturity at crisis yields

It’s all been about greed in order to survive in this desperate grasping-for-yield world. But more and more serious investors are trying, largely in vain, to point out that survival in the future may require getting to the exit on time. Taking a mark-to-market hit on a negative yielding bond is a nasty shock investors aren’t used to. And certainly not prepared for

There’s been an assumption that bond vigilantes were permanently run out of town when the new central bank sheriffs came to town. And that back-ups in yield were some form of anti-social behavior to be scorned. But some policy makers are coming around to realize that steeper yield curves just might be what we need right now. For a whole host of reasons. And reminders that that’s possible should be taken as gentle nudges to reconsider the concept of adding a dose of prudence to investing decisions

“Don’t say no one warned you” will be heard along with the wailing of the those who just wouldn’t leave the dance floor.

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Nemontel's picture

This market needs to crash so that our fairy tale can finaly end:

RafterManFMJ's picture

Hi! All my 15 year old school mates are terribly upset about Trump's use of body shaming language and reducing women to nothing more than their bodies; tell us Mrs. Clinton, how does it feel to knowing your husband is a serial rapist that sinks his dick into anything that cannot outrun him?

Creative_Destruct's picture

If Slick Willy sinking his bent dick into a female's body isn't "body shaming", I don't know what is. 

Manthong's picture

If you have survived the complete absurdity and insanity since late 2011 when the CB’s and the governments began the destruction of any semblance left of the market and price discovery, you have to have a special place in your heart for “Trading Places” and the time when failure was possible for bad operators and rigged positions.


IMHO, guillotines are way too kind a fate for the political and financial aristocracy who have stolen the future of billions of people.

I kind of like the locked with an amorous gorilla in a cage as in “Trading Places”, or better yet the auto repair shop tailpipe solution in “The Mask”.




I am more equal than others's picture



pppplllllleeeeaaassseee crash!

Get this over with already.  It is only going to hurt worse the longer it linkers.

yogibear's picture

"is a serial rapist that sinks his dick into anything that cannot outrun him?"


Too bad he hasn't run into someone like Lorena Bobbitt that would cut off his dick and let a few taxis run over it.

acetinker's picture

Fuck you RafterMan!  Ya' made me spit beer outta my nose!

billwilson2's picture

Not like trump hasn;t said he would like to do his own daughter. Talk about a creep.

Boris Alatovkrap's picture

Market WILL crash, but only when consensus of bankster is to move from soft to hard asset. Greediest bankster will be left in Bank-o-sphere with virtual nothingness. Of course, greediest bankster will probably buy up army and navy to commence war before that is happen…

GUS100CORRINA's picture

Regarding QE and market price discovery or lack of it, all the data is suggesting we have a confluence of factors in play. Below are the factors:

1.) Political corruption 

2.) Idolatry and HUMAN GREED

3.) Evolution type thinking leading to the abscence of absolutes (Right and Wrong)

4.) Global Pantheistic Socialism (Movies, Music, Education, Arts and Sciences)

EVERYTHING IS "EVOLVING" WHICH IS ABSOLUTE BS. We see this type of thinking in finance, law, politics, religion, history, etc. We are behaving more like communist collective. I could write a book on the subject, but not now.

We keep hearing about the "NEW NORMAL" and it is "DIFFERENT THIS TIME"


Below is a list of America's "NEW NORMAL" accomplishments for the last eiight years ...

As someone once said: "GOOD LUCK WITH THAT!"


1.) Student Loan Debt - 2 Trillion

2.) America's debt - UP over 100% in 8 years,

3.) America's unfunded liabilities - 150 Trillion plus and climbing rapidly

4.) Corporate Debt - Up over 100% in 8 years.

5.) Bank Derivative Expsosure - Up over 300% in 8 years.

6.) Crime and Violence - Out of Control (Billions in Lost Property, Lives)

7.) America's foreign policy - America now pays ransom to terrorist states like Iran (1,700,000,000)

8.) State and Municiple Pension Shortfall - 6 Trillion plus

9.) Fed Balance Sheet - At 4.5 Trillion - Up Over 400% in 8 years

10.) US Government Cannot Account for 6.5 Trillion in its books.



jay35's picture

Notice how the National Debt isn't even mentioned anymore? It was big news up until about eight years ago, and then they even turned off that clock in NYC that displayed it. Soon after it conveniently faded from the news.

We Are The Priests's picture

If you like watching clocks you can go to  When you there look at the lower right hand corner and you'll see gold and silver prices that are most interesting.

TheSkipper1967's picture

Wow that puts it out there.  Not that me showing my office co-workers would change their minds.  I work in corp finance and accounting in healthcare and many of the men/women here have no clue what is going on.  Everything is great in their little world.  They wouldn't have a clue what those numbers were telling them.  

LetThemEatRand's picture

We already have a candidate supported by bankers and who rolls around on a cart asking for money.

ebworthen's picture

They knew this would be the result when they went to ZIRP.

Intentionally fucking over generations, who would prefer 6% in a Treasury to fund responsible Government.

Instead, we get MBS, CDS, Libor rigging, Wells Fargo fake accounts, Bailouts for Corporations and Banks, pain for We The People.  As if this will end well for anyone!

Talk about pissing in the pot you cook in!

Creative_Destruct's picture

And shitting... makes a nice bankster stew.

TheRideNeverEnds's picture

You do realize that QEforever is not meme but the actual plan right?

The only question currently is do they give us another token 'rise' in rates before they decrease them again and start overt purchases of stocks or will they start overtly purchasing e-minis and then decrease rates below zero?

Creative_Destruct's picture


YES. Having the entire world and markets dependent on the Central Banks is the Ultimate Globalist Dashboard control center.

There are no markets. There is no economy. There are only Central Banks.

Miggy's picture

When that happens metals go to the roof again so only the ones inside may be in the know as long as possible. As you say, it is already covertly happening.


John 3:16

Creative_Destruct's picture

Ohhh Yaaaa!

But if she put her money in T-Bills these days, she'd never get off her back.

nailgunner44's picture

Strange that Landis hasn't done anything new in many years, what's that all about?

Creative_Destruct's picture

National Lampoon's Animal HouseAn American Werewolf in LondonTrading Places, Michael Jackson's music video ThrillerThe Blues Brothers, and Beverly Hills Cop III.

All good stuff...well BH Cop 3 not so much, but the rest are classics.

And who can forget 

Amazon Women on the Moon

And he's only 66 (seems young to me) so, yeah, another effort from him would be of interest.

gregga777's picture

QE forever eventually means median home prices of $200,000,000, or median rents of $40,000 per square foot, for the average American making the median wage of $15 per hour. Yeah that will work out fabulously. Great job hereditary inbred subnormal IQ elite morons (aka Intellectual Yet Idiot classes) banking gangsters. But, truth be told, all the banking gangsters and the Corrupt World Orld Globalists will be swinging from lampposts long before that point is ever reached.

yogibear's picture

Zimbabwe is the Fed's economic model.

Yellen  and her 12 bankster goons are monetizing debt.

Don't expect any rate increases soon.

cyrus2543's picture

just do what they did in Zimbabwe, add more zero's to your money and it all be just fine.

ejmoosa's picture

To really have that happen, the size of QE year after year would have to continue to accelerate.  But all they did was inject a bunch of bucks and leave them there.  

In my view, QE had the same effect as profits to the economy.  But once the impact year over year diminished, it was back to the mediocre sick as hell economy we have always had.

And they cannot remove the QE in place, because that would have the same effect as raising taxes, and reducing profits, sending us deeper into our ongoing greater depression.

So, they are fubar'd either way.  

They should have just taken their medicine in 2007-08.  But they thought they had outsmarted the laws of real economics.

They were wrong.


dark pools of soros's picture

who da fuck is buying bonds when new IPOs are doubling on the open?


JailBanksters's picture

Loved the ending when the Traders thought they were going to screw everybody else, and they were the ones that got screwed.

I love happy endings.


TheVoicesInYourHead's picture

It's 5:30am, do you know where your Papiermarks are?

Last of the Middle Class's picture

QE, when it's absolutely positively ESSENTIAL to suck all the assets from other socio economic classes and banish them and their progeny to debtor prison living for the sake of the wealthy for the next 10 generations!!!!

jcdenton's picture

QE! Wanta's STOLEN money!


Yay !!!!!!!!!!!!!!!!!!!!!!! [big applause all around]


Comment as Klaatu ..

MATA HAIRY's picture



mary mary's picture

Usually, when authors EXPLAIN each logical step, I can understand.  But Breslow only IMPLIED each step, and I wasn't able to figure out what his message was.

VWAndy's picture

 Take away the QE and the markets get shorted to 0. Prolly within a few days.