Citi: "There Is Something Strange Going On... Something Doesn't Smell Right"

Tyler Durden's picture

With the Dow Jones rising excruciatingly close, or within 0.37 points of 20,000 on Friday only to let down the market cheerleaders in the last minute, it would appear that there is nothing one can throw at a market which is determined to keep rising no matter what happens in the world.  So leave it to our favorite skeptic, Citi's Matt King to throw a fly in the ointment by asking how is it possible that "nothing sticks to markets."

He proposes one possible reason: perhaps analysts were overly pessimistic going into the election and year end, which is possible considering the "most synchronized DM upturn in years"...

... an upturn, which however, has been largely predicated by the reflexivity of soaring stock markets, which in turn have spiked not on actual news, but frontrunning the "everyone's-a-winner-under-Trump" trade...

... which however may never actually materialize in practice, and which could very well also lead to a recession as the surging dollar leads to a global GDP slump while paralyzing financial conditions (see recent record FX volatility in China).

As King then notes, earnings bullishness gets you only so far, and as the chart below shows, the recent surge in global stock prices is not a function of earnings, but expanding P/E multiples relative to Trasuries, which then prompts him to ask why, now that yields are surging, "shouldn't we be discounting using higher bond yields."

This is turn prompts King to propose one of his trademark rhetorical questions: "There Is something strange going on" adding that "something doesn't smell right" in a world in which uncertainty is soaring yet spreads are collapsing, as SocGen first pointed out last month in its "most frightening credit chart", even as leverage also keeps rising.

What is the "key ingredient" in the mix that makes sense out of this market chaos? Simple: according to King, central bank buying of anything that is not nailed down is the "missing link."

Furthermore, despite all talk of a shift from monetary to fiscal stimulus, "central banks aren't done yet", not by a long shot:

Which in turn has - so far - allowed markets to ignore the reality that the credit bubble is getting bigger by the day as debt and interest coverage continue to rise while EBITDA still shrinks, resulting in late cycle fundamentals and valuations.

And yet, there is always a tipping point: according to King, such a point would arrive once real yields spike higher "not matched by a pick-up in growth."

His final rhetorical question: how long until this tipping point happens? The answer: 50 basis points.

Now if only a 50 basis point spike in real yields would also put an end to all the other "strange things" taking place in a world which is burning every day, yet where the Dow Jones is partying like it's 19,999.

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remain calm's picture

Hey Citi get your nose out of your ass

Mr.Sono's picture

colorful charts, sowhat do they mean?

knukles's picture

Dat deres sumptintin goins on ya putz!

This Might Hurt's picture

I hate to tell you this Citibank, but its you, you stink!

JRobby's picture

Followed rapidly by Baltimore, St Louis, you get the picture, everywhere!

Pinch's picture

Swamps often don't smell good. I ask Preznit Tramp to fix this.

philipat's picture

Strange but I can't find anything in the Fed's mission statement about supressing Gold and buying anything else, especially stawks. End the Fed...

NoDecaf's picture

DOW 30k hats,Tee shirts and coffee mugs being printed now, bulk discounts available upon request.


Stuck on Zero's picture

With fiat currency central banks can print money and purchase every asset in sight.  The cash flows back to banks or assets. It's called communism through capitalism.

BabaLooey's picture

Fuck using Tasers - the entire room needed to be gassed.

Pieces of filth - all of them.

Feed the corpses to the pigs.

Consuelo's picture



If you juxtapose that little jailhouse rock incident against (pick one of many) National Geographic episodes on primate behaviour, you will observe striking similarities...

Promethus's picture

WARNING. What truly stinks is when you click on this site you get a big red message that your phone has been infected by 17 viruses and to push a button within 60 seconds to get rid of the virus. 

DirkDiggler11's picture

Use Ad Blocker plus, then u don't see this kind of shit.

Lorca's Novena's picture

It means BTFD just like 09'  ;-)

Or maybe its just chart porn... I dunno Im sober.

Arnold's picture

Consider this.


The BOJ owns a huge portion of publicly traded stock through ETF purchases.

The ECB is having trouble finding enough Bonds to buy.

The Fed balance sheet plus what is held on their behalf by Primary Dealers is pretty opaque.

The PBOC and diverse agencies own or control foreign and domestic investment, as well as the Yuan rate.

Russia, the most opaque of all, needs a big level of oil revenue, which is only a lesser piece of all others.


The governance owns a hell of a lot of private equity.

fockewulf190's picture

"colorful charts, sowhat do they mean?"

They mean stack your fucking ass off for all it´s worth and then some.  This bitch of an economic system can fly off the rails, drive over the cliff, sink like the Titanic, fly into the ground...pick any analogy you any time.  Soulution?  I´ll modify the famous 7 P´s to say Proper, Prior, Prepping, Prevents, Piss, Poor, Poverty.  Even that is no guarentee when the Great Reset hits.  It will only increase your chances of getting through it with less pain than most other people.

TheObsoleteMan's picture

Years ago I believed like you, that silver and gold were the two metals to have as insurance against a doomsday scenerio. But not anymore. Silver and gold work in a polite society, but that's not what we are anymore, no far from it. The two metals I collect now are lead and brass. With my lead and brass, I can take all of your AG & AU, food, water, medicines, women, any thing else worth taking. That "blessed be the peacemakers" shit goes right out the window the day when TSHTF.

fockewulf190's picture

If the world goes totally Mad Max, then of course it´s your lead against mine.  Your expecting the total collapse of the human race into outright anarchy. Although the Great Reset will do it´s fair share of culling, I don´t believe it will get THAT far.  I guess it all depends if World War Three is triggered during the reset and EMP warfare ends up throwing us all back into the stone age. 

A. Boaty's picture

Sadly, I lost my lead and brass in an unfortunate boating accident.

Cloud9.5's picture

So, you plan to become a brigand and rape and pillage your way through the hinterlands.  Know something. We have large families; our people have been in this area for more than a hundred years.  If you harm one of ours we will hunt you, we will track you, and we will find you, and when we find you, we will skin you alive.

JLM's picture

People use color charts to impress engineers who are tranfixed by them.  Scientists hate color charts or anything else that distracts from the facts.  Someone is selling something here... .

divingengineer's picture

As an engineer, let me just say: Blow me.

Encroaching Darkness's picture

Each dataset gets a different color, so you can demonstrate multiple interacting relationships in one graph. Contrasting colors keep related data visually connected, while being able to tell datasets apart prevents confusion.

Yeah, you can blow me too.

Zarbo's picture

Old colleague of mine used to say "the information in a chart is inversely proportional to the number of colors used" -- his were always black and white.

Yog Soggoth's picture

It is just like that Cheech and Chong movie where Cheech asks Chong if he sold any of his product because the rent is due. Chong replied, yeah to myself. They also mean invest in outdoor sporting goods.

Paul Kersey's picture

"Hey Citi get your nose out of your ass"

CITI can't do that. Not with a training video like this. This definitely doesn't smell right.

abyssinian's picture

Yeah that is the stinking smell of Central Bankers scams... We've all been smelling it since 2009 and it's gettting worst and worst

whatamaroon's picture

Fuck Citi, my farts smell flowerdy!


Now we know the oxygen content of your brain, whatamaroon, and how you can avoid the methane portion that gives your writing such depth, and your character such a dignified aura of respectability, and grace.

Kirk2NCC1701's picture

The last sentence is pure ZH gold.

BabaLooey's picture
"Citi: "There Is Something Strange Going On... Something Doesn't Smell Right"


GreatUncle's picture

Do you ever feel that even at 19,999 it is going to go way higher?

Before it crashes and burns.

In all this it is not wether you buy it is can you get out and keep whatever you make before it collapses.

db51's picture

My fingers smell like Tuna?  What does that mean?



It means your fingers smell like tuna, and your brain has atrophied, epistemologyBOY!

Chandos's picture


«My fingers smell like Tuna?  What does that mean?»

Some people fearmonger;

Others just fishmonger...

Bubba Rum Das's picture

"My fingers smell like Tuna?  What does that mean?"

It means it's time for your Old Lady to Douche, WTF do you think it means?


You should not talk about his mother that way, BRD.

EuroPox's picture

Nah he's got it wrong!  It's all about DCFs.  If interest rates are 0% then the NPV of a 1c dividend is infinite!!  The market is seriously undervalued, it is on its way to infinity (and beyond!)

lincolnsteffens's picture

I'd like a $100,000,000 fixed rate loan at -.05% interest rate for thirty years. Yeah, think that's about right. Can I apply to Freddy or Fanny or do I need to go directly to the US Treasury? 

Inquiring minds want to know.

megadeadbeat's picture

well what if they are all just plain wrong?? and its just one big bubble waiting for the china boobs to pop it!

HokumYTrader's picture
HokumYTrader (not verified) megadeadbeat Jan 7, 2017 5:38 PM

He said China Boobs.

Lorca's Novena's picture

It is and has been one big bubble for years now. The recovery is a myth and a lie supported by QE, bailouts, etc... Many have said and predicted we should have let everything reset in 09', but (((they))) couldnt ever let that happen. 8 years is plenty of time to shuffle positions around and gather wealth in other forms. The POS dow will hit 20k before Obonga leaves office, just so that complete fucking failure of a president can say he left his post in good shape. Unfortunately teh masses have no effing clue how our country works and will see the "zomg da dow at 20K weeee"  soon. Meanwhile theyve already lost everything but dont know it yet.


Anyways, yes bubble.

booboo's picture

i see incredible upside to downward movement laterally in a megaphone shaped straight line circulating a topping bottom

WTFUD's picture

It's difficult to turn your back or walk away from a nice top & bottom.

garcam123's picture

One has to be an engineer to understand the description of a drain.....very good...oh, an they even let me ride in the caboose!

navy62802's picture

It's just the bubble to end all bubbles. Not really news, given the radical financial and economic policies insituted in the aftermath of 2007. All we did with those policies is kick the can down the road. Now, when we finally have to deal with the problem, we will have less ammunition and the problem will be worse. And the people who got obscenely wealthy giving us all the big dick in the ass will either be dead or in a nursing home.

Sweet Cheeks's picture


Unfortunately, the untra wealthy bloodline of the powers that pull the levers behind the curtain live on and on for centuries. They go by many names but the bottom line is they win and you lose.

Dr. John Coleman wrote "The Committee of 300: A Brief History of World Power...Venetian Black Nobility, Roots of Today's ...."

Oh, by the way, the color Black refers to the nature of their deeds, not the color of their skin.

Bubba Rum Das's picture

"Oh, by the way, the color Black refers to the nature of their deeds, not the color of their skin."

What about O'bammy? Oh, that's right, the 'Magic Negro' isn't even a real Negro...

Which brings us to the question- Why is everything the Federal Government does, thinks, say's ultimately turn out to be a complete lie?

old naughty's picture

taking three steps back, SweetC and BubbaRD,

the dark side (Black thing), on the apex above the pyramid, is the 95+% negative (one end of the duality or STS) they must achieve, or else; while a few is on the 51+% positive (STO, the other end of the duality); the masses are in between <51% positive and ><95% negative, and that includes all you mentioned in the lower levels of the pyramid... the dark side claims to be our bro (paternal !) since we are all "performing" on this hologram stage, and they're just doing god's (which?) work including transforming us to... if you choose, go spend next few months reading