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Biderman And Bianco On The Black Swan Bonanza

Tyler Durden's picture




 

While, by definition, we can't 'know' or predict what the event is that becomes a Black Swan, it is nevertheless useful to consider which large risks are relatively underpriced by the market currently and perhaps more so - what to keep an eye on to consider the odds of such an event. Biancerman (or should it be Bideranco) take on Europe (the pace of the disaster is accelerating and the hope for a Draghi-save is overdone), US Inflation (focus on 3% as a 'problem' and owners-equivalent-rent), The Debt Ceiling (will Geithner get 'extraordinary' again or will it become the political hot potato that proves the deficit will never be cut) , and The Fiscal Cliff (the entire gain in income from the 2009 lows will be removed if this occurs - that doesn't seem like a positive) in this thought-provoking clip. Reflecting on these realities, Biderman so eloquently notes "means the smelly stuff is likely to hit the fan" and Bianco reminds us that, just as in 2008, "hope [in equities] can be a very powerful drug".

 

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Mon, 05/14/2012 - 21:12 | 2425429 xela2200
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I wouldn't count on the FED holding their word on 2.5% inflation.

They will print to buy bonds until the US Government can bring in more money than it spends. Until then, the FED will be the only entity buying Treauries.

Mon, 05/14/2012 - 21:17 | 2425436 I think I need ...
I think I need to buy a gun's picture

you can have 50k gold and have 2.5% inflation in everything in else,,,,,not a problem,,,,,,tee up gold revaluation, ben can control inflation easily with 50k gold,,,,,,your 401k doesn't buy many flat panels from best buy or chinese crap at walmart anymore though.  ****except oil**** I don't want to know what 2013 will bring after the flood of oil is gone that is currently on the market for obama to be reelected....

Mon, 05/14/2012 - 22:43 | 2425627 Rahm
Rahm's picture

Bullish - Benny Boy's Butt goes Bed Bath & Beyond to Bail Barack & Bozo's out of the Bathhouses.  Bankers r Bitchezzz.  Buy Bullion, Boost Basis, Bring on Bank run.

Tue, 05/15/2012 - 02:29 | 2426045 AldousHuxley
AldousHuxley's picture

Bernanke doesn't read black swan:

 

http://www.youtube.com/watch?v=G6_bmeTSAOk

Mon, 05/14/2012 - 22:20 | 2425591 CrashisOptimistic
CrashisOptimistic's picture

You haven't thought it through.

We hit 1.77% today on the 10 year because European money is terrified and is hiding.  THERE IS NO GROWTH.

The Fed is not expanding its balance sheet with new bond purchases right now.  Any remaining twist is net 0, with a sale of the short end to buy long end.  But that's not what's driving the long bonds.  It's Europe.  It's fear.

People are looking for a place to hide.  "Money on the sidelines" is money in stocks, waiting to go to bonds.  Why would they be elsewhere in a world with no GDP growth?

Tue, 05/15/2012 - 00:58 | 2425914 pkea
pkea's picture

the black swan is staring right in your facesladies and gents. the only "black swan" could be further JPM's and alike derivative book losses beyond of any imagination. "size doesn matter" rule applies here and not in the positive way

I did suspected their getting out of control synthetic positions all along since last fall for this spring and finally we have seen some first official tip of the iceberg last week. The black swans are usually not unknowns but poorly perceived knowns

Mon, 05/14/2012 - 21:25 | 2425455 GOSPLAN HERO
GOSPLAN HERO's picture

These guys are considered terrorists in the USSA.

Mon, 05/14/2012 - 21:18 | 2425456 CClarity
CClarity's picture

While "no one" is watching, China is buying up gold  Could make a run at becoming a reserve currency by tying the yuan to some gold backing.  Quite a compelling move while drachmas, lira, and peseta spring back up with no more backing than the Euro and US$.  Just saying . . . 

Mon, 05/14/2012 - 21:29 | 2425483 xela2200
xela2200's picture

That is a given. They are working on the alternate SWIFT system, and it wouldn't surprise me if they don't add a Gold competent to it. They know everybody is begging for sound money.

Mon, 05/14/2012 - 21:28 | 2425463 tom a taxpayer
tom a taxpayer's picture

Biderman and Bianco covering the waterfront. Good stuff. Thanks.

Off Topic: Karma. TSA Agents Conduct ‘Full Monty’ Pat-Down On Henry Kissinger

http://washington.cbslocal.com/2012/05/14/tsa-agents-conduct-full-monty-...

Mon, 05/14/2012 - 21:38 | 2425513 TwelfthVulture
TwelfthVulture's picture

True karma would be the airplane making an emergency landing in Saigon.

Mon, 05/14/2012 - 21:34 | 2425496 BalanceOrBust
BalanceOrBust's picture

The debt ceiling?  Does it matter at all?

In the first Part, Biederman asked where the money is coming from.  Without additional QE, where is the money coming from?  Sure Twist is holding rates down (for now), but the FED will need to print before we hit the debt ceiling.

Mon, 05/14/2012 - 21:36 | 2425503 Caviar Emptor
Caviar Emptor's picture

It won't be a black swan, it won't be a cliff dive. Not when everything is TBTF and every rule can be suspended, amended, pretended. It's just a long slow sink into the muck. 

Mon, 05/14/2012 - 21:36 | 2425504 RoadKill
RoadKill's picture

How is it their is no story about...

Greek President PapoLIAR to reccommend government of promiment non-politicians to avert new elections and manage crisis???

This is a big fat end around to eliminate democracy in the country that invented it. If this happens - and I think its the most likely "solution" for TPTB, then their need to be riots in the streets of every nation in the 27 country EU bloc. You cant have these unelected beaurocrats in Belgium csuspend democracy every time they dont like the outcome.

I dont agree with all the bankster, conspiratorialist BS that gets bantered about on here - but this is one I think we can all agree is vial despotisim at its worst.

Mon, 05/14/2012 - 22:21 | 2425598 CrashisOptimistic
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Both Szirys and the 4th place finishing party said they will not sign onto another technocrat government.

Tue, 05/15/2012 - 03:52 | 2426088 ThirdWorldDude
ThirdWorldDude's picture

And the Commies won't even attend the meeting to discuss such an option:

 

The Communist Party (KKE) has said that its leader, Aleka Papariga, will not attend the meeting. The KKE is opposed to all coalition scenarios. A party statement said: "The KKE's position, which was also expressed during the meeting with the president and is contained in the minutes of the discussion, is against the formation of a government of personalities, regardless of the name that it will take. Therefore, Aleka Papariga would not contribute to such a discussion where the preconditions and the composition of this government are determined."

Mon, 05/14/2012 - 21:43 | 2425525 junkyardjack
junkyardjack's picture

All Black Swans noted in the video are not Black Swans as Black Swans can not be predicted, fail whale....

Mon, 05/14/2012 - 22:27 | 2425613 JackT
JackT's picture

To be truly known in event, scope, and timing.  Only 2 of the 3 are "known", timing is still not.  Of course we could easily have another Fukushima-type event.  

Mon, 05/14/2012 - 22:41 | 2425641 Manthong
Manthong's picture

I agree.. the B2’s are hitting on the various known destructive conditions that are bound to go exponential some day (EU Debt, US Debt, US tax specter etc, but I Black Swan is supposed to be unexpected.

My idea of a Black Swan is more along the lines of a derivatives disturbance that goes nuclear, Japan going belly up, some sort of China economic surprise or collapse, Fuku 4 hitting the floor or something similar that out of the blue pulls the pins on the whole financial FUBAR we are in.,

Mon, 05/14/2012 - 22:54 | 2425670 obejoyful
obejoyful's picture

I agree as well that these are not black swans but will add to the effects of the black swan.  Also, add to the list of the previous post.  

Natural event: like a CA Earthquake

Politcal event: Iran, China, Syria

and anyone of the bubbles: Stundent loan, Treasury or credit bubble 2.0.

 

 

Tue, 05/15/2012 - 06:00 | 2426134 disabledvet
disabledvet's picture

"fail whale" sounds a lot worse than a Black Swan actually.

Mon, 05/14/2012 - 22:25 | 2425608 lolmao500
lolmao500's picture

The US doesn't have 2% inflation?? LOL yeah, if you take out food/energy/health care... something which you need to live.

Tue, 05/15/2012 - 06:04 | 2426135 disabledvet
disabledvet's picture

actually prices are falling now. health care is kind of odd: "if you don't get any but still have to pay for it do you have inflation"? i'm sticking with a bottle of booze on that one. college education costs is the last vestige of the truly extortionate...and a one trillion dollar collapse in that debt market is going to solve that problem for the next 100 years as well.

Mon, 05/14/2012 - 23:03 | 2425703 blueridgeviews
blueridgeviews's picture

In what world do we have 2% inflation? Food and Fuel are up 50-100% over the past few years. 5lbs of sugar went from $1.25 - $3/lb today. That's 2% inflation? What a bunch of arrogant elitists!

Tue, 05/15/2012 - 00:13 | 2425850 island
island's picture

You are apparently under the misconception that people need food and other forms of energy.  

/sarc off

Tue, 05/15/2012 - 06:58 | 2426160 TWSceptic
TWSceptic's picture

Yes but ipads have more features so it's a trade off.

 

/sarc

Mon, 05/14/2012 - 23:08 | 2425714 blueridgeviews
blueridgeviews's picture

There is not a chance in hell that the Republicans are going to have a repeat of last August. They have proven themselves ball-less and leaderless when it comes to reigning in Gov't spending.

Mon, 05/14/2012 - 23:48 | 2425780 Caviar Emptor
Caviar Emptor's picture

All over the economy it's the same theme: costs up, receipts down. Same is true for classical music and opera across America. You can argue it's obsolete. You can also make the same argument for human capital across any industry: blame robots, computers, outsourcing, cheap foreign labor, commoditization of expert qualifications, the internet, free markets, regulation......but even in fields with none of the above (live classical performances) the exact same economic reality is at work

For generations, large and small cities saw orchestras,  operas and other classical music organizations as part of civic life.  Now,  many are in deep financial trouble with no relief in sight.

The reasons for their predicament is simple:  Costs are rising at a faster rate than their receipts.  That’s why the Philadelphia Orchestra,  long considered a crown jewel of American cultural life, recently had to seek protection from creditors.  Even classical music organizations that are keeping their heads above water have had to slash costs to the bone including laying off staff.

http://247wallst.com/2011/05/01/the-most-cash-strapped-classical-music-organizations/#ixzz1uuFL6IIQ

 

 

Tue, 05/15/2012 - 00:19 | 2425866 Dead Canary
Dead Canary's picture

My brother in law, Black Swan came over for some beers and NASCAR the other day (Yea, my wife's sister is in a mixed marriage. What's it to ya!). I tried to get him to spill the beans on what he's up to but he just said "I can't talk about it".

He had a Spanish/English dictionary in his pocket though. (Wink, wink)

Tue, 05/15/2012 - 02:10 | 2426028 sdavis
sdavis's picture

Anything listed here has already been played out on a Fed  supercomputer. I am beginning to have faith in Dr. Bernanke.

Who would have thought things would be so relatively good 4 years ago when the sky was falling?

He just needs to continue to engineer a soft landing. So far, so good. How many years after the biggest bubble to have popped, when we could have been looking at blow-out, starving people Greater Depression, will you believe? If we assume oil is getting more expensive for real reasons like Peak Cheap Oil, What should oil cost?

In 2007 people were expecting $300 oil by now. It is still under $100.

There was a huge bubble that needed to be popped. The real estate bubble was getting out of hand as well.

What are the other bubbles that need to be popped? Gold? $US Government debt? The $US dollar? Oil?

You know the debt is going to be deflated. Against oil? No. That is too taxing to world economic growth.

Against gold? Against the $US currency?

Bernanke is doing better than I ever expected.

Tue, 05/15/2012 - 06:10 | 2426139 disabledvet
disabledvet's picture

equities are not a drug. TRADING equities is a drug, doing all this boardroom bullshit is a drug (proxy fights, hack attacks, mind martianing, etc, etc)...but no "simple portfolio management with an emphasis on equities" is in fact the exact opposite of a drug...it's all about quietus and "taking the emotions out of your actions." unfortunately of course. also missing from this missive is "borrowing 100 billion a week to pay for everything tends to focus the mind"...especially now that JP Morgan Chase whale has exploded.

Tue, 05/15/2012 - 08:09 | 2426259 TheMerryPrankster
TheMerryPrankster's picture

Bernanke ONLY particpated in the ILLUSION of a soft landing. The cia/corporate owned media are joined to the hip to the fiction writers in the BLS and other gov agencies.

25% real unemployment is not a soft landing, continued record foreclosures and dropping real estate prices in top 10 markets is not a soft landing. 50 million people who can't feed themselves without food stamps, is not a soft landing.

You only see what they want to show you.In the belly of the beast the organs are rotting and the cancerous tumours are growing day by day. The beast will lumber apparently healthy, until it suddenly falls dead, rotten from the inside.

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