Citi's 'Red Flag' Warning From The Credit Markets

Tyler Durden's picture


It seems the world is willing to come on TV and tell the rest of the world that consensus is bearish, sentiment is weak, and that this rally 'proves' that investors are resilient. We have shown in recent days that the consensus is much more bullishly positioned in fact and as Citi's HY credit desk noted today:

"I'm a little cautious on how much further this rally goes. Not because I think that the September road bumps that have been very well flagged are going to come and bite us, but more because the consensus, which towards the end of August was mixed, to slightly wider, is now getting into a "this market is bullet proof, the ECB and FED put is there, and the technical is still great, and we're only going one way... Tighter". When the market consensus moves like this, it's small red flag, even though it definitely doesn't feel like that at the moment."

and as a reminder of the reality we inhabit (from Citi's credit strategy group):

One recurring lesson of the last few years is that the threats of central bank intervention tend to be far more effective than the actual programs. It takes quite a lot of chutzpah to short the markets after Draghi’s “whatever it takes” comments and the FOMC’s ever more dovish statements and minutes, but it’s a different story now that the cat’s out of the bag and markets are reflecting central bank action.

Source: Citi
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Wed, 09/05/2012 - 18:18 | 2766014 Nihilarian
Nihilarian's picture

CNBC thinks otherwise.

Wed, 09/05/2012 - 18:28 | 2766057 Muppet of the U...
Muppet of the Universe's picture

ALL CNBC TRADERS: GO LONG ES SUB 1388.  The market will definitely rebound and totally won't crash!  ZH has your back we will be buying too!

Wed, 09/05/2012 - 18:44 | 2766108 Michael
Michael's picture

Stock equities are like dead money because the public is no longer involved. When it moves, the whales will be cutting each others throats, the likes of which has never been seen before in history.

The few winners will be the ones that panic first.

Wed, 09/05/2012 - 20:19 | 2766267 Muppet of the U...
Muppet of the Universe's picture

SHH!!  Don't tell the whales that!  They are still food for the HFT...


Don't worry whales...  A death by a thousand cuts is peaceful...  I think.


But it just close your eyes, cross your fingers, pinch your buttholes, and pray for...



Wed, 09/05/2012 - 20:19 | 2766448 Michael
Michael's picture

They already know, but I do prefer they bleed to death slowly and none of them get out alive.

Wed, 09/05/2012 - 20:22 | 2766460 Muppet of the U...
Muppet of the Universe's picture

HAHAHAHA, XD HAHAHhaha.  Get out alive?  We are all already dead.  We are just living on borrowed time.

Wed, 09/05/2012 - 23:19 | 2766473 Michael
Michael's picture

The whales I speak of it's true and the muppets well, you know, and that is a beautiful song choice link.

Wed, 09/05/2012 - 23:42 | 2766935 mkhs
mkhs's picture

        CNBC thinks otherwise.


Since when did CNBC start to think?  Don't mistake the nice suits and big words for intelligence.

Wed, 09/05/2012 - 18:19 | 2766020 vast-dom
vast-dom's picture


Wed, 09/05/2012 - 18:31 | 2766068 Muppet of the U...
Muppet of the Universe's picture

So... long aapl?

Wed, 09/05/2012 - 18:21 | 2766024 fonzannoon
fonzannoon's picture

China has already crashed. The ballsack dry index has crashed. Every barometer is completely broken and yet the indexes are completely suspended in mid air. It's fascinating.

Wed, 09/05/2012 - 18:30 | 2766065's picture


China has already crashed.


Did they finally all get up on chairs and jump off at the same time like folks used to speculate about back in the '70s?

Wed, 09/05/2012 - 18:33 | 2766074 fonzannoon
fonzannoon's picture

I went camping in Pennsylvania this past weekend (Rickets Glen, nice place). I get to this hiking trail in the middle of nowhere with my family and all the sudden 3 huge buses pull up and like 500 asians get out and start stumbling all over the place. It was like out of a bad 80's movie. I have no point to this story.

Wed, 09/05/2012 - 18:37 | 2766088's picture

I was entertained. That's sufficient.

Wed, 09/05/2012 - 18:37 | 2766089 walküre
walküre's picture

It was real estate tour! They got off track and lost.

Buy real estate in Pennsylvania now. The A$ians are coming to buy up everything in sight!

Wed, 09/05/2012 - 18:45 | 2766111 prains
prains's picture

wait til they all start walking around in purple Descente ski suits

still can't get 1988 scubbed from my 2 Mb

Wed, 09/05/2012 - 18:47 | 2766117 NotApplicable
NotApplicable's picture

I was road-tripping once and managed to arrive at the Grand Canyon at 8 AM on a Monday morning. We were the only people there, when suddenly several busloads of Asians arrived.

It was hardly the "out in the middle of nowhere" experience that I expected.

Wed, 09/05/2012 - 19:04 | 2766172 Meesohaawnee
Meesohaawnee's picture

its 5 oclock somewhere

Thu, 09/06/2012 - 01:18 | 2767069 AynRandFan
AynRandFan's picture

There's just too damn many of them.

Wed, 09/05/2012 - 18:31 | 2766069 Milton Waddams
Milton Waddams's picture

More like suspended animation.  Ther SPX hasn't posted a daily change equal to or greater than 1% in 22 consecutive trading days.

Wed, 09/05/2012 - 19:40 | 2766304 Caviar Emptor
Caviar Emptor's picture

THere's no reason why the market would not rise with all global economies crashing. Because banks park all the extra Fed liquidity there. Of course that means there's no one to sell to if they need to raise more cash

Wed, 09/05/2012 - 18:22 | 2766029 FL_Conservative
FL_Conservative's picture

"One recurring lesson of the last few years is that the threats of central bank intervention tend to be far more effective than the actual programs."


Citi is just figuring this out NOW????

Wed, 09/05/2012 - 18:25 | 2766041 not fat not stupid
not fat not stupid's picture

risk, first higher, then far lower.

Wed, 09/05/2012 - 18:31 | 2766053 DormRoom
DormRoom's picture

Bullish as Europe & China head into Stagflation?

Wed, 09/05/2012 - 18:28 | 2766059 Tsar Pointless
Tsar Pointless's picture

It all begins to come crashing down after September 13, when Chairman Ben admits to the world that, indeed, the Emperor is nekkid, and has run out of both bullets and bullshit.

This was timed perfectly - for Mitt Romney's sake.

The cementing of the USofA as an official banana republic will thence become complete.

Wed, 09/05/2012 - 18:29 | 2766060 TideFighter
TideFighter's picture

I will short when Mittens' flahing SUV arrives at the front door of the Fedsters and drags Bananas from his chair.

Wed, 09/05/2012 - 22:02 | 2766720 bugfixx
bugfixx's picture

With his dog in a cage strapped to the roof.

Wed, 09/05/2012 - 18:34 | 2766078 fonzannoon
fonzannoon's picture

Has there been anything on here today regarding this? From the FT

Four of the biggest money market fund managers have told the Financial Times that along with the rest of the industry they are looking at ways of passing on negative returns to investors.

full link.



Wed, 09/05/2012 - 18:40 | 2766101 walküre
walküre's picture

In other words the money "managers" who lost client's money in the first place are looking at ways to suck more money out of their clients because they need another paycheque? The lost the money because they have no effen clue about anything but all fancy talk and fancy illusory ways to create synthetic wealth aren't paying off?

Good grief!

Wed, 09/05/2012 - 23:53 | 2766944 mkhs
mkhs's picture

Possibly, but the NIRP in Eu as well as ZIRP in US kills fixed income.



  Frontrunning: September 5
Wed, 09/05/2012 - 18:43 | 2766099 bob_dabolina
bob_dabolina's picture

And still the easiest way to lose roughly half a billion dollars....getting married.

Other notable losses

Our penises can get us in a lot of trouble.

Wed, 09/05/2012 - 19:08 | 2766152 Meesohaawnee
Meesohaawnee's picture

well done!! Yea. Ive always found it funny. Here there are lots of traders. whats number one rule in trader land? Capital Preservation. Sorry all. Pussy is THE NUMBER ONE source of capital destruction. Ill never understand why these idiots who can have a different vivid girl everyday for the rest of their lives get married. Maybe they should go to trader school.


oh and one more. You MJ;s current hosebag. Yea she luv him lots.. wait till ole horndog gets old to her. Rack em up  but riddle me this batmen and bat women. Why does a black man when hes rich and famous mostly go for white women??

Wed, 09/05/2012 - 19:06 | 2766176 walküre
walküre's picture

Henry VIII had better lawyers obviously.

Wed, 09/05/2012 - 19:15 | 2766214 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I junked you. 

Who cares about divorce settlements?  TMZ?  Give me a break.

Wed, 09/05/2012 - 22:58 | 2766845 Hulk
Hulk's picture

In effect, the penis is simply a VAT...

Wed, 09/05/2012 - 18:44 | 2766109 Meesohaawnee
Meesohaawnee's picture

investors are resilient.   really? maybe "algos" are more ..  there are no more investors and the longer this sham continues they will be forever.

Wed, 09/05/2012 - 18:50 | 2766122 slewie the pi-rat
slewie the pi-rat's picture

L0L bob_D!

altho i can't say for sure what tomorrow might bring, i did go on the record here with an "argument" yesteday (again) that wednesday just might be pretty much like tuesday as opposed to WAAAAY different

nailed it, too!  imagine that!  zH contarianism  Hahaha!

and from what i'm seeing on my screen right now i shall boldly "predict" about the same for thursday too

my main awe being at/of the orderliness of the markets here for months :>  up, down or (of course) sideways, even if we do go full retard risk0ff at the opening bell tomorrow, it will be orderly

and that's an order, BiCheZ!

Thu, 09/06/2012 - 00:49 | 2767034 AynRandFan
AynRandFan's picture

Flat line twitching is the intraday pattern over the last 10 days.  We also have a continuation pattern going, meaning there should be an upside breakout any day.  Hey, I didn't say it made sense.

Wed, 09/05/2012 - 19:13 | 2766201 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Anyway, on a note that has to do with the above article....

It really has nothing to do with bears or bulls or technicals or fundamentals of the corporations.  What it has to do with is the price that will be paid in fiat.  Fiat is expanding proportianally to growth, because there is no growth.  In essence fiat has replaced growth.  This means all prices will expand.

The question we must ask ourselves now how do we get out of the prediciment of a world denominated by fiat?  It is like the anology of the group of people trapped in a cave by a fat man.  We have a stick of dynomite and matches and the fat man has blocked the cave.  He can't wriggle himself free and we are all stuck in the cave.  What do we do?

Do we blow up the fat man?  Or does the group die.

Obviously we blow up the fat man.....

So thus we need to understand that yes, finance is bearish.  We need to understand that nominally it could be painted as bullish (confusing the shit out of the clueless people that embody the status quo).  Then once we understand this then we can realize the whole fiat ponzi is a big bad joke and we must look outside the system for solutions.

Wed, 09/05/2012 - 21:15 | 2766592 stocktivity
stocktivity's picture

I seriously doubt in the history of mankind has there ever been a situation where a fat man blocked a cave and had to be exploded out of the way....but I could be wrong.

Wed, 09/05/2012 - 23:43 | 2766938 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Its allegorical.  If you must, please think of Paul Krugman as the fat man.  Or Larry Summers, if you will.

Thu, 09/06/2012 - 00:46 | 2767027 AynRandFan
AynRandFan's picture

I'd like to think it was a typo.  We blow up the fiat man.  Allegorically speaking, of course.

Wed, 09/05/2012 - 19:41 | 2766307 CDSMonkey
CDSMonkey's picture

ZH is the consensus. Has been for awhile. Site was best when it challenged consensus. When was last time the wizard was right?

Wed, 09/05/2012 - 19:54 | 2766368 Lewshine
Lewshine's picture

What crashes a market? Rule of law...Natural law. This market has been rescued by fraud and lies...big lies, daily lies - For what? Giving time for governments and the 1%ers to re-allocate...But its coming and they know it!

Wed, 09/05/2012 - 20:09 | 2766416 Dogbark
Dogbark's picture

Draghi’s “whatever it takes” comments were made when he was sitting on a potty.

Wed, 09/05/2012 - 20:24 | 2766466 chump666
chump666's picture

Germany will 100% shut this nutcase Mario down:

*Draghi plan details hit the newswires (unlimited, sterilized bond buying)


Wed, 09/05/2012 - 20:26 | 2766471 ATG
ATG's picture

Got puts?

Could be time for a white knuckle screamer...

Wed, 09/05/2012 - 22:00 | 2766714 chump666
chump666's picture

Bulls are going for broke, you kinda gotta respect that.  But the a-holes gonna get fleeced, bad. 

Mario will disappoint, Germany will tighten the clamps.  ECB is printing anyway = priced in, topped ranged, sell off ensured.

Smoke it till the Germany high crt and the loons at the FOMC (12/13sept).

HFT are lowing ranges, nasty, should freak out the momo. This market is about to blow any day. 


Wed, 09/05/2012 - 23:39 | 2766931 This is the end
This is the end's picture

Merkel has already said yes. She has already proven that what she says has no meaning. She will print whatever it takes to keep the Euro hope alive. Look at all the printers, Bernanke, Draghi, Merkel have they seen their power and influence increase or decrease since they started the printing presses? Increase! They will print until they can't. Especially Merkel.

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