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The Five D's Of Dystopian Markets
One of the most frequently-used phrases we hear is 'The Markets Are Broken' and while there are many anecdotal events almost every day in and across asset classes, there is more to it than sudden 'flash-crashes' or Italian bond levitation. The world is increasingly dystopian and Citigroup's credit group recently noted, as part of a pitch for structured credit products, the most critical aspects of our broken environment. While not quite as memorable as the five D's of Dodgeball; the five D's of Dystopian markets are decidely less comical.
Via Citigroup's Structured Credit Outlook - Apocalypse Yesterday:
1. Debt Yields...with such low yields, even in the face of rising deficits for fiat sovereigns, and questionable risk-free rates elsewhere, Traditional Return Assumptions Are Broken.
2. Doubtful Liquidity...trading across vast bid-offer spreads, even when transparency is high, does not always mean positions are executable, meaning explicitly the trading Markets Are Broken.
3. Distributional Challenges...while headline forecasts for GDP growth or S&P 500 performance in 2012 may seem accurate and comprehendable, the underlying distributions of the uncertainty surrounding these predictions are huge meaning Forecast Models Are Broken.
4. Difficulties In Funding...ask any European bank where their next USD is coming from and they'll squirm. Term funding costs are prohibitive, market demand for financial issuance is minimal, and collateral is sorely lacking leaving Funding Models Broken.
5. Deleveraging, as Deregulation is unwound...the shift from Basel II to Basel II, Dodd-Frank, Volcker, Tobin Taxes? All will slow credit creation, force (potentially correctly) deleveraging, and reduce financial firm flexibility leaving the Banking Model Broken.
And just for good measure, a few more D's to worry about: Divergence (between EM and DM growth), Decoupling (between US, Europe, and Asia), Deleveraging (of more than just European banks but the entire developed world of debt-saturated balance sheets), Downward revisions (earnings are rolling over), and Dividend strategies (which remain the most crowded of crowded trades). We are sure there are many more and of course the solution to all of these according to every talking head - A Dazooka (sorry).
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First!
Congrats, UncleBill, the first with the least, too
Uncle Bill another D you might want to consider.......Down Syndrome
With sooo many D's I will consider D own syndrome #6
Dystopia? why not Cacotopia? better still why not just keep it simple and say "Ill" Sick or even Cactus fucktus.....
Elect a muslim to ru(i)n the country. What could go wrong?
Every day of his life, the same thought goes through your father's head: "Why didn't I just pull out?"
Classic response!!!! + 10000000000
Freddie, you're a frustrated Jew or a frustrated Christian, but seriously, all you're displaying is your frustration with your own shortcomings, can't you see that?
So tulipmania/south sea is now re-incarnated in the the Dow and the Snpees
Thank you to all of the "PAYASOS".
Some may prefer to to use "payaso" as a verb for the instances when someone "acts" like a clown. The "payasos" that CNBC, Bloomberg and all the rest keep parading out in front spewing their absolute and complete bullshit.
Years ago at least some of the bullshit they were spewing was quasi plausible, today it is not so. Even if you're watching them in a dentist's office fully drugged and a laughing gas mask on, nothing is plausible anymore!
These people are clearly one of two things, complete idiots or pathological liars with the intent of injuring anyone they can. There can be no in between any longer because of the "obviousness" of how wrong, how broken and insolvent, how fraudulent and how sinister the financial system has become... "the guy on the street is finally getting it... the "Occupy Everywhere" movement is witness to this.
How any "analyst" could be so stupid now to not see what is coming. How any analyst COULD see what is coming yet "misinform"... lie... and injure some innocent participants in the markets is also beyond belief.
How about "stockbrokers"?
Now here is a group to behold. There has always been a "conflict of interest" here, to do what is right for the client or do what the firm tells you to do to generate commissions even if you know it is wrong. The entire financial system has become one where everyone is looking for "today's piece of flesh".
Doing what is right has gone the way of Leave it to Beaver.
The MF Global situation where clients have been raped in public view is proof that the system is done, that in a system where big brother can tell you where you have spent your entire paycheck, they cannot "find" $1-3 Billion of STOLEN funds.
By the way, did we ever find out who bought the airline puts back in 2001?
It is all crooked, evil and intentionally fraudulent which is why anything that is "honest" (as in real and honest money,... Gold) ... is mocked.
The entire conversation this morning by CNBC's Joe Kernen was "mocking" and playing the devil's advocate saying that everyone knows that all governments will have to print print as everyone races their currencies to the bottom so everyone should now buy Gold. He then chuckled and said that he was only saying this "common sense" to get some angry e-mails.
In other words the Gold Bugs were mocked again which was followed by another guest pointing to today's down action as proof that Gold is no safe haven. He said that you can't eat it, smoke it, put in your gas tank and even went so far as to say that Gold is a very dangerous asset to have in your portfolio and serves no purpose whatsoever. So what started out as a "bad morning" was topped off with more media stupidity.
So S+P is in the process of telling us what we already know, sovereign governments are not safe and secure as we thought...."bankrupt beyond repair"... and Gold dropped yesterday and again today in anticipation of the S+P statement and in response.
Stupid!
The worse things really are behind the scenes the harder Gold is hit and suppressed, it has been like this for 15 years now since 1996. How is it possible that Gold, a safe haven for 5,000+ years weakens in fiat price when government paper... THE "desired" safe haven for the sheeple by their puppetmasters... is hitting a wall?
How is Gold not now and already $5,000-$10,000 per ounce?
We all know the how and why! Anyone who doesn't get it is going to REALLY "get it" as the Ponzi scheme unwinds. The "payaso media" is happy with what they've done, millions of very good people will have listened to them and have their lives ruined. Not so funny.
CNBC’s Joe Kernen is a real turkey when it comes to gold and he has been for 13 years, missing the entire move up and mocking gold bulls all that time.He was a stock broker in 1982 and pedaled gold, only to get hurt by his pitch with clients. He never got over it and now can’t see the forest for the trees.
The Gold Cartel has done it again ... another fleecing of investors while they line their pockets. They bombed the shares on Friday ... buried gold and silver the following two trading sessions ... and then covered their share shorts while gold and silver are struggling and trying to recover.
There was no other reason for gold and silver dropping to where they were this morning other than the Gold Cartel rip off artists flexing their financial power and stealing money.
Hail Jon Corzine!
www.lemetropolecafe.com
true enough. what rankles more than even the rip-off in broad daylight at mf global is the government (non)response to the commission of such an egregious and unprecedented crime. almost like it was consistent with the policy of the obama administration.
jim rogers was on cnbs this afternoon discussing the state of the markets and the mf global disaster...highlights imo include his observation that segregated accounts are sacrosanct and that corzine should face jail time
jim rogers
Very Good, My thoughts exactly, I cannot watch CNBC or Bloomberg. Every bailout they say is a wonderful thing and imply that people are stupid and do not understand that the Fed has to bail out the EU so you can get your paycheck. That is exactly what one women said on CNN.
As for CNN, they have women.
As for Joe Kernen, He can't eat gold, but he surely eats GE's shit. (Now Comcast). Yes Master, I will Master. I do Master.
Because when you hit non-linearity, your linear models just go nuts!
Its all non-linear, its a complex system for which no one really has a model. That is what scared the living shit out of me when I first heard about derivatives (back when the nominal totals were about 50 trillion). They are supposedly structured to avoid effects from high sigma events. Yet, how would you know since you can not predict the feedback effects from a derivatives market that did not exist in the prior data you assume is your baseline, and that claims to insure/derisk bets on $1750 trillions of dollars notional. Haha! Funny. Pass me another valium please.
Sorry, this is the wrong article for valium. Here, try this doobie instead.
Citigroup are putting out some great analysis of late. When I think of the lunacy coming from SoGen and BofA...
Just so no one else has to ask what Dystopia means either: is the idea of a society in a repressive and controlled state, often under the guise of being utopian, as characterized in books like Brave New World and Nineteen Eighty-Four. Dystopian societies feature different kinds of repressive social control systems, various forms of active and passive coercion. Ideas and works about dystopian societies often explore the concept of humans abusing technology and humans individually and collectively coping, or not being able to properly cope with technology that has progressed far more rapidly than humanity's spiritual evolution. Dystopian societies are often imagined as police states, with unlimited power over the citizens.
Yep, that's us.
The US can never be a dystopia. Our prison population is only up 500% since 1980. Besides, prisons create good jobs that Chinese cannot destroy.
Prison refuse and cesspool maintenance: good solid jobs for the future
I'm sure some Dubai based corporation will be awarded the contract in a no bid selection process and use illegal immigrants to actually do the shovel-ready stuff. It's a beautiful thing.
+1 Chump. Those Citi Techs like the { Low Liquidity} , trades. I'll bet they are long ( gbp/aud), as we speak.
yeah they are trading smart. i think they are looking at the stagflation trade, for one they don't seem keen to go all in on the ECB/FED pumps. i would agree a low liquidity trade seems the play broken market trade = sell EZ/China, hedge long on oil/gold
NICE! How about the ( Foreward), on U.S. drones? I'm long uranium/dinar . sarc :)
Stay away from China 666. update. Play some India. Thay are quiet and moving forward. If you can tollerate Russia, after the elections? I'll play that one.
Let the motherfucker BURN! Got enough "stuff" to SURVIVE!
"The eve of destruction" by Barry McGuire
"Ball of Confusion" by The Temptations
"Wheels of Confusion" by Black Sabbath
"Who Put That F**king Muslim In Charge" by Jerry Lewis & The Playboys
The guy with the one-track mind, by Claude Balls.
You ever talk about anything else but the head Muslim?
Geez, get a life.
For you and your Dem Jon Corzine & Dem muslim pals.
Cretin Hop - The Ramones
http://www.youtube.com/watch?v=7ymeuOz0hZU
Stupid lib Dem f*cks.
Awwww, I think little freddie has a crush on Obama. How cute.
"Freddie's Dead" by Curtis Mayfield
"Land of Confusion" by that short, round, bald Brit. Video needs updated puppets, though.
http://www.youtube.com/watch?v=zU9lv_WqK6k
A dearth of trust in something that relies on it, is death to it.
D pressed.
Indeed.
Market Debauchery
The first two charts make no sense. Things do improve after that.
everything is bullish.
...and dodge.
Dazooka
that`s really funny
Heck? We could have a dystopian { inverted shoulder } , Forming? Look @ the chart.>
Markets getting downright goth!
Death rock the only appropriate music to play when screening these charts
The emerging picture guarantees that "the solution" to this and all the other global economic "crises" will be far less economic, and far more a political solution. As it invariably is when things reach critical.
Generations that live through depressions and World Wars - have reasons for acting morally without regulations or fear of prosecution.
Generations that grow up in times of excess, of ease, of levered prosperity - think acting imorally is the path to success and happiness.
I thought greed was good?
WSJ: Spain Weighing a Fast, Costly Cleanup of BanksPrime Minister-elect Mariano Rajoy has said he wants to speed up the process of dealing with €176 billion ($236 billion) of impaired real-estate assets from Spain's housing bust, although he played down the potential cost of his plans ahead of last month's elections.
Now you know why the Senate banking committee members are meeting with Lagarde tomorrow: everyone's gonna get a "one-time" shot at a mega bailout pie, the bailout to end all bailouts "so we can get on with our lives".
But you can never go home again once the system is broken beyond a crtical point, suffering structural problems from having been so insulated from the laws of supply/demand for so long that regular cash infusions are needed for survival. More debt will have to be piled up just to maintain near zero growth in economies that will simultaneously fight cost inflation and wage/net worth deflation.
Those charts are a hoot! Tyler knows the one that scares me.?< The tiny little last one in the ( Right) corner.
The funny thing is that the models were always broken, the dumbasses just didn't know it. They still don't know it...it's just...they're broken now...as if they will return to predicting the future correctly like they did(n't) last time.
It's easy to fit a model around the stability of a rigged market. All sorts of things taken for granted as fact, solid, stable. It was really just fitting the idea around the data, stably rigged, rather than the data pointing the way and noticing the rig job. Even then....
The variables of real life have never been accurately modeled. Guesses are guesses, and it gets tougher when the rig job fails.
Glass-Steagall
Add two more D's: Dumb, Delinquent
Now we have the Dirty Seven D's.
Dumb, dumber, and dumberer.
Hmm, but who's the "dumbenest?"
Da, da, da, damn.
Dysfunctional, Dopey, D.T's.