This page has been archived and commenting is disabled.

Santelli On Capital Flight And Bond Contagion

Tyler Durden's picture





 

While it will be no surprise to any ZH reader (with our attention to Swiss 2Y rates) the world is undergoing a massive capital flight to safety. Rick Santelli gave this topic his special treatment today, pointing out that "capital is detouring - to avoid risk", and outlining just how big a 'crash' lower in yields we have seen among many of the supposedly safest sovereigns as money floods to safe-havens (including UK, US, Japan, Germany, and Holland). What is most important is that Rick outlines why we should care - when all around are yawning on about how cheap 'dividend' stocks must be given low interest rates - since it changes the nature of capital (the life-blood of our markets) from risk-taking to absolute safety-seeking - as he points out that "it isn't necessarily about our own economy's numbers, it isn't even about who we export to; it's the fact that if capital continues to get somewhat impaired, you'll have more data points as investors not only rethink about their capital but everybody rethinks everything in the capital structure that makes business go round."

 

 

10Y Yields across many majors (and Spain)...

Chart: Bloomberg

 


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Thu, 05/31/2012 - 14:39 | Link to Comment Sircornflakes
Sircornflakes's picture

This isn't news, we've been waiting for it since 2008.

Thu, 05/31/2012 - 14:45 | Link to Comment Convolved Man
Convolved Man's picture

Fortunately, I TiVo'd 2008 to 2012 and can now fast forward through all the crap to get to "The End".

Thu, 05/31/2012 - 14:49 | Link to Comment Sancho Ponzi
Sancho Ponzi's picture

Bernanke: "I'll do everything in my power to force people into equties"

The whole freaking world replies: "Fuck you, Bernanke"

Thu, 05/31/2012 - 15:04 | Link to Comment Manthong
Manthong's picture

“everybody rethinks everything in the capital structure that makes business go round”

It is not at all hard to model capital flow in the new Fed and central bank distorted economy

http://www.youtube.com/watch?v=XoS-MCnTPtQ

Thu, 05/31/2012 - 15:13 | Link to Comment janus
janus's picture

in case you ran out of space on the ole tiVo, here ya go:

 

this is the end

http://www.youtube.com/watch?v=M4WJlLNIsyY

beautiful friend,

janus

Thu, 05/31/2012 - 15:30 | Link to Comment financial apoca...
financial apocalyptic contagion's picture

Aside from a few big fights, very rarely do I see these CNBC faggot anchors debate Rick Santelli over the economy and the topic he discusses.

It's always, "Good Job Rick" or "very interesting, Rick" or "Nice to hear from you, Rick Santelli from Chicago"

These Pieces of Shit treat Mad Ricky over there like Ron Paul was a few months back, FIRE EM ALL

I'd wouldn't mind getting all the news from him, we can keep Becky Q to suck Buffett's dick every once in a while so we can get a good laugh out of his bullshit recommendations

Peace

Thu, 05/31/2012 - 18:31 | Link to Comment DonGenaro
DonGenaro's picture

Bloomberg's no better.
If Buffett farts, they all line up in hopes of getting a whiff.

Thu, 05/31/2012 - 22:10 | Link to Comment smb12321
smb12321's picture

I wish folks would calm down.  For christ sake, you'd think CNBC has committed the unpardonable sin by not extolling the exact economic philosophy as Tyler.  It's an entertainment show that contains (at times) interesting and oertinent data and market sentiment.  I like the give and take between hosts (Rick is by far my fave) but you do get different points of view AND it's the only place besides FOX that dares speak ill of POTUS.

SOme folks have some real issues if they get worked up to fever pitch over a damn TV show.

 

Fri, 06/01/2012 - 11:54 | Link to Comment financial apoca...
financial apocalyptic contagion's picture

its supposed to be america's premier FINANCIAL NEWS channel not entertainment, but sadly it is

although its not your fault--- with all the stupid advertisments, lame stoner documentaries at night and clowns as anchors, anyone could mistake it for an entertainment source.

Thu, 05/31/2012 - 14:39 | Link to Comment Robot Traders Mom
Robot Traders Mom's picture

@ Tyler-any idea why the Jan 14 TBT leaps just spiked?

 

Very unusual to see a jump like that.

Thu, 05/31/2012 - 14:41 | Link to Comment 101 years and c...
101 years and counting's picture

dividend paying stocks offer safety.  as long as you ignore the potential for 50%+ losses on capital just to get the whopping 3% yield.  and the inevitable cancellation of that 3% yield when things get bad.

 

Thu, 05/31/2012 - 14:43 | Link to Comment disabledvet
disabledvet's picture

Banks were the highest dividend yielders going into the market collapse of 2008. Hmmmm. What are the highest yieldeds this time? Let me guess: "gold miners."

Thu, 05/31/2012 - 14:54 | Link to Comment Pladizow
Pladizow's picture

Poor guess!

Thu, 05/31/2012 - 16:09 | Link to Comment The Monkey
The Monkey's picture

Agency real estate investment trusts.

Thu, 05/31/2012 - 16:12 | Link to Comment prodigious_idea
prodigious_idea's picture

So you're guessing?  Why waste your time posting?

Thu, 05/31/2012 - 14:56 | Link to Comment duo
duo's picture

why save and accumulate capital if you can't save it anywhere you to beat inflation without the risk of being Corzine'd?  Capitalism without capital is dead.  Thanks, Ben.

Thu, 05/31/2012 - 15:51 | Link to Comment brooklynlou
brooklynlou's picture

Nothing like picking pennies from the front of a moving steamroller ...

Thu, 05/31/2012 - 16:27 | Link to Comment Zero Govt
Zero Govt's picture

The Fed and US Govt killed capitlism (working) in 2008 with the bailouts

you don't get a recovery if you prop up the old dinosaurs and you don't get green shoots if the dead-rotten wood is still clogging up the forest canopy

Bubble Ben 'studied' the Great Depression, what part did he look at soup kitchens?!!

Thu, 05/31/2012 - 14:43 | Link to Comment Boilermaker
Boilermaker's picture

Capital is avoiding risk???!

I just saw the equities markets have a massive reversal even in the face of abysmal data.  That's not avoiding risk.  What is Rick smokin?

Thu, 05/31/2012 - 14:58 | Link to Comment duo
duo's picture

you have to accumulate capital safely.  Try opening a McDonalds by paying them $1500 a month.  You can't.  You gotta have $250K of CAPITAL.

Thu, 05/31/2012 - 15:02 | Link to Comment Baron Robber
Baron Robber's picture

Santelli is a schill for the banks and he certainly won't discuss exactly who the ECB is bailing out in Europe - the TBTF banks.

Thu, 05/31/2012 - 16:12 | Link to Comment The Monkey
The Monkey's picture

Everyone in equity land is waiting for the big Euro bounce (since everything is nearly 100% correlated on FX).  Healthy market for sure.

Thu, 05/31/2012 - 14:45 | Link to Comment geewhiz190
geewhiz190's picture

seen on the new arrivals desk in a bookstore- "How to make money in Junk Bonds", right next to discount rack selection "Flip This Condo".

Thu, 05/31/2012 - 14:45 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

I love the "Safe is a Relative Term" in the video still.

How exactly do you define "safe" in a world of risk assets run amuck........starting with the so-called lowest risk asset, USA sovereign debt?

Thu, 05/31/2012 - 14:46 | Link to Comment LoneStarHog
LoneStarHog's picture

Jim Willie gives an excellent explanation of why there IS NO FLIGHT TO SAFETY < http://traffic.libsyn.com/tfmetals/Willie2.mp3 > I would love to listen to Rick and Jim debate this issue.

Thu, 05/31/2012 - 14:46 | Link to Comment Dr. Engali
Dr. Engali's picture

When all this money starts flying out of this bond bubble it's going to shock the world. It will make the equity bubble look like a pimple.

Thu, 05/31/2012 - 14:51 | Link to Comment disabledvet
disabledvet's picture

"cue: Espana."

Thu, 05/31/2012 - 14:53 | Link to Comment Bastiat
Bastiat's picture

If 10% more went into gold it would rock the world.

Thu, 05/31/2012 - 14:53 | Link to Comment CommunityStandard
CommunityStandard's picture

Time for everyone to get Proactiv and buy phys.

Thu, 05/31/2012 - 14:59 | Link to Comment Pladizow
Pladizow's picture

But I dont have zits?

Thu, 05/31/2012 - 14:51 | Link to Comment slackrabbit
slackrabbit's picture

 

The black hole begins....more and more 'investors' move closer to the event horizon to avoid the outer risk chaos....or more and more sheeple head to the big opium den in the city to avoid the outlying gang wars in the burbs....the only way is down, either way

 

Thu, 05/31/2012 - 15:02 | Link to Comment Dr. Richard Head
Dr. Richard Head's picture

When you get to the fork in the road, take it. - Yogi Berra

Thu, 05/31/2012 - 15:15 | Link to Comment Piranhanoia
Piranhanoia's picture

I grabbed the fork and ate.  It was a simple solution and I was hungry.

Thu, 05/31/2012 - 14:52 | Link to Comment azzhatter
azzhatter's picture

I hope Rick sealed off the hot tub in his back yard. He's way to truthful for CNBC. He was dissing the fed this morning and I swear LIESman had tears in his eyes.

BTW- Mandy is flashing the Druries again today, I'm guessing ratings really suck. Next week they are installing a pole for her to broadcast from

Thu, 05/31/2012 - 17:16 | Link to Comment Roandavid
Roandavid's picture

That was Bernanke cum in Liesman's eyes.

Thu, 05/31/2012 - 21:05 | Link to Comment tom a taxpayer
tom a taxpayer's picture

I'm randy for Mandy.

Thu, 05/31/2012 - 22:13 | Link to Comment smb12321
smb12321's picture

Liesman has the advantage of hogging all the time and STILL can't hold a candle to Rick.  I love Santelli when he gets going!

Thu, 05/31/2012 - 14:51 | Link to Comment zerotohero
zerotohero's picture

There isn't anything that is truly safe - just perhaps "safer".

Thu, 05/31/2012 - 14:54 | Link to Comment slackrabbit
slackrabbit's picture

i have a gold  tooth that says  'bite me' :-)

Thu, 05/31/2012 - 14:57 | Link to Comment zerotohero
zerotohero's picture

don't smile around the wrong people.

Fri, 06/01/2012 - 01:19 | Link to Comment StychoKiller
StychoKiller's picture

Or, just start chowin' on their facez!

Thu, 05/31/2012 - 14:52 | Link to Comment Seasmoke
Seasmoke's picture

just buy all the van Goghs you can people !

Thu, 05/31/2012 - 14:56 | Link to Comment Mark123
Mark123's picture

The basement is on fire....quick....run into the attic!!

Thu, 05/31/2012 - 15:05 | Link to Comment slackrabbit
slackrabbit's picture

dude, you have truely summed it up!

Thu, 05/31/2012 - 15:02 | Link to Comment Mark123
Mark123's picture

I recall that Rogoff/Reinhart study saying that about 3 years after a banking crisis you have the sovereign debt crisis....hmmm....are we there yet?  You can hear the supports creaking as the stress overwhelms the duct tape holding this together.

 

If this rigged market does fall apart it will be wild.  All the pension funds, government services, everything will be destroyed.  That is why it can't happen!!!  Bernanke et al won't let it!!

Thu, 05/31/2012 - 15:09 | Link to Comment slackrabbit
slackrabbit's picture

True.

Print Ben print....print the economy back.

 

This is like a real game of Alan Wake - 'If I believe hard enough, I can write my dead wife back'....and if it works - its pet cemetery time for the dollar

Thu, 05/31/2012 - 15:03 | Link to Comment Temporalist
Temporalist's picture

Lemmings led by sheep who are owned by wolves.

Thu, 05/31/2012 - 15:11 | Link to Comment yabyum
yabyum's picture

The blind leading the nekkid.

Thu, 05/31/2012 - 15:14 | Link to Comment StockHut
StockHut's picture

No way Santelli gets a bonus from CNBC this year. He tells the truth way too much.

Thu, 05/31/2012 - 15:18 | Link to Comment ArkansasAngie
ArkansasAngie's picture

I have cash.  I want to invest it.  I've looked at my local real estate and can't find anything that is priced at what I consider its economic vale.  I'm not in the market.  I'm not going to buy bonds for any duration and short term stuff is irrelvant.  Seriously ... I'm thinking that I'll lose less money sitting out by my pool this summer than anything else I can do.

Thu, 05/31/2012 - 16:02 | Link to Comment brooklynlou
brooklynlou's picture

Want to make some money this summer? Invest in a pop corn machine ...

Thu, 05/31/2012 - 16:24 | Link to Comment The Monkey
The Monkey's picture

If the market deflates, you make money just by sitting in cash.  Your cash will be worth more on the other side.

Bonds are pricey, I would just sit tight for a year.

Thu, 05/31/2012 - 16:32 | Link to Comment Rubbish
Rubbish's picture

You just gotta love North Central Arkansas, I think there is 1 bank for every 75 people. Come look me up on Bull Shoals, we can compare wads.

 

Wheeeee !

Thu, 05/31/2012 - 15:24 | Link to Comment yabyum
yabyum's picture

Arkansas, Is your pool above ground or ? Just kidding ;). Sitting by the pool may be the way to go as long as your money is in sight.  A little popcorn will help idle away the dog days of money.

Thu, 05/31/2012 - 15:28 | Link to Comment Stuck on Zero
Stuck on Zero's picture

This flight to safety makes me wonder why the passengers of the Titanic didn't all move over to the iceberg?

Thu, 05/31/2012 - 15:47 | Link to Comment drink or die
drink or die's picture

By the time they finally accepted that the ship was going down, the iceberg was too far away to get to.

Thu, 05/31/2012 - 15:30 | Link to Comment Encroaching Darkness
Encroaching Darkness's picture

Sorry, Arkansas Angie, google "Weimar Germany" or "Argentina" or "currency collapse" to see what happens to those who hold cash too long. Perhaps shelf-stable food, gold coins or diesel fuel?

Good luck whatever you choose, we're all going to need some good luck to get by.

edit - Argentina

Thu, 05/31/2012 - 15:53 | Link to Comment world_debt_slave
world_debt_slave's picture

Rick for POTUS

Thu, 05/31/2012 - 16:01 | Link to Comment grey7beard
grey7beard's picture

Fuck Santelli.  He's just another shill for one of the factions.  If someone can't put personal politics aside long enough to give unbiased assessemnts, they're not worth listening to.  Santelli is one of those.  Too bad as he's obviously bright.

Thu, 05/31/2012 - 21:44 | Link to Comment Money 4 Nothing
Money 4 Nothing's picture

Santilli is the only host on the show that's not afraid to tell the truth. I like when he is off the chain.

 

-JP

Fri, 06/01/2012 - 00:32 | Link to Comment Peter K
Peter K's picture

Santelli is the ONLY reason worth watching ComedyNBC:)

Thu, 05/31/2012 - 16:27 | Link to Comment prodigious_idea
prodigious_idea's picture

What a waste of time watching CNBC (unless you want to see what P&G is selling).

Thu, 05/31/2012 - 17:42 | Link to Comment Snakeeyes
Snakeeyes's picture

I love Santelli, but only if Europe improves will we see OUR Treasury yields rise. Its almost like The Fed is rooting for The Med countries to flounder. But once they get better, he will use QE or Twist3 to push down rates.

http://confoundedinterest.wordpress.com/2012/05/31/ism-drops-to-52-7-10-year-treasury-yield-falls-to-1-56-will-they-or-wont-they-fed-policy-shift/

Do NOT follow this link or you will be banned from the site!