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Will The Current Market Distortions Last?

Tyler Durden's picture




 

Recent market trends such as equity and debt strength, the periphery outperforming the core, Europe outperforming the US, banks outperforming non-financials, and unsecured credit outperforming secured all seem predicated on the belief that there will be a funding plan for Spain and Italy. The ECB's gradual draining of assets from the market combined with hopes of more liquidity (something we are already not short of) has created a problem of 'excess demand' but, as Citi's Matt King notes, this 'scarcity factor' has suspended normal market relationships. The question is, across a variety of scenarios, which recent market trends are more vulnerable than others.

 

Source: Citi

 

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Wed, 08/29/2012 - 17:35 | 2747997 malikai
malikai's picture

Enter Game Theory.

Wed, 08/29/2012 - 17:48 | 2748023 Dr Benway
Dr Benway's picture

Ponzis are by their very nature unsustainable, so of course the market distortions can't last forever.

But can they last longer than your investment horizon or lifespan?

Wed, 08/29/2012 - 18:01 | 2748056 Brazillionaire
Brazillionaire's picture

But can they last longer than your investment horizon or lifespan?

Why, yes they can. I am living it (for now, keeping in mind ZH's creed).

Wed, 08/29/2012 - 17:54 | 2748042 Rainman
Rainman's picture

Correct game theory.....if it's made out of paper , it's vulnerable.

Wed, 08/29/2012 - 17:43 | 2748013 HedgeAccordingly
HedgeAccordingly's picture

The VIX is hinting at a possible pinch up toward 24.. 'about dat time' 

chart - http://hedge.ly/Ny1zfU 

Wed, 08/29/2012 - 18:06 | 2748078 q99x2
q99x2's picture

Expect the unexpected.

Wed, 08/29/2012 - 20:08 | 2748342 Bunga Bunga
Bunga Bunga's picture

Massive QE3 and stock markets crash.

Wed, 08/29/2012 - 17:49 | 2748024 Jlmadyson
Jlmadyson's picture

It should be at more like 44, but that will all come in due course.

Wed, 08/29/2012 - 20:08 | 2748304 slewie the pi-rat
slewie the pi-rat's picture

que sera sera

what should be will be?

44 by when?

soon?

in slewienomics :> after the republicunts get back to their offices after the balloon-fest  is the most probable answer given the present event horizon

the immovable markets await the irresistible force of wallStreet's ungovernable passion for mittens and the neoCons and your money

will they make the evil FED look like shit?

stay tooned, BiCheZ

don't get re-hypothecated like rPaul tho, ok?

i hope things got to where they should be soon;  but if they don't stay there, will you remind us again that things are not as they should be? 

then we can all say:  ain't it awful!

and perhaps asswipes like you will then STFU?

anybody wanna buy a bridge?

Wed, 08/29/2012 - 20:26 | 2748360 slewie the pi-rat
slewie the pi-rat's picture

my bad!

due course

of course!  even more 'scientificly economic'  than :>  soon

awesome intellects here!

put the phone down and keep you hands where slewie can see them!

put the phone down!  NOW!

L0L!!!  you are my fave ignoramus asswipe doucebag of propaganda vomit this whole week!  except for tyler & chs.  of course

perhaps the zH readership or at least one or two troll-killers will look at your posts over this time and see the utter robotics of yer jacking off here, themselves

very deep thought and penetrating wisdom beyond anything we usually get here especially from the "opinion-meisters"

and he knows how to junk people, tooooo! 

see ya, asswipe!

Wed, 08/29/2012 - 17:54 | 2748044 lasvegaspersona
lasvegaspersona's picture

DM>EM 7 BINGO!!!!!

what does this matrix mean?

seems silly with out a legend

Wed, 08/29/2012 - 18:13 | 2748070 ekm
ekm's picture

Yes.

THEORETICALLY it can last until the Fed via subsequential cocainated easings buys up all the market, hence the Gov becomes the owner of all means of production in the society.

In eastern europe we used to call it COMMUNISM.

 

If Obama wins, it may even become a practical reality, not because Obama would enforce, but because americans are willing to accept self imposed slavery, same as chinese and slowly................europeans.

Wed, 08/29/2012 - 18:35 | 2748148 malikai
malikai's picture

But the problem is the FED has bought up all the unproductive assets - Treasurys, MBSs, etc. It's a dogshit hotel.

Wed, 08/29/2012 - 22:07 | 2748553 ekm
ekm's picture

Correct.

But the Primary Dealers have bought the S&P. Who is primary dealers? It's the Fed, it's the Gov.

Wed, 08/29/2012 - 18:41 | 2748161 Meesohaawnee
Meesohaawnee's picture

ekm.. one of the most informative posters out there.. that being said. I just find it hard to believe your insinuating that theres a difference between criminal parties? Regardless who is in, there still will be self imposed slavery just different degrees. Its just whats the worse house in a bad neighborhood thats all. If you see what i see, financial dist of Chi where everyone walks. Slavery seems to be no  problem as long as those have those tin toys we put in front our faces while walking all around. ,, slavery?  whats that?

Wed, 08/29/2012 - 19:01 | 2748201 CvlDobd
CvlDobd's picture

Complex systems and all that...

Wed, 08/29/2012 - 20:02 | 2748332 slewie the pi-rat
slewie the pi-rat's picture

~10% losses for 2 months straight  followed by ~10% gains for each of the next two months

comm_futures_10.gif (GIF Image, 410 × 225 pixels)

stable!

now close the barn door!  quickly! vite!  vite!  L0L!!!

Wed, 08/29/2012 - 21:18 | 2748474 intric8
intric8's picture

No one has the markets clocked anymore. Too much interference and manipulation by big boys pulling the strings. The biggest put in the history of financial markets has got to be that of Bernanke. The amount of insurance we have at every -10% on the dow is pretty unprecedented, from a historical market perspective.

Wed, 08/29/2012 - 22:10 | 2748558 chump666
chump666's picture

Bernanke is f*cked as is the Fed, he'll need to print like no tomorrow t lift commodities, but oil is still supported.  Pretty much will cancel out Obama if oil stays above 95

So he cannot print large, it will have to be Obama with a massive stimulus plan, again oil will go bid.

Either way.  It is finsihed, this Keynesian pipe-dream of central bank academic madmen planning with chaos.  Chaos always wins.

End 2012/ start 2013 will not be like 2008.  There is nothing anyone can do now.   

Wed, 08/29/2012 - 22:04 | 2748547 chump666
chump666's picture

Asia is getting blown to hell on industrial commodities tanking, equities have to RECOUPLE with the price collapse, problem the jawboning a-holes at the ECB and Fed have is oil is still bid despite a China crash, which is happening now.  re: iron ore price.

Now, what we wait for is the HFTs.  Who for the last three weeks have supported a low volume market in the upper ranges. 

 

 

Thu, 08/30/2012 - 06:56 | 2749014 orangegeek
orangegeek's picture

SP500 has broken channel support.  Better seen on a daily, but we'll take it.

 

http://bullandbearmash.com/chart/standard-poors-500-hourly-august-29-2012/

 

FTSE is diverging nicely to the downside with respect to the SP500.  Pending "flash crash" or just plain crash?

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