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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malikai's picture

Enter Game Theory.

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?

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).

Rainman's picture

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

HedgeAccordingly's picture

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

chart - http://hedge.ly/Ny1zfU 

Bunga Bunga's picture

Massive QE3 and stock markets crash.

Jlmadyson's picture

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

slewie the pi-rat's picture

que sera sera

what should be will be?

44 by when?


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?

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!

lasvegaspersona's picture

DM>EM 7 BINGO!!!!!

what does this matrix mean?

seems silly with out a legend

ekm's picture


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.

malikai's picture

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

ekm's picture


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

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?

CvlDobd's picture

Complex systems and all that...

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)


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

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.

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.   

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. 



orangegeek's picture

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




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