All The World's Investable Assets In Context

With central bank credibility suddenly on the line once again, following both the Fed's June rate hike punt (so it doesn't disturb "data-dependent" stocks), and with a possible imminent Greek default and Grexit, which will crush the ECB's "political capital" and "irreversible union" propaganda, it is time once again to check what are the safe assets in a world in which nearly one quadrillion in "paper wealth" exists solely due to faith in solvent counterparties, a faith which has been bought by the central banks at a cost of €22 trillion so far, and which is rising exponentially with every passing year.

For the answer, we go to the latest letter by Elliott's Paul Singer which lays out the "size of global markets" just to put it all in perspective.

We decided to do a little research to find out the size of different investable asset classes globally, to try to get some color on the money flows in this extraordinary period. The data is from various dates from 2013 to 2014, but the differences don’t matter much.

 

Over-the-Counter derivatives, notional amounts: $692 trillion at year-end 2014, per the BIS. For comparison, this figure was $72 trillion in 1998.

 

Global real estate: $180 trillion, according to global real-estate services provider Savills.

 

Global debt market, both securities and other forms of debt: $161 trillion at year-end 2014, per the Institute for International Finance’s Capital Markets Monitor. According to the Bank of International Settlements (BIS), debt securities make up $95 trillion of this total.

 

Global equities: $64 trillion, per the World Federation of Exchanges.

 

Global M1 money supply: $24 trillion at year-end 2013, per the World Bank.

 

Gold: $6.8 trillion at year-end 2013, according to the Thompson Reuters GFMS Gold Survey.

Which, of course, is just another way of showing the famous inverted pyramid of John Exter, himself a former Fed official.

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