Recent Posts and Categories

In Praise Of Price Discovery—–The Market Is Off Its Lithium

OWoN: As Deflation replaces inflation, watch the wingnuts of Hedge Funds follow.

The winds of deflation will rip through all things, everywhere with a vengeance, to deliver justice on central bank propaganda . No one and no asset class will be safe from damage nor will demand or consumption.

The world is about to experience the reality of financial hubris that never had value other than in the minds of the speculators.




In Praise Of Price Discovery—–The Market Is Off Its Lithium


Contra Corner
By David Stockman
18 January 2015

This morning’s market is more erratic than Claire Danes off her lithium. Gold is soaring, the euro’s plunging, US treasury yields are in free fall, junk bonds are faltering, copper is bouncing, oil has rolled over, the Russell 2000 momos are getting mauled, the swissie has shot the moon, the Dow is knee-jerking down, correlations are failing……and the robo traders are flat-out lost.

All praise the god of price discovery!

For six years financial markets have been drugged into zombiedom by maniacal central bankers who have violated every known rule of sound money and financial market honesty. In expanding their collective balance sheets from $5 trillion to $16 trillion over the past decade, for instance, they have midwifed a planet-wide fiscal fraud. Politicians have been enabled to spend and borrow like never before because central banks have swapped trillions of public debt for electronic cash confected from nothing.

Likewise, never have carry traders and gamblers been so egregiously pleasured by the state. After 73 straight months of ZIRP they are still pinching themselves, wondering if such stupendous largesse is real. They have bought anything with a yield and everything with prospect of gain, financed it for nothing and collected the arb—–while being swaddled in the Fed’s guarantee that it would never surprise them or perturb their trades with unannounced money market rate changes.

And so they wallowed in their windfalls, proclaiming their own genius. Does a pompous dandy like Bill Ackman end up purchasing an absurdly priced $90 million Manhattan condo just “for fun” because markets operate on the level? Do his petulant brawls with other grand “activist” speculators like Carl Icahn mark investment genius or the machinery of honest capitalism at work?

No they don’t. There is absolutely nothing honest, productive or fair about the central bank dominated casinos which have morphed out of what used to be legitimate money and capital markets.

Indeed, all the requisites of stability, efficiency and honest price discovery have been destroyed by the monetary central planners. The short sellers have been eradicated. Downside insurance against a broad market swoon has become dirt cheap. Momo traders have thereby been enabled to earn unconscionable returns because their carry costs have been negligible and their hedging expenses nearly nothing.

Accordingly, the chart below of the S&P500 since the March 2009 bottom does not represent a market at all; it traces the central bank enabled casino in full bloom, the buy-the-dips mania in overdrive.




Behind this vast deformation was, ultimately, a simple proposition. Namely, that central banks were omnipotent, efficacious, purposive and reliable; that everywhere and always they had the “backs” of the gamblers and speculators; and that, above all, the central bank “put” was money good.

Today all that changed. In a word, the Swiss Central Bank was on the verge of printing itself into oblivion. It had to stop pegging the CHF at 120 before the madman Draghi turned on the ECB printing presses and submerged the SNB’s vaults in a deluge of wasting euros that would have soon reached the tops of the Alps.

Here’s what it had come to. In about 84 months, the SNB’s balance sheet had expanded by 5X. It now stands at nearly 100% of GDP, towering far above even the lunatic monetary emissions of the BOJ.

Had the SNB not finally blinked, the Swiss economy would have been obliterated in a orgy of export sector malinvestment, virulent domestic speculation and incendiary asset-inflation. At length, even Swiss mountainside real estate would have become too expensive for cows and ski lodges alike.




What happened today is that the SNB confessed it was lying, faking, making it up by the seat of its pants. So doing, it unleashed financial hell.

Scroll down the Swiss stock exchange lists and find exporters, miners, industrials and techs down by 10-20% in a single day. Is it possible that some of these “names” had been in the portfolios of leveraged momo traders who are now getting heavy margin calls? The Lonza Group life science company, for example, had been up 4X from its 2012 low and traded at 30X. So when today it lost 18% of its CHF value in a heartbeat, it was not just widows and orphans funds which were licking their wounds.

So too the army of carry traders who funded their speculations with zero cost CHF. They were ionized in a nanosecond because they were effectively “short” the swissie. But why not? They believed SNB Chairman Thomas Jordan’s incessantly repeated promise that the 120 peg would never, ever be removed—–and most especially not in the dead of night, without warning.

And at least the professional speculators in the CHF should have known better. Now comes the millions of everyday central and eastern European householders who took out ultra-low interest mortgages denominated in CHF. They too should have read the fine print, but why bother in a world of central bank omnipotence?

Needless to say, Thomas Jordan is not the last central banker who has turned out to be a liar. He’s merely the first—-with Mario Draghi already on deck. When he fails to deliver on “whatever it takes”, and that is a near certainty now, they will not even want him back in Italy to assume the ceremonial post of President.

Can it be that dozens of Italian banks, which loaded up on Italian government debt when ECB front-running speculators drove yields into the sub-basement, will now be reawakened to the process of price discovery?

Most assuredly they will. It was only Draghi’s seat of the pants lying that made the following picture possible. In an honest financial world, the debt of a ungovernable country on a fast track to bankruptcy could not possibly have experienced the stupendous rally of the last 30 months shown below.





So let the price discovery begin. The global petroleum complex is already there. So is iron ore, copper and the most of the central bank bloated world of industrial commodities. The EM currencies are not far behind. Nor is the $9 trillion of vastly over-valued off-shore debt that was denominated in dollars and sold to yield hungry speculators.

Take a trip to Istanbul. Ask how the skyline of construction cranes will find the dollars to pay off the debt they have poured into still empty towers.

For that matter, can the Japanese monetary madhouse be far behind? Have not even the Shanghai market punters figured out that China’s $26 trillion tower of debt is already swaying precariously in the global financial winds?

Yes, the Swiss National Bank did ring the bell. Slowly at first, and then with a rush, the casino players will learn that the central banks have been lying all along. Then the lost art of “price discovery” will have its way.

link

8 comments :

  1. USE DISCERNMENT

    Sunday, January 18, 2015
    EXPLOSIVE Breaking News: The Swiss Game Changer and It's a Double Cross

    TOM HENEGHAN INTELLIGENCE BRIEFINGS
    ALL Patriot Americans MUST know with sources inside
    American/European intelligence agencies and INTERPOL
    reporting what is really going on behind the scenes of the
    corporate-controlled, fascist, extortion-friendly
    propaganda U.S. media's massive deceptions

    http://nesaranews.blogspot.com/2015/01/explosive-breaking-news-swiss-game.html

    The Swiss Game Changer and It's a Double Cross

    UNITED States of America - It can now be reported that Bank of America, JPMorgan Chase, U.S. Citibank, German Deutsche Bank, Bank of New York Mellon, U.S. Wells Fargo Bank and Barclays Bank of England are now sitting on trillions if not quad trillions of dollars of worthless derivatives aka I.O.U.s between each other aka naked short Japanese yen positions that can decapitate the world financial system
    .
    The Swiss National Bank just applied the coup de grâce to the Kuroda foreign currency ponzi scheme that provided no stimulus to the Japanese economy but was only designed to orchestrate and prop up world equity prices with the current Japanese government receiving massive financial bribes from U.S. banking interests.

    We can further divulge that numerous FX firms and hedge funds (reference the Everest Global Hedge Fund) are all currently collapsing as the CME Group itself is now facing a $10 TRILLION margin call tied to naked short positions in the Japanese yen.

    CME Group President Terry Duffy illegally allowed customer segregated funds (tied to major U.S. domestic clearing houses) to be cross-collateralized to both the Harris and 5th 3rd Banks of Chicago, Illinois.
    At this hour both of the aforementioned banks are holding the bag.
    Reference: William Pesek of Bloomberg News just had his story spiked that dealt with the content that we are pleased to report to you today on this intelligence briefing website.
    Item: At this hour, eyes over JPMorgan Chase and Wells Fargo Bank of Reno, Nevada.

    P.S. We can now divulge that the alleged five (5) terrorists linked to the French event (of Belgium national origin) in the nation of Yemen represented the five (5) crisis actors that escaped by helicopter to Hamburg, Germany (the location of the Hamburg, Germany 9/11 'Becker terrorist cell') were then illegally flown back to Yemen by a U.S. transport aircraft.
    We can now report that French Intelligence helped trigger the arrests despite efforts by the U.S. cable news network CNN to obstruct the attempt by French Intel to grab these suspects.
    Question: Why is it the nation of Yemen financed by Saudi Arabia is allowing only CNN cable news network into the nation of Yemen?
    We have just answered that question.
    Message to CNN: It is in your best interest to get your reporters out of Yemen and do it now because the nuclear aircraft carrier Charles de Gaulle is now in the Mediterranean Sea and will soon begin carpet bombing the nation of Yemen who committed an act of war against the Republic of France. (CONTINUED)

    ReplyDelete
    Replies
    1. (CONTINUED)
      We can now also divulge that the late French Intelligence Officer Helric Fredow on the day of the French event came into possession of documents linking the French domestic terrorist cell not only to the nations of Yemen and Saudi Arabia (CNN calls it the Arabian Peninsula) but to the U.S. CIA-Bush Pegasus Unit out of Hamburg, Germany but also the U.S. Department of Homeland Security.

      Note: The key document taken into possession by Fredow named Saudi Prince Salman bin Abdulaziz as the handler in charge of the French terror cell with Prince Salman bin Abdulaziz's phone number included.
      Reference: It is no wonder now that no one in the implicated Obama Administration decided to attend the unity rally in Paris, France the day after the Paris attacks.

      In closing, we can reveal that Bloomberg News and its reporter David Weigel is now sitting on the complete story of the coup d'etat aka the NSA electronic overthrow of the year 2000 presidential election involving Jeb Bush, daddy Bush, George W. BushFRAUD and others.

      Question: Who are the others?
      Answer: Dick-dick-dick-dick-dick Cheney and the NAZI Paperclip NSA.

      Finally, it is important to remember that the financial world war continues and soon the Russian Federation President Vladimir Putin will ask for payment in euro currency for the purchase of oil and natural gas from the Russian Federation, that includes the United Kingdom, which has now been isolated given France and Germany's mutual opposition to the continuation of Russian sanctions.

      Delete
  2. John

    Could you give us a lesson about what we can expect from roller coaster of inflation-deflation-hyperinflation? And what would be the best to do to survive or even make it without loses?

    Thanks....

    ReplyDelete
    Replies
    1. This is so extensive and intricate an area of so many variables it needs a full report. Also time to see how current events play out. Think of shaking a whole bagful or marbles. Which do you want to select to gamble with in the game of life when every one carries human lives at risk? This is an epoch time when all is at risk. Bankers Greed has risked everything pursuing illusory gains of nothing. Derivatives are so far out of control it needs a global moratorium to negate the lot. The planet has been sacrificed to illusory gambles. Entire nations assets have been gambled on mathematical formulae dice plays. Every vestige of Corporate Morality has left the rails under Zionist control or influence. This approaches an end game where whole nations can be sacrificed with no awareness they are even in play. This is no longer Obama Gaming the System, but the Kazakhs Gaming you all.

      Delete
  3. USE DISCERNMENT

    French Police Commissioner Suicided After Attempting To Issue Murder Warrant Against President Obama

    http://www.thetotalcollapse.com/french-police-commissioner-suicided-after-attempting-to-issue-murder-warrant-against-president-obama/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheTotalCollapse+%28The+Total+Collapse%29

    An absolutely stunning Foreign Intelligence Service (SVR) report circulating in the Kremlin today appears to show why all top US officials failed to join their counterparts in Paris yesterday who marched in solidarity against the Charlie Hebdo Massacre as it reveals a top French police commissioner was “suicided” within hours of his attempting to obtain a European Arrest Warrant for President Barack Obama and other as yet unnamed American leaders.

    According to this report, French police Commissioner Helric Fredou [Photo top left] was tasked immediately after the 7 January Charlie Hebdo Massacre with the examination of documents contained in a small backpack found in the getaway car used by the killers Saïd and Chérif Kouachi, and which contained the driver’s license/identity card of Saïd.

    Also discovered by Police Commissioner Fredou in this small backpack, SVR analyst in this report say, were a number of “cryptic documents” and telephone numbers, one of the most important being a US cell-phone number “directly linked” to former US general and Central Intelligence Agency (CIA) director David Petraeus.

    Upon Police Commissioner Fredou’s discovery of this “Petraeus-link”, this report further states, SVR signals intelligence data show he contacted Paris prosecutor François Molins and requested that the Cour D’assises (Assize Court) issue an immediate European Arrest Warrant for President Barack Obama and “other” such American officials to be named within 24 hours.

    Within 3 hours of Police Commissioner Fredou making this request, however, this report continues, his body was found by his desk in his office with a single gunshot to the head at 0100hr on Thursday 8 January that was quickly ruled a suicide; and Obama regime officials began flooding the US media with reports that former CIA director Petraeus was in danger of being arrested on felony charges relating to classified materials found in his mistresses possession. (MORE AT LINK)

    ReplyDelete
    Replies
    1. The world was at risk for Pussy Whipped Be Tray Us.

      Delete
    2. They're all sold out...for what? In the end they end up with exactly how they started.

      Delete
  4. This appears to be the beginning of the market correction that we have been warned about for months. From the latest estimates we should see about a 60% correction in UsA markets and this is the inflation that was propped up on the markets giving these rogues leverage that was only imagined on the back of the taxpaying working citizen.

    They squandered all of the real value from the system and then over valued everything to hide the losses which will eventually come home to roost...however, with real currency revaluation, they lose because the dollars that they have hoarded (trillions) will all go up in smoke and will only be as worthless paper.

    The hidden hand is getting a much needed "spanking."

    ReplyDelete

If your comment violates OWON's Terms of Service or has in the past, then it will NOT be published.

Powered by Blogger.