AuthorTopic: Big Slide v2.0 Begins  (Read 115942 times)

Offline RE

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MARKETS GO BERZERK!
« Reply #210 on: December 19, 2014, 12:17:40 AM »
It's getting WILD out there now in Algo-Land!

Just gonna include the latest report from China, but the same shit is going on here too.

Short Form: The Folks running the Laptops are going ALL IN, betting the Farm with borrowed money in the one place still going UP, the Stock Market, in the most incredible Lemming MOMO behavior of ALL TIME.

When this sucker BLOWS, it will be something to behold indeed.

RE

Frenzied Chinese Stock Buyers Soak Up So Much Liquidity, Central Bank Forced To Intervene, Prevent Seizure

Submitted by Tyler Durden on 12/18/2014 22:18 -0500

    Capital Markets
    China
    Citadel
    Citigroup
    fixed
    Hong Kong
    Market Crash
    Money On The Sidelines
    Money Supply
    SPY
    Yuan

While today's rabid explosion in the S&P500, coupled with a literal break in the NY Fed/Citadel market boosting algo which went haywire in the last moments of trading and pushed the S&P up to 2130 in milliseconds via Kevin Henry's preferred SPY ETF, may be the stuff of market manipulating legends, nothing compares to the far more berserk situation China finds itself in, where a 50% surge in the Shanghai Composite over the past few months - not on improving fundamentals but just the opposite, hopes of massive liquidity injections to halt China's economic hard landing - has found the PBOC scrambling to find a way to, politely, burst the stock market bubble without causing too much pain.

This is because as reported overnight, China's seven-day repurchase rate, a gauge of interbank funding availability in the banking system, surged 139 basis points, to a 10-month high of 5.28% in Shanghai, the biggest since Jan. 20. The reason for the sudden cash crunch, according to Bloomberg, is that subscriptions for the biggest new share sales of the year lock up funds. Twelve initial public offerings from today through Dec. 25 will draw orders of as much as 3 trillion yuan ($483 billion), Shenyin & Wanguo Securities Co. estimated. In other words, the scramble to allocate capital into China's surest way of making money, IPOs, has led to a drying out of general liquidity in the entire market.

This in turn forced the PBOC to intervene and inject short-term money loans to commercial lenders in order to prevent the kind of interbank liquidity lock up that emerged in China in June 2013 in the aftermath of the first Taper Tantrum (and which before all is said and done, will likely take place again) and which sent global capital markets around the globe reeling before China resumed its massive liquidity injections which are at the heart of China's debt-fuelled bubble in the first place.

From Bloomberg: “The IPOs are affecting the market, leading to cautious sentiment with fewer institutions willing to lend,” said Li Haitao, a Shanghai-based analyst at China Guangfa Bank Co. “Quite a few traders found it very difficult to meet their funding needs yesterday.”

Why? Because everyone wants to get rich quick so badly, they are risking collapsing the entire market.

    Lenders paid 4.65 percent for 60 billion yuan of three-month treasury deposits auctioned today by the PBOC, the most they’ve paid since January for such funds. The central bank also rolled over this week at least some of the 500 billion yuan of three-month loans granted to lenders in September, a government official said yesterday, declining to be identified as the details haven’t been made public.

“Banks have to prepare for quarter-end regulatory checks, including loan-to-deposit requirements, and hoard cash to meet year-end demand,” said Wang Ming, chief operations officer at Shanghai Yaozhi Asset Management LLP, which oversees 2 billion yuan of fixed-income investments. “With all these factors affecting the market, it’s no surprise it’s suffering more than during previous IPOs.”

    The cost of one-year interest-rate swaps, the fixed payment to receive the floating seven-day repo rate, rose five basis points to 3.38 percent, data compiled by Bloomberg show.

     

    The yield on China’s sovereign bonds due September 2024 fell two basis points to 3.78 percent, according to data from the National Interbank Funding Center. It’s increased 27 basis points this month.

     

    The PBOC is expected to cut lenders’ reserve requirements before the Lunar New Year holiday in February to top up the money supply as the prospect of U.S. interest-rate increases draws cash from China, according to Ding Shuang, senior China Economist at Citigroup Inc. in Hong Kong.

And since the Chinese stock market is surging ever higher on momentum-driven euphoria, China which wants to if not burst its bubble than certainly tame it as it is already having adverse impacts on cross-asset classes, the last thing regulators want to do is risk a full blown slam in equities, which are now so far above their fair value, a Chinese market correction correction could have dramatic consequences on all other aspects of China's bubble economy.

They better decide quick just how they will do this, becauase as Bloomberg also reported moments ago:

    CHINA 7-DAY REPO RATE TOUCHES 5.81%, HIGHEST SINCE JAN.

Ironic, and very much reflexive: with all the "money on the sidelines" is being soaked up in the stock market, there is nothing left to keep the rest of the facade operating efficiently, which ultimately assures a stock market crash.

Perhaps even in a time of pervasive central-planning, a Princeton economist can only pull the rubber band so far before it finally snaps.
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Offline RE

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Big Slide: Hoser Housing to Hit Hard Hammer
« Reply #211 on: January 03, 2015, 12:03:30 AM »
This is what is commonly referred to as "Blowback".  ::)

TAKE OFF, Eh?

<a href="http://www.youtube.com/v/X-ZvAVcBIrQ?feature=player_detailpage" target="_blank" class="new_win">http://www.youtube.com/v/X-ZvAVcBIrQ?feature=player_detailpage</a><a href="http://www.youtube.com/v/ot70G4wSQi0?feature=player_detailpage" target="_blank" class="new_win">http://www.youtube.com/v/ot70G4wSQi0?feature=player_detailpage</a>

RE

Guest Post: Oil & The Looming Canadian Housing Bubble Crash

Tyler Durden's picture



 

Via Dr.Housing Bubble blog,

As the year comes to a close, it is useful to put things into perspective.  Sure, California has a love affair with real estate and we go through our traditional booms and busts.  $700,000 crap shacks now litter the landscape but there are fewer and fewer lemmings taking the plunge.  In Canada there was no correction.  In fact, households continue to go into deep debt to purchase real estate.  The argument goes that mortgage standards are much tighter in Canada so therefore, they are much more enlightened when it comes to financing homes.  People forget that the bulk of the 7,000,000 foreclosures in the US came in the form of standard loans.  Garbage loans imploded in more dramatic fashion but people lost their homes because the economy shifted.  At that point, it merely meant covering the monthly nut.  We were housing dependent and that market contracted aggressively.  Canada is housing and oil dependent.  And oil just got a big kick to the shins.

In Canadian debt we trust

There was an inflexion point for US markets when household debt surpassed household income.  People kept saying it was a liquidity crisis initially but it was truly a solvency crisis.  People took on too much debt and were walking on a financial tightrope.  In the US, this peaked above 120 percent.  Canada is well on its way above 160 percent:

Canada-US-debt

 

Basically Canadians are deeper in debt relative to their income.  And a large part of this debt is housing related.  A large part of the economy is also tied to oil and as you may know, oil just took a massive cut:

oil

 

It was interesting to hear that we would never see oil drop below $100 a barrel.  Oil is now trading at $52.84 a barrel.  Similar arguments were made about US housing never having one negative year-over-year price drop until we did.

Large part of Canada’s oil is costly to extract

A large portion of Canada’s oil is costly to extract.  With oil sands for example oil would need to be at $80 a barrel to make a profit:

Oil sands

I doubt people want to run money losing operations for a long period of time.  So it is no surprise that oil rigs are closing:

Oil & Gas rig count

Fewer jobs and less money.  And for a large part of the Canadian economy, much of this money has been flowing into housing.  In Canada, there seems to be a cult belief that housing simply will not correct.  They are full on drinking the good old tasting real estate Kool-Aid.  In the US, we already lived that correction and understand that yes, housing does go through booms and busts especially when debt is used to supplement a lack of income growth.  As the debt to income chart shows, many US households were forced to deleverage via foreclosures and bankruptcies.

Home prices out of sync

Home prices are fully out of sync with incomes.  Take a look at this rise in home values:

Canadian housing

Canada has enjoyed many years of the global commodities boom and now finds itself contending with a market full of debt and inflated housing values.  Short of oil rising back up to $80 a barrel and higher Canada is likely going to face some short-term pain.  The housing market is due for a correction.  Those of us in California realize that booms and busts can occur all of a sudden but the events leading up to this are largely foreseeable.

I’m sure many in Canada assume that home values will simply continue to go up and just because banks check incomes doesn’t mean squat.  As the above data shows, households are already deep in the quicksand of massive debt.  It is all dandy when everything is going up including oil.  When oil gets smashed as it did, it came on quickly.  Canada has their versions of $700,000 crap shacks usually in the form of condos.  Hey, at least with a crap shack you don’t have to share a common wall.  When you look at the Canadian housing market it makes the US look like a frugal uncle.

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Offline Petty Tyrant

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Re: Big Slide v2.0 Begins
« Reply #212 on: January 04, 2015, 12:37:05 AM »
No mention of chinese investment there, thats how prices get sustained so high above J6P's price range, chinese bidding and buying sight unseen. This article only mentions half the double whammy if they started selling out at the same time. Im calling a 40-50% crash coming if the chinese abandon ship.
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Offline g

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Leading US stock indexes declined sharply on Monday, as plunging oil prices worried investors.

The Dow Jones fell 377.22 points, or 1.9%, to 17,495 in afternoon trading.

The broader S&P 500 index shed 40.52 points, or 2%, at 2,017, and the tech-heavy Nasdaq slipped 85.09 points or 1.8% to 4,641.

The US oil price fell below $50 per barrel for the first time since April 2009.

Known as West Texas Intermediate crude, it fell 5.39% to $49.85 a barrel, below the symbolic threshold.

The benchmark Brent crude oil price also fell significantly, dropping 6.24% to $52.90 per barrel.

Oil firms Exxon Mobil and Chevron saw their shares fall as a result.

Shares in Exxon were down over 2.5% by the afternoon, and Chevron's had declined by more than 3.5%.

Industrial machinery giant Caterpillar also saw its share price slip by more than 5% as investors worried about the firm's exposure to the energy sector.

 http://www.bbc.co.uk/news/business-30687243#sa-ns_mchannel=rss&ns_source=PublicRSS20-sa    ::)

Offline MKing

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The US oil price fell below $50 per barrel for the first time since April 2009.

Known as West Texas Intermediate crude, it fell 5.39% to $49.85 a barrel, below the symbolic threshold.

Oh but this is just today's price. How long can it STAY under $50? The longer it can…the tighter the vise. Keep it under $50 ($30 would be REALLY wild) until June? Oh my NOW we can talk…because by then the repercussions would REALLY be digging into the meat as opposed to just trimming fat.

Who I feel bad for are the students graduating school with $$ in their eyes for those jobs they figured they would be heading out to in May and June, hitting the rigs and board rooms of the big players in North Dakota and Texas. In booms the schools build up expectations, of both employment and $$. And once you pass by a full seasons worth of these folks, their value to the oil field just drops like a rock. Some will continue in school to get masters degrees, others will combine their oil field centric degree with MBAs and whatnot. But they are the ones I feel sorry for, being a victim of timing just sucks.

Sometimes one creates a dynamic impression by saying something, and sometimes one creates as significant an impression by remaining silent.
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Offline g

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Re: Big Slide v2.0 Begins
« Reply #215 on: January 06, 2015, 08:46:29 AM »
Market turns 100 point rally into 140 point loss as measured by the Dow

Oil plunging again down 2 bucks after feeble rally attempt last night.

Gold up 8 bucks. 

Doesn't sound to good for sure.

 :o ::)

Offline Eddie

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Re: Big Slide v2.0 Begins
« Reply #216 on: January 06, 2015, 08:56:41 AM »
Some will continue in school to get masters degrees, others will combine their oil field centric degree with MBAs and whatnot. But they are the ones I feel sorry for, being a victim of timing just sucks.


Yep.
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Down Goes Copper
« Reply #217 on: January 14, 2015, 02:10:43 AM »
Liquidation time!

RE

Copper Halted After Crashing 8% On LME, Sends AUD Plunging, Futures Dip Under 2000

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Today's prime time event hasn't even arrived, that would be the European Court of Justice (ECJ) delivering its final opinion on the legality of the ECB’s previously announced OMT program, in less than an hour, and already the fireworks have begun, most notably out of Asia where after yesterday's epic commodity drubbing many were caught with their pants down and margin calls up, and what followed was a classic liquidation puke, when Copper prices crashed over 8% on the LME, to fresh 5 year lows and below USD 5,500/T in London.

This plunge prompted Shanghai futures to hit a daily-trading limit, while copper COMEX also dropped to a five and a half year low. According to traders, the sell-off was sparked by stop-loss selling as the World Bank downgraded global growth and amid expectations of increasing supply. Adding gasoline, so to say, to the excess capacity fire, Goldman said risks to copper prices are heavily skewed to downside and a Q1 rise in LME and SHFE inventory is to weigh on prices. Oh, and before you blame the selloff on another OPEC-driven supply glut, here is the real culprit according to Goldman:

  • GOLDMAN SAYS RISKS TO COPPER PRICE HEAVILY SKEWED TO DOWNSIDE
  • GOLDMAN EXPECTS CONTINUED DEMAND WEAKNESS IN CHINA

Yes: it is, sadly for the apologists, all about China, whose credit creation dynamo has all but run dry. Worse, with copper the primary funding metal of its shadow banking system (read The Bronze Swan Arrives: Is The End Of Copper Financing China's "Lehman Event"? and Bronze Swan Lands: Goldman Explains How The China Commodity Unwind Will Happen) things in China are about to get very interesting.

Here is a blow by blow of the copper crash from RanSquawk:

 
 

The sharp move lower in copper was initially attributed to stop-loss selling and a surge in trading volumes.

  • The World Bank then cut its 2015 Global growth forecast to 3% from 3.4% sending prices further lower.
  • In response, Goldman Sachs said risks to copper prices are heavily skewed to downside and a Q1 rise in LME and SHFE inventory is to weigh on prices.
  • In tandem with the copper weakness, commodity-related currencies including NZD, AUD and CAD came under selling pressure, notably against JPY.
  • Of note, yesterday BNP Paribas cut 2015 copper forecast to USD 6,175 from USD 6,500 per tonne.  Elsewhere, Deutsche Bank head of commodity research said short positions in copper are now at multi-year highs in the face of oil weakness.
  • The negative sentiment also comes ahead recent heightened expectations of increasing copper supply. Yesterday,  Peru (world's third largest copper producer) finance minister Segura sees very strong copper output on new mines, output to rise through 2018

This also comes after LME Warehouse Stock Movements showed copper stockpiles rise 2.1% to highest since May.

The copper crash has also impacted adversely all commodity currencies, and NZD, CAD but mostly AUD all fell against all major peers. Here is the AUDJPY tumbling to the lowest since October.

The flight from, well, all commodities was also evident in JPY crosses after the USD/JPY tumbled below 117, the lowest since December 17, dragging the E-mini lower with it.

And now we sit back and see if Draghi's "whatever it takes" OMT has been deemed illegal, or, instead, if the ECJ finds it legal and begins a full blown political war with Germany.

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Offline RE

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Caesar Goes Bankrupt!
« Reply #218 on: January 15, 2015, 01:10:07 AM »
You know things are getting rough when the Gambling Biz is in trouble.

It should be obvious why they are collapsing.  The Gamblers are running out of Money to Gamble with! If they can't afford the gas to GET to Vegas, how can they lose the rest of their money at the Casino?  LOL.

LOTTO sales also down about 15%.  J6P can't even afford a Lotto Ticket these days!

Add this one to the Water Woes in Vegas, and you got another Perfect Storm there.

RE

Caesars Files For Bankruptcy

Submitted by Tyler Durden on 01/15/2015 03:42 -0500

    Creditors
    Gambling
    Illinois
    Las Vegas
    Oaktree
    Real Estate

Et tu, Caesars?

In what has been the most anticipated bankruptcy case in the past several years, hours ago Caesars Entertainment put its main operating unit under Chapter 11 bankruptcy protection in Northern Illinois bankruptcy court (case 15-01153) even as a splinter group of dissident creditors including Appaloosa and Oaktree, holders of about $41 million of Caesars debt and which allege the company has siphoned off billions in value from creditors, put the company into involuntary bankruptcy in Delaware bankruptcy court on January 12. As a reminder, Caesars was one of the sterling LBOs of the last credit bubble, when in 2008 Apollo and TPG decided to take the company private. The problem, as is always the case: too much debt, especially when combined with a broken business model, as Caesars has lost money every year since 2009.

While the Voluntary Bankruptcy Petition, see below, lists some three pages of operating units and affiliate debtors, it preserves the equity interests of the financial sponsors by keeping the parent Caesars Entertainment, out of bankruptcy.

As the petition also shows, the operating unit, which filed with more than 100 affiliates, listed about $12.4 billion in assets and $19.9 billion in liabilities. The Affidavit, to be filed shortly, will be a very riveting read on the real state of the Las Vegas gambling industry.

The bankruptcy caps a long and contentious litigation between the various groups of creditors. As Bloomberg reports, last year, a trustee for holders of so-called second-lien notes sued the company and top management last year, accusing them of plundering the operating unit of its most valuable properties. The dissident creditors accused Apollo and TPG of trying to create a “good Caesars” to hold the valuable properties and a “bad Caesars” to owe most of the debt.

    The conflict came to a head earlier this week, when some of those creditors asked the Wilmington, Delaware, bankruptcy court to put the unit into Chapter 11 and hire an examiner to review the asset moves.

     

    Typically, when two bankruptcies for the same company are sought in different jurisdictions, the judge in the case that was filed first determines where they will be heard. Creditors in the involuntary bankruptcy had asked the judge in Delaware to bar any action in a rival case.

     

    Caesars said in a court filing in Delaware yesterday that the creditors are trying “to wreak havoc on the orderly process the debtors, their professionals, and the many consenting stakeholders have been preparing for months.”

     

    U.S. Bankruptcy Judge Kevin Gross in Wilmington has said he would consider a request to prevent any court action in a second case after it’s filed. The creditors today asked Gross to halt the proceedings in Chicago.

What's next for the debt-ridden casino operator? Under the consensual creditors' proposal, Caesars Entertainment Operating Co. would become a real estate trust with two divisions, one to hold property and one to manage casinos. The new company would have about $8.6 billion in debt. "The Caesars’ parent, in turn, would give senior creditors a stake in the new companies, according to negotiation details released in December. A judge would have to approve the arrangement."

The plan has received support from more than 80 percent of so-called first-lien noteholders, Caesars said in a statement today. Randall S. Eisenberg of AlixPartners was named chief restructuring officer of the operating unit, according to the statement.

The good news for an entirely different set of habitual gamblers, namely those eager to try their luck in the Caesars casino today, arguably a less rigged venue than the US equity market, it will be business as usual: "The properties across the entire Caesars Entertainment network are open and will operate without interruption,” Gary Loveman, Caesars chairman, said in the statement.

Full bankruptcy petition below.
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Offline RE

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THE SHIT HITS THE FAN!
« Reply #219 on: January 16, 2015, 02:38:42 AM »
With the capitulation by the Swissie Banksters, we are now officially in a full on SHTF scenario.

Market volatility tomorrow is going to be outrageous.

Break out the Popcorn.

 :happy1:

RE
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Offline Randy C

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Re: Big Slide v2.0 Begins
« Reply #220 on: January 16, 2015, 10:15:24 AM »
   Bruce Krasting's take on the events in Switzerland....

This will likely be an exciting weekend.  And, I may see another offer soon.....  :icon_sunny:

http://brucekrasting.com/end-cb-power-snb-folds/?utm_source=rss&utm_medium=rss&utm_campaign=end-cb-power-snb-folds

Posted to The Automatic Earth blog for 16 January 2015

.
Thursday, January 15, 2015
End of CB Power – SNB Folds

 

I wrote about the Swiss National Bank being forced to abandon its currency peg to the Euro on 12/3/14, 12/8/14 and 1/11/15. That said, I’m blown away that this has happened today.

 

Thomas Jordan, the head of the SNB has repeated said that the Franc peg would last forever, and that he would be willing to intervene in “Unlimited Amounts” in support of the peg. Jordan has folded on his promise like a cheap suit in the rain. When push came to shove, Jordan failed to deliver.

The Swiss economy will rapidly fall into recession as a result of the SNB move. The Swiss stock market has been blasted, the currency is now nearly 20% higher than it was a day before. Someone will have to fall on the sword, the arrows are pointing at Jordan.

The dust has not settled on this development as of this morning. I will stick my neck out and say that the failure to hold the minimum rate will result in a one time loss for the SNB of close to $100B. That’s a huge amount of money. It comes to 20% of the Swiss GDP! If this type of loss were incurred by the US Fed it would result in a loss in excess of $2 Trillion!

In the coming days and weeks there will be more fallout from the SNB disaster. There will be reports of big losses and gains from today’s events. But that is a side show to the real story. We have just witnesses the collapse of a promise by a major central bank.

The Fed, Bank of Japan, ECB, SNB and other Central Banks have repeatedly made the same promises over the past half decade:

 

Don’t worry! We are here. We will do anything it takes to achieve the stability we desire. We are stronger than the markets. We can overwhelm all forces. We will never let go – just trust us!

 

I never believed in these promises, but the vast majority of those who are active in financial markets did. The entire world has signed onto the notion that Central Banks are all powerful. We now have evidence that they are not.

Anyone who continues to believes in the All Powerful CB after today is a fool. Those who believed in Jordan’s promises now have red ink on their hands – lots of it!

The next central bank that will come into the market’s cross hairs is the ECB. Mario Draghi has made promises that he would “Do anything – in any amount”.  Like I said, you would be a fool to continue to believe in that promise as of this morning.

We’ve just taken a huge leap into chaos. The linchpin of the capital markets has been the trust in the CBs. The market’s anchors have now been tossed overboard.

Offline MKing

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Re: THE SHIT HITS THE FAN!
« Reply #221 on: January 16, 2015, 10:49:48 AM »
With the capitulation by the Swissie Banksters, we are now officially in a full on SHTF scenario.

Market volatility tomorrow is going to be outrageous.

Break out the Popcorn.

 :happy1:

RE

Down a smudge at the opening, up about 80 right now, nothing bizarre, certainly nothing that can be described as outrageous.




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Offline g

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Re: THE SHIT HITS THE FAN! Swiss Central Bank Capitualtion Black Swan Event
« Reply #222 on: January 17, 2015, 07:35:36 AM »
With the capitulation by the Swissie Banksters, we are now officially in a full on SHTF scenario.

Market volatility tomorrow is going to be outrageous.

Break out the Popcorn.

 :happy1:

RE

Down a smudge at the opening, up about 80 right now, nothing bizarre, certainly nothing that can be described as outrageous.





MKing may I disagree with your assessment of the Swiss Central Bank move.

RE is correct in pointing out it's significance in my view, my only criticism of his calling it to our attention is that he was not forceful enough in his presentation of this most  significant event.

I am going to offer up an article by someone who has some real expertise in these matters Mr David Stockman and hope the Diner forum will appreciate it's import as a financial event.
In Praise Of Price Discovery—–The Market Is Off Its Lithium

By David Stockman

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 to article with it's charts for those interested in further study.

http://davidstockmanscontracorhttp://davidstockmanscontracorner.com/in-praise-of-price-discovery-the-market-is-off-its-lithium/?utm_source=wysija&utm_medium=email&utm_campaign=Mailing+List+Saturday+9+AMner.com/in-praise-of-price-discovery-the-market-is-off-its-lithium/?utm_source=wysija&utm_medium=email&utm_campaign=Mailing+List+Saturday+9+AM    :icon_study: :icon_study: :icon_study: :icon_study: :icon_study: :icon_study: :icon_study: :Thinkingof_:    :-\ :-\

P.S. The addition of the black swan event to RE's original Title was my work and not Mr Stockmans title.
« Last Edit: January 17, 2015, 07:40:03 AM by Golden Oxen »

Offline g

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Re: THE SHIT HITS THE FAN! Swiss Central Bank Capitualtion Black Swan Event
« Reply #223 on: January 17, 2015, 09:12:31 AM »
These are the ass holes the Fed is providing free money too.

And our beloved congress, with arm twisting from the turd in the White House just put the American taxpayer at risk again for these scuzzy imbeciles.


It's Not Just 'Retail': Head Of European FX Sales Out After Citi Admits Massive Loss
By Tyler Durden
Created 01/16/2015 - 12:48

All morning, mainstream media has been down-playing the insolvency of various retail-focused FX brokers using words like "contained" and even suggesting retail 'moms-and-pops' should not be allowed to trade FX. Now, we get more news from a non-retail institution:

    *CITIGROUP SAID TO LOSE MORE THAN $150 MLN ON CURRENCY MOVES

So should Citi be banned from FX trading too? It appears so - Citi's head of European FX sales is 'said to leave' the company.

    *CITIGROUP HEAD OF EUROPEAN INVESTOR SALES, FX, SAID TO LEAVE

As Bloomberg reports,

    Citigroup Inc., the world’s biggest currencies dealer, lost more than $150 million after the Swiss central bank decided to let the franc trade freely against the euro, according to a person briefed on the matter.

     

    The losses occurred on the New York-based bank’s trading desks and aren’t tied to its relationships with FXCM Inc. and other retail trading platforms, said the person, who asked for anonymity because the information hasn’t been disclosed publicly.

     

    ...

     

    Citigroup Inc.’s head of European investor sales, foreign exchange and local markets, Alex Jackson, left the firm this week, a person with knowledge of the matter said.

     

    His departure isn’t related to investigations into the rigging of the foreign-exchange market, according to the person, who asked not to be identified because the move isn’t public.

*  *  *

See what happens when you can't rig the market?

http://www.zerohedge.com/news/2015-01-16/its-not-just-retail-head-european-fx-sales-out-after-citi-admits-massive-loss  :icon_study:

Offline jdwheeler42

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Re: THE SHIT HITS THE FAN!
« Reply #224 on: January 17, 2015, 09:59:11 AM »
With the capitulation by the Swissie Banksters, we are now officially in a full on SHTF scenario.

Market volatility tomorrow is going to be outrageous.

Break out the Popcorn.

 :happy1:
Down a smudge at the opening, up about 80 right now, nothing bizarre, certainly nothing that can be described as outrageous.
A friend of colleague just happened to choose to close his FX account just as this was happening.  He lost about $7000 out of $18000.

A case of some mighty bad timing.
Making pigs fly is easy... that is, of course, after you have built the catapult....