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Denniger On Market Volatility

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http://market-ticker.denninger.net/archives/2353-A-Caution-On-A-Broken-Market.html

If this isn't enough to give you nausea I don't know what is:

Monday night into Tuesday, 1090 - 1035, a roughly 5% drop. Then on Tuesday, a nearly 5% rise.

Yesterday afternoon there was a rumor that China was "reviewing" it's Euro Zone holdings, and into the bell the market sold off hard, down 3% from the top, and last night after the Chinese central bank "soothed" markets, we're up the entire 3% we lost plus a bit more this morning.

As you can see a significant percentage of these moves are happening overnight, trapping the retail investor without a realistic ability to hedge.

The extreme volatility on nothing more than rumors bring back memories of 2007 and 2008, when Charlie Gasbag-a-rino was trotted out every time the market was down 200 points to claim that Ambac and MBIA would be bailed out "imminently", stick-saving the market time after time. You'd think that such rumors would "wear off" after a while when they didn't materialize and nobody would believe (or act on) them any more.

You'd be wrong; it "worked" for months.

Then there was "Buffett Will Buy The World, including every insolvent bank in the United States." That one was good for huge ramp jobs too.

But those at least took place, for the most part, during the daytime. These ramp jobs are all pretty much overnight events, and what's worse, they're all government interventions in one form or another by governments that have pretty much already blown their policy-making wads.

Those who believe "we're in a new bull market" have some trouble with the facts here, particularly with squaring that belief against the ridiculous instability of the last few weeks. Stable, recovering markets and economies don't vomit up 5% of their value within a couple of hours, only to recover it all when someone comes out and says "oh yeah, we'll find another trillion dollars laying around in the sock drawer for you."

I remain firmly grounded in my belief that the odds of all these policy interventions fixing what ails the broader economy and markets is somewhere near zero - to within several decimal places. The underlying issue is one of solvency; the path that nearly all western governments are on today leads to the same handbasket that Greece finds itself in.

In the meantime we have a President and Democrat Congress that clearly doesn't get it, intending to put through yet another huge spending bill. True to form our hypocritical government has Geithner shaking his finger at the Europeans - telling them to cut spending.

If you are wondering why the markets look like a roller coaster covered in vomit, this might have something to do with it. If we don't get our house in order and stop acting as if we have an unlimited credit card we will soon feel a rhinoceros horn in a very unpleasant place, and instead of a market that contracts to a reasonable fair value consistent with private final demand (which still whacks 10% or so off GDP) we will instead watch 60-80% of our market's value disappear.

Buckle up folks - the idiots in DC still don't get it, and won't until they get a forcible colonoscopy served by market forces they simply cannot control (hubris and arrogance aside.)

Looks like we have a volatile recovery.

Still it's contained.

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The Fed has successfully manipulated the market for so long now, they are probably becoming complacent.

It might yet end up blowing up in their face.

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The Fed has successfully manipulated the market for so long now, they are probably becoming complacent.

It might yet end up blowing up in their face.

The Fed has to manipulate the stock market because everyone's pensions are locked into it. Now that was a genius move.

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The Fed has to manipulate the stock market because everyone's pensions are locked into it. Now that was a genius move.

Encourage people to impoverish themselves faster as they feel richer. Pure evil.

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The Fed has to manipulate the stock market because everyone's pensions are locked into it. Now that was a genius move.

I am not sure it is just the fed that is engaged in this game.

I think there are other "elements" that are abusing the market system as it stands.

what better way of destabilising an opponent than making their financial system look like it is rigged...or completely irrational.

hitler did always say he would do us over financially,so distorting what should be a fairly honest free market into something which has no rhyme or reason to it will put potential investors off will it not?

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  • 259 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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