Ryan,
Good to see you back. In my view bubbles need a belief that nothing fundamental matters. Add to this a decade of Central Bank policy that encouraged investors to move up the risk curve in every asset class. Should it really be surprising that investors are narcotized to risk?
Igy
Ghost of Igloi wrote:
^Scary crazy guy expects an answer to a question he should ask himself.
Classic straw man.
Low bond yields are a reflection of slower growth:
https://mobile.twitter.com/haditaheri/status/1134460421157507073
Mouth Breather wrote:
Ghost of Igloi wrote:
^Scary crazy guy expects an answer to a question he should ask himself.
Classic straw man.
Classic misunderstanding of the term straw man.
ClassiqueZ wrote:
Mouth Breather wrote:
Classic straw man.
Classic misunderstanding of the term straw man.
Nope.
Mouth Breather wrote:
ClassiqueZ wrote:
Classic misunderstanding of the term straw man.
Nope.
Of course it is.
Look into the definition of the term, post it here for us to see, and then try to defend your use of the term.
Can we expect another insightful response like your previous one, "Nope"? I suspect so.
wondering wrote:
wondering wrote:
1. Sally is a fairly common name.
2. Who do you work for if not Maserati?
Igy, you’ve made statements like this before and refused to back them up when you’ve been called out. And you wonder why people refer to your dishonesty. It’s time to put up, or shut up.
Bump.
Ghost of Igloi wrote:
Ryan,
Good to see you back. In my view bubbles need a belief that nothing fundamental matters. Add to this a decade of Central Bank policy that encouraged investors to move up the risk curve in every asset class. Should it really be surprising that investors are narcotized to risk?
Igy
Goi,
Here is a question to ponder.
Can bubbles exist anymore if central banks are ultimately going to buy $trillions of a bad bank's trash?
Ryan Foreman wrote:
Ghost of Igloi wrote:
Ryan,
Good to see you back. In my view bubbles need a belief that nothing fundamental matters. Add to this a decade of Central Bank policy that encouraged investors to move up the risk curve in every asset class. Should it really be surprising that investors are narcotized to risk?
Igy
Goi,
Here is a question to ponder.
Can bubbles exist anymore if central banks are ultimately going to buy $trillions of a bad bank's trash?
Ryan,
My belief is it is all dependent on the psychology of investors. Once investors lose confidence that central banks can manipulate prices that game is up. You would think there is an end point. I see the investment environment becomes more risky rather than less. I agree though, that is the question.
Igy
Ghost of Igloi wrote:
Ryan Foreman wrote:
Goi,
Here is a question to ponder.
Can bubbles exist anymore if central banks are ultimately going to buy $trillions of a bad bank's trash?
Ryan,
My belief is it is all dependent on the psychology of investors. Once investors lose confidence that central banks can manipulate prices that game is up. You would think there is an end point. I see the investment environment becomes more risky rather than less. I agree though, that is the question.
Igy
I generally agree with that. But that is sort of a different issue. I go back to my original point that there is no panic in this market (at least on the surface there doesn't appear to be) even though there are good reasons to panic. I mean, 12 years ago if DB was trading at a $14 billion market cap with the biggest portfolio of derivatives of all the banks, I think everyone would be sprinting for the fire escapes.
Maybe the central banks can no longer manipulate prices. I think we may very well be close to that point. But right now Wall Street appears to be more confident than ever that any kind of run on banks is not happening. Perhaps forever. If somebody is waiting for that crises tipping point I would say one shouldn't hold their breaths.
I suspect how things are going to play out is that there will be a slow drift into deflation. A few years will go by. People will look at their 401Ks and realize that they are not getting much return on their investment, either from stocks or bonds. To save more they will realize they will have to spend less and a vicious downward cycle is established. But it will be very gradual and with no panic because the financial system will continue to function even if its all made up of zombie banks.
Ghost of Igloi wrote:
Low bond yields are a reflection of slower growth:
https://mobile.twitter.com/haditaheri/status/1134460421157507073
historically yes, sure
But also historically, inflation is a reflection of full employment
Now we have full employment, ok growth and very little inflation.
The Q is if tech, globalism and the demise of organized labor have broken the link between high employment and inflation.
If we can have growth and high employment without inflation...then the rules have changed.
Which would suggest that we could now have low bond yields with ok growth.
The change being that the only reason bond yields have tracked growth in the past...is the inflation sparked by growth. That connection may be broken, making that chart a relic of the past.
Ryan Foreman wrote:
Ghost of Igloi wrote:
Ryan,
My belief is it is all dependent on the psychology of investors. Once investors lose confidence that central banks can manipulate prices that game is up. You would think there is an end point. I see the investment environment becomes more risky rather than less. I agree though, that is the question.
Igy
I generally agree with that. But that is sort of a different issue. I go back to my original point that there is no panic in this market (at least on the surface there doesn't appear to be) even though there are good reasons to panic. I mean, 12 years ago if DB was trading at a $14 billion market cap with the biggest portfolio of derivatives of all the banks, I think everyone would be sprinting for the fire escapes.
Maybe the central banks can no longer manipulate prices. I think we may very well be close to that point. But right now Wall Street appears to be more confident than ever that any kind of run on banks is not happening. Perhaps forever. If somebody is waiting for that crises tipping point I would say one shouldn't hold their breaths.
I suspect how things are going to play out is that there will be a slow drift into deflation. A few years will go by. People will look at their 401Ks and realize that they are not getting much return on their investment, either from stocks or bonds. To save more they will realize they will have to spend less and a vicious downward cycle is established. But it will be very gradual and with no panic because the financial system will continue to function even if its all made up of zombie banks.
We're all Japanese now
Wikipedia:
“The Japanese asset price bubble (バブル景気 baburu keiki, "bubble condition") was an economic bubble in Japan from 1986 to 1991 in which real estate and stock market prices were greatly inflated. In early 1992, this price bubble burst and Japan's economy stagnated. The bubble was characterized by rapid acceleration of asset prices and overheated economic activity, as well as an uncontrolled money supply and credit expansion. More specifically, over-confidence and speculation regarding asset and stock prices were closely associated with excessive monetary easing policy at the time.
By August 1990, the Nikkei stock index had plummeted to half its peak by the time of the fifth monetary tightening by the Bank of Japan (BOJ) By late 1991, asset prices began to fall. Even though asset prices had visibly collapsed by early 1992,the economy's decline continued for more than a decade. This decline resulted in a huge accumulation of non-performing assets loans (NPL), causing difficulties for many financial institutions. The bursting of the Japanese asset price bubble contributed to what many call the Lost Decade. Japan's annual land prices averaged nationwide have finally risen since the asset bubble collapse, though only mildly at 0.1%, a process that has taken 26 years to show up statistically.”
^ Great source!
Sound familiar: “The bubble was characterized by rapid acceleration of asset prices and overheated economic activity, as well as an uncontrolled money supply and credit expansion. More specifically, over-confidence and speculation regarding asset and stock prices were closely associated with excessive monetary easing policy at the time.”
Ghost of Igloi wrote:
Sound familiar: “The bubble was characterized by rapid acceleration of asset prices and overheated economic activity, as well as an uncontrolled money supply and credit expansion. More specifically, over-confidence and speculation regarding asset and stock prices were closely associated with excessive monetary easing policy at the time.”
I guess you’d have to define “rapid” to make sense if this. Also, QE has been over for awhile.
Terri Yakkee wrote:
Ghost of Igloi wrote:
Sound familiar: “The bubble was characterized by rapid acceleration of asset prices and overheated economic activity, as well as an uncontrolled money supply and credit expansion. More specifically, over-confidence and speculation regarding asset and stock prices were closely associated with excessive monetary easing policy at the time.”
I guess you’d have to define “rapid” to make sense if this. Also, QE has been over for awhile.
What did Powell say within days of 12/24/2018?
Ghost of Igloi wrote:
Terri Yakkee wrote:
I guess you’d have to define “rapid” to make sense if this. Also, QE has been over for awhile.
What did Powell say within days of 12/24/2018?
Merry Christmas ?
All Euro indices down at this point -- albeit not by much.
Ryan Foreman wrote:
I'm starting to get curious as to why there isn't a full on panic happening right now.
Deutsche Bank is only trading at a $14 billion Market Cap. That is stunning to me. That's before you get to reports that Italian banks remain on the brink. And reportedly DB has the biggest amount of derivatives on their books of any bank in the world.
I'm thinking its just assumed now the central banks will bailout any big bank nowadays.
DB didn't suddenly fall off a cliff. They've been sucking @ss for a while now and everyone has moved on to other things to gamble on. And just because they're jacked up on derivatives doesn't mean much. What's the leverage, naked exposure, positions, net, etc?
Finally, Germany will not let DB fail and everyone knows it. The most damaging thing DB has right now is a bunch of sh!t loans and possible money laundering schemes involving Russians and Trump but I 100% guarantee you that the Germans have already dealt with that little paper trail issue. And once that replace Draghi everything will go back to happy fun time as usual.