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Strategies & Market Trends : The Financial Collapse of 2001 Unwinding -- Ignore unavailable to you. Want to Upgrade?

To: THE ANT who wrote (8313)	12/11/2021 3:32:29 AM
From: elmatador	Respond to of 13789

No Risk. No Reward. In today's sea of liquidity: How to get a reward in the absence of risk? Create artificial risks. What is called "a phenomenon that we are likely to see more of: “illiquidity in the midst of liquidity” — a phrase I first heard from Gramercy’s founder Robert Koenigsberger. Since liquidity is not getting away, we do not get rid of liquidity. We create artificial illiquidity. How? By creating artificial risk. Market volatility could portend a retreat of liquidity The Omicron variant, inflation and concerns about China and Russia are a recipe for uncertainty MOHAMED EL-ERIAN As bouts of market volatility have become more common in recent weeks, it is clear that investor appetite to buy on dips will be tested when the Fed withdraws support for asset prices Mohamed El-Erian DECEMBER 9 2021 We’ll send you a myFT Daily Digest email rounding up the latest Markets volatility news every morning. The writer is president of Queens’ College, Cambridge, and an adviser to Allianz and Gramercy As bouts of market volatility have become more common in recent weeks, it is clear that investor appetite to buy on dips, while still strong, will be tested when the US Federal Reserve withdraws support for asset prices. For now, overall liquidity in markets remains high. While starting to taper, central bank asset buying programmes are still huge. But the sharp swings in markets experienced in recent weeks illustrate a phenomenon that we are likely to see more of: “illiquidity in the midst of liquidity” — a phrase I first heard from Gramercy’s founder Robert Koenigsberger. The seemingly counter-intuitive notion is that liquidity dislocations can occur within the context of ample overall liquidity. Having experienced sudden bouts of volatility in recent years, investors seem generally well equipped to navigate their way through it, including by using market drops as a basis for further future gains. Yet the emergence this time round of two factors that were not foreseen just a few months ago complicates matters: inflation and the investability of China and Russia. Investors now need to assess more carefully the possibility not just of pockets of illiquidity in the midst of generalised liquidity, but also of a retreat of overall liquidity. Global bond and equity investors have been taken on quite a rollercoaster ride in recent days. Last week’s unsettling fall in stocks was followed by this week’s impressive two-day rally and yet more outsized moves in bond yields. The immediate causes of this volatility were concern — on health, economic and financial grounds — about Omicron, the new and more infectious coronavirus variant, and the manner in which Fed chair Jay Powell chose finally to retire the gross mis-characterisation of inflation as “transitory”. The volatility caused by disorderly closing of “pain trades” was amplified by a longstanding structural imbalance: the lack of sufficient risk-absorbing capital in the face of a sudden shift in conventional market wisdom. This is not just about the multi-year reduction in the willingness and ability of intermediaries (broker-dealers) to act counter-cyclically. It also reflects the greater uniformity of portfolio positioning in the context of protracted Fed-induced market distortions. Until now, episodes of sudden illiquidity in the midst of liquidity have proved to be temporary and reversible, and for good reason: The Fed’s constant flooding of financial markets with liquidity reinforced the markets’ conditioning to buying the dip, for “fear of missing out”. With such high market confidence in the “Fed put”, every bout of localised illiquidity encouraged the private sector to extend its leverage to take advantage of a reversible market drop. More and more people got sucked into similar positioning. In the process, the risk of systemic financial instability shifted from banks subject to stronger regulatory oversight to under-supervised and poorly regulated non-bank participants in the market. This is where the two new global themes come in — inflation and the investability of major emerging economies. Higher and more persistent inflation limits the Fed’s ability to inject liquidity in a substantial and predictable fashion. It also forces other central banks to become less dovish, resulting in a generalised tightening of global monetary policy. The more this reality sinks in, the greater the risk to the markets’ own factories of leverage and debt, threatening an additional endogenous tightening of global financial conditions. Omicron amplifies this risk given stagflationary tendencies accentuated by the unintended effects of well-intentioned pre-emptive health measures. This week’s understandable imposition of a vaccine mandate on the private sector by New York mayor Bill de Blasio is just one example. The question of China and Russia is more complex. The greater the uncertainties about the scale and scope of direct Chinese government intervention in markets, the higher the risks to global capital, especially so-called tourist flows that ended up far from their natural habitat, “pushed” there by highly repressed yields at home. This can also tighten global financial conditions. Meanwhile, the more the west is concerned about threats to Ukraine, the greater the possibility of a destabilising round of sanctions and counter-sanctions. The hope is that recent market volatility is a simple repeat of past episodes of reversible illiquidity amid conditions of general liquidity. But the risk, which would grow in response to the persistence of high inflation and emerging market uncertainties, is one of a generalised and more permanent receding of overall liquidity.

To: THE ANT who wrote (8313)	12/16/2021 3:51:37 AM
From: elmatador	Read Replies (1) \| Respond to of 13789

Global debt hits $226 trillion? Advanced economies and China accounted for 90% of the debt rise, enabled by low interest rates. Don't worry about the EM's. You don't get a hangover if it was the other guy who drunk at the party. IMF warns of interest rate risks as global debt hits $226 trillion https://uk.finance.yahoo.com/news/imf-warns-interest-rate-risks-163106355.html

To: THE ANT who wrote (8313)	12/22/2021 1:05:11 PM
From: elmatador	Read Replies (1) \| Respond to of 13789

Chile's stroke of genius! They elected a guy to keep the noisy left quiet while the country can move on. Chile is way too strategic to be destabilized. 500k jobs for women, supporters waving the rainbow LGBTQ flag, candidate Kast accepts defeat graciously. Promise to help the new president... President Pinera, who will be stepping down in March earlier offered Boric his government’s full support during the three-month transition. There is going to be many changes that will help the people and the working class. This people did not read Orwell's Animal Farm... Boric on Sunday reiterated his plans for “a more humane Chile, a more dignified Chile, a more egalitarian Chile.” What is this? A Netflix movie or what? No ! This is the game plan. Elect a Peace & Love Millennial president who keeps the left and the media off the country's back and Chile can move on business as usual. The media is clapping their hands. The international community is in tears of joy. Hats off for the Chile governing elite ! The governing elite put the country stability above their political interest.