Even The BIS Is Shocked At How Broken Markets Have Become

Courtesy of ZeroHedge:

Not a quarter passes without the Bank of International Settlements (BIS) aka central banks’ central bank (also the locus of some of the most aggressive manipulation of gold and FX in human history) reiterating a dire warning about the fire and brimstone that is about to be unleashed upon the global economy.

It started in June of 2013, when Jaime Caruana, certainly the most prominent doom and gloomer at the BIS (who also was Governor of the Bank of Spain from 2000 to 2007 when this happened) asked if “central banks [can] now really do “whatever it takes”? As each day goes by, it seems less and less likely… [seven] years have passed since the eruption of the global financial crisis, yet robust, self-sustaining, well balanced growth still eludes the global economy…. low-interest policies have made it easy for the private sector to postpone deleveraging, easy for the government to finance deficits, and easy for the authorities to delay needed reforms in the real economy and in the financial system. Overindebtedness is one of the major barriers on the path to growth after a financial crisis. Borrowing more year after year is not the cure…in some places it may be difficult to avoid an overall reduction in accommodation because some policies have clearly hit their limits.”

The BIS’ preaching did not end there, and hit a new crescendo in June of 2014, when in its 84th Annual Report, the BIS slammed “Market Euphoria”, and found a “Puzzling Disconnect” between the economy and the market”:

“it is hard to avoid the sense of a puzzling disconnect between the markets’ buoyancy and underlying economic developments globally”, that “despite the euphoria in financial markets, investment remains weak. Instead of adding to productive capacity, large firms prefer to buy back shares or engage in mergers and acquisitions” and that “the temptation to go for shortcuts is simply too strong, even if these shortcuts lead nowhere”… “Particularly for countries in the late stages of financial booms, the trade-off is now between the risk of bringing forward the downward leg of the cycle and that of suffering a bigger bust later on.” Continue reading

5 Charts that show Markets are not Representative

Are markets acting rationally taking into account the current economic figures? The simple answer is no and the reason is because markets are fixed. The stock markets keep climbing to new highs, giving the appearance, to the general public, that all is well and the economy is recovering….it’s not. The Euro continues to disappoint and when does a bad outlook translate into higher stock prices? It doesn’t, it translates into mass fraud by the banks using High Frequency Trading and algorithms to give the impression of liquid and healthy stock markets.

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Taken from The Hedge….

It would appear that the credit markets both anticipated and began to price in what is now the worst recessionary period for the European Union on record a few days ago. However, their exuberant, ever-hungry colleagues over in equity land remain in the bad is good mode and can’t get enough of these higher prices. Where ever we look around the developed world, equity prices are lifting as credit deteriorates. The masses ignored these lessons in 2007; are they ignoring it again? Or is this just another short-term divergence? If so, it is bond-buying time… if not, take your equity profits now because these divergences are unsustainable.

European stocks and credit…

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US stocks and credit…

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Sovereigns ain’t buying it?

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and protection is bid

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It’s time to get your cash out of the markets.