REAL MARKET SENTIMENT: the official is artificial, and that’s official

If you invest
like a  man possessed
you’ll lose the nest
when repossessed.

The Slogic Oracle, 4,230 BC

I spent much of last Monday night and early Tuesday morning bashing the Skype float. As professionals in first Europe, then the US and then Asia left work, I asked a tiny but valued number of them nothing more specific than “What’s your mood about the global economy now?” None of the feedback was particularly surprising; I would call it educated confirmation of gut feel rather than startling new information. But what it confirmed is, in and of itself, crucial: that is, there is an ever-more yawning gap between The Official Line and The Sharp End Experience.

The investment professionals I spoke to have one overriding thing in common: they’re tired. It’s not fatigue as such…they’re just tired of broken promises and balm and increasingly contrived interpretrations of inevitable outcomes.

This represents a significant shift from where they were last February, when I took my own SIPP out of exposure to the markets and stuck it in a ring-fenced bank account. At that point, their majority opinion was that I’d lose out on some short-term gains….and they were right. But as the markets are today 16% lower overall than they were just over a year ago, I’m not complaining: of course I’d have done better to make that move last August, but hindsight is a wonderful thing – were I still exposed the markets today, I’d  have lost 28% of my pension value.

The big change in attitude I discern among the pros is that many of them have now morphed into cons. This was summed up best by one bloke based in Spain:

“The bottom line is that Yellen, Draghi, Carney and all the other CBs from Japan to Frankfurt keep insisting that x, y and z is going to happen, and they don’t. Lots of promise, no results. Broken promises lead to loss of faith. It’s the same in every walk of life, and ours is no different.”

That view was reflected by the comment of a very conservative institutional investor interviewed by Bloomberg today:

“You know, I keep hearing predictions about outcomes as if we somehow had more cards in the deck to play here. Truth is, we don’t. I think there’s gonna be a clearout, not a bounce. Why would there be a bounce…?”

Leading from the core criticisms of central bankers, there is also a strong conviction that economists in general are “as usual” viewing progress down the road from the vantage point of their rear-view mirror. Said a Hong Kong source:

“How many times can you tell economists that QE is the new factor without them taking that on board? The answer is ‘forever’ because they don’t seem able to take it on board. They are all for it on the one hand, but they don’t want to acknowledge it’s effect.”

But perhaps above all, respondents seemed fed up to the point of frustration with apologism and understatement. An analyst in New York told me:

“I saw you blogged about ‘the narrative’ recently, but actually what we have right now is the daily invention of new vocabulary in a bid to hide something’s real identity. It’s a totally fictional narrative, like you get in a war, you know? Bearish commonsense becomes “uncertain volatility”. There’s nothing volatile about bear markets until idiots start pissing into the wind to control the insistent natural bearishness”.

The syntax of which he complains is obvious on business channels -and business slots on BBCNews, France24, CNN and so forth – where one hears, on an hourly basis, statements like:

“Yes, Iranian oil coming on stream may make the oil glut worse and could lead to even lower prices”
“I think central banks are pushing back on rate hikes”
“It’s fair to say that mining companies are facing a challenging market back-drop”
“Well, the consumer would once again become the lifeblood of the British economy if only, you know, salaries could pick up a bit”

There is no ‘may’ or ‘could’ about Iranian oil. Central Banks are reneging on rate hikes, not ‘pushing back’. Miners of raw commodities are staring down the barrel of extinction. UK salaries are not going to ‘pick up’ – they’ll continue to fall as Camerlot depresses both hours and remuneration, while counting each job created as equal to all other jobs . The King is in the altogether, the altogether, the altogether.

That’s the new market sentiment, red in tooth and claw. These people live by it, and they are going to die by it.

Yesterday at The Slog: Seven poison darts will deflate the Iran optimism balloon

27 thoughts on “REAL MARKET SENTIMENT: the official is artificial, and that’s official

  1. “This land is your land, this land is my land”

    “Don’t you know, they’re talkin’ about a revolution”

    “They’re selling postcards of the hanging”

    As a kid I used to regularly go and watch football, when it was on a Saturday afternoon, you may remember the days …. and there stood outside the main entrance each week was this rather diminutive fellow holding a placard – BEHOLD, THE END IS NIGH

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  2. We know there’s way too much debt. We know that China doesn’t need raw materials like they used to.
    We see the volatility day to day – and that’s a sure sign of a looming correction.
    Prices are falling in this slump in demand – its called DEFLATION.
    Imho, there is one move to safety in sight , and that’s KING phys DOLLAR

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  3. The Investment Professionals aren’t tired of the broken promises.

    They are well aware of what is going to happen and there is nothing they can do but milk the ponzi scheme whilst it lasts.

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  4. I wonder would we hear them talk that way if they were making millions? Let’s be honest, if they were making millions they’d be too busy to talk!
    For me it’s too reminiscent of the EU wobbles where we ‘stood on the brink’, ‘stared into the abyss’ and so on and on…ad infinitum well, the EU is still here, and no signs yet of it breaking up.
    We might not get a ‘crash’ but a slow but steady decline all the way to the bottom, who knows? All that’s safe to say really is, we are in the flux of great change.

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  5. Education debt adds to the gdp( although fake growth even of the money supply)so will extending it to masters & older people & changing grants (money already created into debt new money created) yet little of it can & will be paid back because the earnings potential is being decimated.,what is worse is they don’t understand why!

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  6. It is becoming clear that all along the Emperor had no clothes and has been wandering around like that for a coons age. What is not certain is how this will pan out for the bulk of us. This, for me, is far more crucial. What is the impact of the Baltic dry index on availability of my cornflakes? How accurate is the hypothesis that we are nine meals from anarchy?

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  7. Isn’t it time we accepted the fact that Central banks, in whichever country they are to be found – be it in Germany or Greece, from Albania* to Zuid Afrika – are Privately Owned Institutions. This means they have as much interest in the ordinary consumer as a corporation like Monsanto.

    Their primary concern is to make money. With this in mind, they will regard such trivia as “the truth” as something nice, just as long as it doesn’t hit the bottom line. By the use of the term ‘truth’ I speak of the sort of thing that should be reported in the press but usually isn’t because of the need to make money…

    (*Is Albania the only country NOT to have a central bank… or is it somewhere else like Burkino Faso?)

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  8. iain like steel your cornflakes will sit on the keyside until a ships manifest is full,so any chance of recovery will be delayed by this factor & the price you have to pay will also increase to secure those commodities,so even if they get from one dockside to another by the time they do the economy could well have collapsed again or be unaffordable,that’s why home grown food ,minerals & steel/iron etc is very very important,but try telling the waiter that!

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  9. @Gemma:

    Central banks are a must have…..even if shared…..

    “The Bank of Albania is the central bank of the Republic of Albania. The Constitution of Albania (Article 161) defines the status of the Bank of Albania and the Law No. 8269, dated 27.12.1997 “On the Bank of Albania” lays down its objectives, duties, relationships with the banking system and state institutions in Albania, organisation and management, financial statements, capital and profit allocation.

    The primary objective of the Bank of Albania is to achieve and maintain price stability. The Bank of Albania is autonomous and independent from any other authority in the pursuit of its objectives and the performance of its duties.

    The Bank of Albania is accountable to the Assembly of the Republic of Albania and its paid-up capital is owned exclusively by the State of Albania”

    “The Central Bank of the West African States (BCEAO) is the common central bank of the eight member states which form the West African Economic and Monetary Union: Côte d’Ivoire, Benin, Burkina Faso, Mali, Niger, Senegal, Guinea-Bissau, and Togo.”

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  10. living on debt is a gamble that the whole world has got into. whoever thought debt is a good basis for currency should be escorted to the madhouse while the rest of us queue at soup kitchens…. seems like we are all in for one hell of a ride..

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  11. “Things begin moving slowly”, is a precursor to “things have stopped moving”. The interim between these two events is when the last of your planning comes into play. After that, it becomes reaction.
    I ordered something made in China back in November. It hasn’t shipped yet. Will it ever ship now? Earlier in the year, I had to order a replacement part from China. Took a very long time to arrive compared to ‘the norm’ of years past.
    Take account of those things you can’t do without and obtain them before you have to do without them. Famous last words?

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  12. Appropriately enough, the gambling expression ‘a busted flush’ takes on a whole new meaning when your economy is in the toilet; add to this the fact that the sewage works is unable to cope with the large amount of effluent being produced.. suffice to say this situation is not going to be cleaned up easily.

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  13. “These people live by it, and they are going to die by it.” …………………..If only!!!
    It seems more likely that it’s going be we prols who die by it.

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  14. Stephenroi,

    whilst the legal statement regarding the Central Bank of Albania is very grand, it neglects to mention that it is the property of the Rothschilds.

    As is the BCEAO.

    I did mention that there might be a country that doesn’t have a “privately owned” central bank. Just for added clarification, the Bundesbank is also owned by the Rothschilds – so much for money leaving the German treasury and winding up in German hands (ie the German central bank). It leaves the German treasury and disappears into the pockets of the Rothschilds.

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  15. Come on Gemma, you’re better than that! No need to recycle the claptrap about the Rothchilds. Goldman Sachs maybe.

    FYI Saudia Arabia, Hong Kong and Singapore do not have central banks per se. They have Monetary Boards which is a second class central bank reporting to the Treasury. The British colonies (even the Isle of Man and the Channel Islands today) all had monetary authorities that pegged their local currencies rigidly to sterling as HK and Saudi do to the USD. Sing pegs its currency to a basket.

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  16. OAH – the important element to remember, irrespective of who the owners are – is that the Central Bank is not owned by the government of the country! They are as private and money grabbing as any corporation.

    And I was wondering which countries managed to escape the long tentacles of the private institutions that own the C.B.s

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  17. From well outside, it looks like everything is being wrestled to a standstill. In 2008 it stopped being a “Prize (Bun) Fight” for the winning & became about not loosing out. To me it looks like simple attrition now. All the EU austerity was designed to get the great unwashed ready for the real shit. A soft landing is by far the best way to go, especially if you need the sheep to offer up their fleece for negative nothing.

    I really cant see the Manewarings of Banking throwing anything towards the physical fight, because the world of ammo has changed & would bring the heat to their doorsteps. No homes left to guard. The wealth OCD’ers would be left without admirers, flunkies, acolytes & aspirer’s too. Shallow ego’s need that, you know.

    Looks like the “Marketeers” out ran them & their electronic surfs, to me.

    Honestly, it is badly a broken & trapped by the history of the Market place. Unfortunately for you, if we all get another chance for the new version, & I think that’s a 75+%’er, then it will be a Newmarket.

    With new found respect. You tweaked my axis, Ta.

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  18. The UK will be fine. All we need to do is continue selling each other ever more expensive houses. Apparently that constitutes rising wealth according to Mark Carnage.

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  19. FTSE closing price Feb 19 1998: 5718.50.
    FTSE price 10:06 am Jan 20 2016: 5715

    So much for long term investing in the stock market

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  20. Them there Rothschilds, if they are that smart to control all central banks and hive off the proceeds to themselves, what do they do with all that wealth?
    I don’t see their mega-yachts, I don’t see their palaces, their armies, their drug empires, and I don’t see their glamorous parties. If they own all this land and all these corporations, then it sounds like they are re-investing and creating businesses and employment, and maybe being proud of their achievements. (as well as stealing a slice of course). You cannot own a big company and hope to run it if it doesn’t produce something. They ain’t getting any glory or pretty girls, so what would be the point of just hoarding wealth.

    If they are just acquiring all that wealth to stockpile and gloat over, they must know that the wealth ultimately has no value and the dispossessed will one day come knocking on their door. That would not look like a viable long-term plan to me.
    If they are just taking this wealth and giving some of it to their 0.1% friends, they must know that these are ugly, greedy people and who would want them as friends. Furthermore, these kind of carpetbaggers promote spite and envy and always lead to trouble. Either way, it ends up in a mess.

    No doubt the Rothschilds are wealthy and manipulative, but I refuse to believe they control much at all. There is just no sign of secret handshakes, special badges, military convoys. If I was an ambitious Rothschild, and their power was so pervasive, I would be telling Papa R. that he should be ashamed of himself and use this power for good. He’ll get much more of a buzz doing that.

    No, I suggest the banker greed, the political weakness, the capture of the legal system, the massive increase in public sector and taxation, the fraud and theft are all mostly caused by normal people, who nobody bothered to stop.

    I don’t think we need to sorry about the Rothschilds at this point, let’s just start a whole lot lower in the food-chain. We know the bankers, we now the politicians, we know the commodity acquirers and price-fixers, we know the regulators who are working for the other side, and we know the media folks who should be looking out for us.

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  21. Really plumbing the depths now, just heard some ‘expert’ quoted on the news as saying, ‘…… stock markets aren’t really down, it is just that Banks and Oil Co’s are over represented in the indexes …..’

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  22. Pingback: Dumkopf | Gabriel Vents

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