The Market Ticker
Commentary on The Capital Markets

Oh yes, remember the banks cleaned up their balance sheets and closed all those pesky derivative trades....

Right?

NEW YORK – This spring, traders and analysts working deep in the global swaps markets began picking up peculiar readings: Hundreds of billions of dollars of trades by U.S. banks had seemingly vanished.

“We saw strange things in the data,” said Chris Barnes, a former swaps trader now with ClarusFT, a London-based data firm.

Except.... they didn't vanish.

They went overseas, but are still there.

Just remember, it was CDS and IR products that blew up the world last time, and you were told that was cleaned up.

Was that a lie, and given what's going on in the markets now.....

'Just saying....

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Be very ****ing careful.

That's the short version.

Timelines have become compressed to an unbelievable degree, and liquidity sucks.  HFT is responsible for most of this, I suspect, but it portends very bad things in the near future for the markets -- and ultimately for the overlevered economy and business as well.

Don't let anyone tell you business has "de-levered."  That's a lie.  Non-financial corporations have record debt outstanding.

And why not, when you're basically getting paid to borrow?

It gets worse when you start looking at off-balance-sheet obligations such as firms like Netflix have -- far worse.

How far does this go and how bad does it get?

Nobody knows how far it goes -- but it can get very, very bad indeed.

How about worse than 2008 -- because the systemic leverage is in fact higher among non-financial businesses and governments, while the available means of response have been basically exhausted.

Buckle up.

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Excellent.

To the Rethuglican hacks that think sabotage is a good strategy: You're going to eat your own grenade if you keep this crap up.

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As I've said..... yep.

DEPORT THEM ALL.  NOW.

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2015-08-25 14:40 by Karl Denninger
in Market Musings , 188 references
 

Oops..... if you bought the open you're deeply underwater.

Gonna keep buying, dippy?

smiley

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