Survey Says! ‘Consequences Could Be Very Painful’

Do you know what Bloomberg has done, ostensibly on your behalf?

Well, I’ll tell you: they went out and they surveyed 30 “finance professionals” on “four continents” in order to get a read on where the risks are in markets.

Again, that’s 30 professionals. Five more than 25. And if they had surveyed three times as many professionals as they surveyed, they’d have surveyed 90. Which is close to 100.

And four continents is a lot of continents. It’s twice as many as two.

In short, Bloomberg has its finger on the pulse of “intercontinental professionals”, and from that pulse, they derived a consensus about exactly what it is that could cause this whole thing to come crashing down in spectacular fashion. Here’s an excerpt:

Central-bank policy is the linchpin for the majority of respondents.

After the unprecedented and sometimes coordinated efforts by monetary authorities to shore up financial systems and the global economy over the past decade, many see a messy unwinding as the top risk.

And fortunately, you don’t need to be an “intercontinental finance professional” to understand why an unwind of central bank stimulus is the biggest risk.

All you need is this idiot-proof chart:

“Consequences could be very painful,” Remi Olu-Pitan, who manages a multi-asset fund at Schroder Investment Management Ltd. in London, told Bloomberg, before adding that “we have had a liquidity-fueled bull market [and] if that is taken away, there is a pressure point.”

Yes, “there is a pressure point.”

You’ll note that what’s missing from that chart is a projection of where central bank balance sheets are headed going forward. Fortunately, Citi has created just such a chart. Here it is:

So you know, buckle-the-fuck-up.

For those interested in more from Bloomberg’s survey, you can find it here and if you want more from Citi on the QE “cliff”, you’re encouraged to read the details in “‘The Cliff’: Central Banks Have Pulled Back Before, And Here’s What Happened…”