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‘A Massive Margin Call On The Whole Financial Asset Rally Since 2010’
Wednesday marked yet another catastrophic day across assets, as equities careened lower and bond yields surged, wreaking havoc on balanced portfolios, in a continuation of the recent "sell everything, go to cash" trade.
On top of the rolling "VaR-down" environment, the bond rout is being exacerbated by the sudden realization that massive fiscal stimulus (and thereby potentially massive supply to fund it) is in the offing.
US yields climbed by as much as 20bp at the long-end of the curve, where
“How’s your 401-k doing?”
Great, went 100% cash when China decided to declare martial law in wuhan. Luckily convinced my father to do the same. Unfortunately I was a broke millennial depleted by the astronomical inflation of healthcare and education before so I didn’t really manage to save myself much but hey at least my father still gets to retire.
Not as good as my 409k.
Ok get real time, close market and stop food hoarding ASAP. Then have rescue program of 100 percent of GDP or prepare to provide 20 trillion. Then by shutting market prevent shorting to downside and stop bets aimed at grocery and essential stuff. Time for draconian tuff love to quell chaos
What will cause the “sell everything, go to cash trade” to be completed? Sounds like this trade is not even close to being complete.
Thanks for this one H………..cause I was just getting ready to dip in for some high quality bargains… Usually I am early in as well as out and needed a little dose of reality / humility….Short positions are getting a little scary as the Gold /miner hedges are not working as well as expected….Been a lot of fun lately and this site has been beneficial for triangulation .
Looked like a bottom today, because humans can live in abject fear for three days and then adrenaline kills them … or they have taken whatever steps necessary to survive.
The key word is – whatever
Mark Cuban comment March 18, 2020:
“It looks like we’re starting to get into a trading range. Up 5%, down 5%, up 5%, down 5%, and I’m not quite sure why,” Cuban said. “It felt like for a while we had active management doing all the work and trying to figure things out and now over the last three days it feels like we’re starting to get more algorithmic trading coming into the market.”
Obviously, he doesn’t subscribe to TheRealHeisenberg…
So the establishment (Fed, Congress, WH) pulled out all the stops in 2010 to save the economy and prop up asset prices. Which not only worked but served to inflate asset prices to even more unsustainable levels. And now, courtesy of the COVID-19 black swan, here we go again, x10. Which means that the next crash — assuming that all the emergency measures being taken now work — will be the last crash for democratic capitalism in the United States. Indeed, the next crash will likely be the end of that far from perfect but not half bad experiment we call the USA. I hope our elites are thinking along the same lines and are willing to put some meaningful guardrails in place to prevent such a scenario. (Not looking at you Congressional Republicans.) I mean, the only reason are banks are the “strongest” in the developed world (according to every analyst/advisor-talking-his-book on CNBC) is thanks to actions taken by Congress after the GFC to rein in the idiotic excesses of a financial system that had been drinking its own Kool-Aid since the 1980s.
Congressional republicans have become decadent, surely democracy can deal with such traitors to the ideas of our experiment.
Do current UST yield moves suggest that MMT isn’t all that feasible after all? After all, a $3TR deficit in 2020 is about what you’d look forward to under MMT.
Or are the yield moves more due to liquidation and other dynamics?
Not sure if anyone other than seekingalpha denizens have noticed, but UBS has extinguished not one, but 11 ETRACS ETNs in the last few days (8 since yesterday). MORL, BDCL, DVHL, and other 2x leveraged this-n-that funds are soon to be no more. All accelerated and subject to mandatory redemption. Speed kills, leverage thrills. Or was it the other way ’round?