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 "Nothing Has Been Fixed" - Citi's Five Reasons Why This Sucker Is Going Down

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"Nothing Has Been Fixed" - Citi's Five Reasons Why This Sucker Is Going Down Vide
PostSubject: "Nothing Has Been Fixed" - Citi's Five Reasons Why This Sucker Is Going Down   "Nothing Has Been Fixed" - Citi's Five Reasons Why This Sucker Is Going Down Icon_minitimeThu May 05, 2016 4:22 am

...Which incidentally explains why the SF Fed's John Williams just two days ago explained what he thinks may be the biggest systemic risk factor: dropping asset prices. From Reuters:
 
Quote :
San Francisco Federal Reserve President John Williams reiterated Monday his view that the U.S. economy is ready for higher interest rates, but flagged the risk of broad-based declines in asset prices as a result. 
Speaking at a panel on systemic risk at the Milken Institute Global Conference, Williams said the biggest systemic financial risk currently is the possibility that "broad sets of assets are going to see big movements downward" as interest rates rise. "That's an area that I think is a potential risk."
Ignoring the insanity that the Fed now has to warn that a market selloff is a "systemic risk", it also exposes not only the weakest link in the modern financial system, namely artificially inflated prices, but by definition confirms that just like in China where having a bearish opinion is now officially prohibited, it reveals that the market is only where it is due to constant and unrelenting central bank intervention, something "conspiracy theory" fringe blogs have been saying for nearly a decade.



For those wondering how to trade this, we unfortunately have no advice: because if one is buying puts on expectations of the Fed losing control, we have bad news: the market will simply be shut down and all capital flows will be halted indefinitely before true price discovery is allowed. As such those hoping to be paid when all central bank control is lost will be disappointed. It is also why none other than JPM warned last Thursday that the best option is not to bet on financial assets, either long or short, but to move into physical assets among which, JPMorgan listed, gold.
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