Brokers' phones are cut off by angry customers with hysterical whimpers about, and why the hell did you stuff us this internet feces at such a price? No sooner said than done. The excitement of the most successful placement in the history of the United States did not have time to subside., how Brokers исполняют массовые приказы на слив этого чуда. Уже более 30% fall from high. This is exactly how much investors lose in just 2 of the day. Facebook posting turned out to be deliberately discrediting. Opening with a sharp negative gap, that the people don't even have the opportunity to get out.
Behavior so depressing, which literally means, that it was the last time, when we managed to shake money out of suckers? Or investor memory is short? Now investors are starting to sue in order to recover the losses from this miracle and cancel this crazy purchase.. Like they wanted to buy before, and then changed their mind. How well it all started. Forecasts for 30-50 and even 70% growth in the early days, mass advertising, and now the courts. Naturally, completely unpromising.
But let's leave the topic with FB. There is a misunderstanding among the people regarding, what's going on in the markets lately. OK, I will try to clarify this issue.
so, what we see in the markets? For example, this is how the EURO STOXX Total Market Index looks like, which aggregates stock indices of the following 12 countries: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal and Spain denominated in euros.
And these are all Asian indices, converted into dollars at market rates
All emerging markets in dollars.
As seen, emerging markets are at levels 6-7 летней давности, and developed at levels 15 летней давности. What does it lead to? To the inevitable outflow of long and large money. If the investor sat in stocks 3 years - received nothing, 5 years and again past the box office, вот уже 7 years and levels are about the same. Even taking into account the receipt of dividends and their reinvestment, the yield is negative, because. most bought above current market prices. More 90% investors will decide on a more promising investment of funds and withdraw money from the stock market. Liquidity is pumped out of stock markets every year. This is clearly seen in the trading volumes and the absence of large bids., already how 2 of the year.
In this way, markets are not falling even because of some big sales, а из-за того, that long investment money goes away. Slowly, but true. Because. number of shareholders, usually does not change, excluding buybacks and SPO, then long money is replaced by short and speculative, and mostly small. Ultimately, the market is dominated by a speculative form of asset pricing with all the ensuing consequences.
Dealers and market makers very successfully cut speculators, completely controlling price levels. The higher the speculative component, the easier it is to manage the markets, which means the higher the value and influence of dealers in the markets. There is a whole set of tools for this., which we will talk about again, but later.
Considering, that the income of the investment banking community is the direct loss of private small traders, then there is a permanent outflow of speculative money. People are losing, возвращаются, lose again and return again, but in 3 once the plums take a long time.
After the departure of big capital, after the withdrawal of money from mutual funds and management offices and after the departure of small speculators, then shares are concentrated within large funds and investment banks. but, they are also not in the best position, because. they do not always trade on their own and there is a high share of client funds, who are also not happy with the results. Banks start to face liquidity threshold, when there seems to be a lot of money, but it is almost impossible to place on the market with minimal costs - the volumes are gone. There are significant risks here, that mutual funds and investment funds around the world could go bankrupt due to outflow of funds, debts and large losses.
so, money goes from FR. Where do they concentrate? What are the possible options? Commodity markets were never massive and corporate hedgers were based there., institutionalists and big speculators. The precious metals market is too narrow. Most people park liquidity on deposits in national currency and in physical foreign currency. but, in the case of developed countries, what happens, that the average rates have already been lowered 5 year in a row and reach 0.2-0.4% per year on dollar deposits, which is practically unacceptable for the population. As a result, people start looking for higher returns with minimal risks.. So what is it? Debt market! Not even a corporate bond market, а государственный. At the moment, the conditions are as follows, that even the practically zero rates on debt securities of large countries of the world provide high yields, than any other attachment. Я ведь не зря charts приводил…
How did this situation come about?? Positive cash flow in the economy is not enough for the growth of markets. There are several more important factors.. This is the trust of current and potential trading participants in the current economic and financial environment and expectations of future profitability.. Then I will write in more detail. But in short, even in spite of the availability of money, economic conditions are so depressive, that economic agents accumulate cash in case of unforeseen circumstances and aggravation of the economic situation. It makes no sense to talk about expectations of future profitability., when the markets are on 15 summer loys ))
Pancake, would say that in 2006 year, so it would be twisted at the temple )) This (accumulate cache) do households, banks and corporations. Debts are paid off with a part of the cache, partly provide a reserve and an airbag in case of a possible crisis, and some are allowed to enter the financial markets.
The economy is still very weak and requires government assistance, which I previously wrote many times. Means high deficits and borrowing needs in the open market. I cannot provide proof, but there is some information, by which I can judge, that the heads of the largest governments in the world, central banks and primary dealers have adopted a series of agreements. According to which, in a tense situation on the debt market, the necessary retranslation of funds from risky assets to the debt securities of the Big Four will be ensured (USA, Japan, England, Germany).
Central banks provide zero rates, making the retention of money in deposits unprofitable due to high inflation, and dealers moderate price levels in the markets.
It is impossible to secure funding through full monetization in the long term, then it is necessary to create conditions, so that, according to the principle of communicating vessels, liquidity flows from one market to another. It is impossible to keep two markets at once in the current conditions for a long period of time. The debt market is by far the highest priority, because. provides not only macroeconomic stability, but also banking.
In other words, weakness in the markets is not only about objective fundamental prerequisites, as on the monetary, and at the macroeconomic level, but also quite heavily moderated by the largest and most influential institutions. Ie. there is a deliberate holding of markets in the sideways to ensure a stable and sustainable flow of funds from stock markets to debt. Otherwise, Greek scenario possible. Until, while the economy needs full-scale subsidies from the state, then the pressure must be maintained.
but, you need to balance extremely delicately, because. excessive pressure can lead to a cascade of mutual and investment fund bankruptcies, therefore, the sidewall should be preserved for a long time, so as not to cause excessive panic in the market, which will negatively affect the corporate sector and shareholders. But also not lead to strong growth, so as not to provoke interest in the market and the outflow of money from debt securities. Stock market имеет колоссальное значение в новой экономике, but even more important is the debt pyramid. Uncertainty and panic should not be allowed in this segment.
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