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September 19, 2017

Financial Markets as Price Discovery Mechanisms (Video)

By EconMatters

We discuss the API numbers ahead of the EIA report, talk a little about the options market, buying puts at a decent price, and finish off with a discussion of Norway`s sovereign wealth fund, and why it is so emblematic of how things have really gotten out of hand with Central Banks buying assets in Financial Markets, and the complete destruction of Financial Markets as Price Discovery Mechanisms.

Everyone is in the exact same trade, they just don`t know it! There is only one asset, there is no diversification in this Central Bank Market. There is no place to safe harbor the money at this point, the bubble is too large, any major fund that tries to be the first to liquidate causes the first set of many future market crashes to come.

This is the reason for all the Can Kicking by Central Banks, they even want to put off Taperings for as long as possible! The takeaway is that everyone`s capital gets destroyed at the same time. Mark my words this will be Capital Destruction like we have never experienced, the breadth and magnitude of the losses will wipe out entire country`s sovereign wealth funds, cut pension funds in half, make most bank`s insolvent, and there will be a liquidity vaccum in Financial Markets that will make for multiple days of the 2012 Flash Crash Scenario. Financial Markets will literally be like watching a Zombie Apocalypse meets Electronic Markets Horror Movie.

Norway`s Sovereign Wealth Fund - US Holdings: 2015 Investments=$205 Billion.

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Item Reviewed: Financial Markets as Price Discovery Mechanisms (Video) Rating: 5 Reviewed By: EconMatters