Citi: “There Was Something About The Entire Recovery Narrative That Is Downright Wrong”
The reason for this ongoing paradox is still unclear but as Citi’s King, BofA’s Martin and Hartnett, and DB’s Konstam and Reid have all hinted on numerous occasions, the fundamental driver of everything that is wrong with the market are the actions of the policy makers themselves, who in their feverish attempt to preserve the market in the post-Lehman devastation, have made the market into a “market”, one where nothing makes sense any more. In other words, in order to save the market, central bankers broke it.
Which brings us to the conclusion from Matt King’s most recent note, one which picks up on his observations of the all too clear dislocations and paradoxes in the market, those “things which, according to all the policymakers’ models of the world, are “not supposed to be happening”.
And yet they are, and as King adds, “it is increasingly clear that the world is not fixed – far from it.”
The rest of King’s conclusion is a must read for everyone, especially those who think that anything in the past 7 years has been fixed, or even partially resolved.
This, then, is the real implication of widespread market dislocations. It suggests that there was something about the entire narrative peddled after the crisis which was at best incomplete, and at worst downright wrong.
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