{"id":24875,"date":"2017-08-27T13:45:47","date_gmt":"2017-08-27T18:45:47","guid":{"rendered":"http:\/\/olduvai.ca\/?p=24875"},"modified":"2017-08-27T13:45:47","modified_gmt":"2017-08-27T18:45:47","slug":"matt-king-global-qe-and-etfs-everywhere-have-created-an-unstable-one-way-market","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=24875","title":{"rendered":"Matt King: Global QE And “ETFs Everywhere” Have Created An Unstable, One-Way Market"},"content":{"rendered":"

Matt King: Global QE And “ETFs Everywhere” Have Created An Unstable, One-Way Market<\/a><\/h3>\n
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While the financial industry remains divided over what precisely is the cause of the malaise that affects modern markets, characterized by plunging volumes and trading activity, record low volatility and dispersion, a relentless ascent disconnected from fundamentals, and generally a sense of foreboding doom, manifested by an all time high OMT skew – or record high price for crash insurance – as discussed previously<\/a>…<\/p>\n

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… it can agree on one thing: it has something to do with the interplay of QE, the artificial force that has disconnected market prices from values for the past 8 years, and ETFs, which as some prominent investors have said are “devouring capitalism.” They also agree that the combination of QE and ETFs have made the market almost entirely “one-sided”, and thus prone to collapse when conditions finally reverse.Indeed, as Citi’s Matt King – our favorite sellside cross-asset strategist – writes in his latest report, a growing number of institutional managers, from Oaktree to Elliott to\u00a0 Bridgewater, have recently been expressing concerns not only about elevated valuations and the potential for a correction, but in many cases also about the potential for herding and the risk that markets have grown one-sided.<\/strong>”<\/p>\n

King points out a trend observed among the financial literature over the past 2-3 years (starting with Howard Marks’ March 2015 note in which he asked, rhetorically “What Would Happen If ETF Holders Sold All At Once? Howard Marks Explains”), “everyone\u2019s number-one suspect in potentially creating such a tendency seems to be ETFs. In Paul Singer\u2019s memorable words, passive investment through the likes of ETFs \u201cis unsustainable and brittle\u201d and \u201cis in danger of devouring capitalism\u201d.<\/p>\n

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…click on the above link to read the rest of the article…<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n","protected":false},"excerpt":{"rendered":"

Matt King: Global QE And “ETFs Everywhere” Have Created An Unstable, One-Way Market While the financial industry remains divided over what precisely is the cause of the malaise that affects modern markets, characterized by plunging volumes and trading activity, record low volatility and dispersion, a relentless ascent disconnected from fundamentals, and generally a sense of […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[9751,12387,662,1138],"class_list":["post-24875","post","type-post","status-publish","format-standard","hentry","category-economics","tag-global-qe","tag-matt-king","tag-quantitative-easing","tag-stock-market"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/24875","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=24875"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/24875\/revisions"}],"predecessor-version":[{"id":24876,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/24875\/revisions\/24876"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=24875"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=24875"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=24875"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}