{"id":55911,"date":"2020-12-08T09:58:24","date_gmt":"2020-12-08T14:58:24","guid":{"rendered":"https:\/\/olduvai.ca\/?p=55911"},"modified":"2020-12-08T09:58:24","modified_gmt":"2020-12-08T14:58:24","slug":"the-bis-issues-a-dire-warning-we-are-moving-from-the-liquidity-to-the-solvency-phase-of-the-crisis","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=55911","title":{"rendered":"The BIS Issues A Dire Warning: “We Are Moving From The Liquidity To The Solvency Phase Of The Crisis”"},"content":{"rendered":"
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The BIS Issues A Dire Warning: “We Are Moving From The Liquidity To The Solvency Phase Of The Crisis”<\/span><\/a><\/h3>\n<\/div>\n
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There are three certainties in life: death, taxes and the BIS – the central banks’ central bank – warning about excesses from monetary policy (the most recent amusing example of this was last October when as we wrote, “Fed Announces QE4 One Day After BIS Warns QE Has Broken The Market<\/a>“). Actually, to this list of 3 certainties we can add one more: central banks roundly ignoring the warnings from the central bank mothership.<\/p>\n

That, however, does not prevent the BIS from continuing this trend of warnings, and today the Basel-based organization did just that when in its\u00a0Quarterly Review\u00a0<\/a>publication it cautioned that the surge in financial markets following COVID-19 vaccine breakthroughs and the U.S. election has left asset prices increasingly stretched.<\/p>\n

Sounding surprisingly similar to Goldman, which as\u00a0we reported earlier today<\/a>\u00a0issued an almost identical warning, when it observed that its sentiment indicator is now +2.0 standard deviations above average…<\/p>\n

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… which has left positioning extremely stretched and represents a 98th percentile reading since 2009…<\/p>\n

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… the BIS’ quarterly report on Monday noted how credit markets and some of world\u2019s biggest stock markets had surpassed their pre-pandemic levels despite the significant degree of uncertainty that still remains over the pandemic as it continues to spread.<\/p>\n

The BIS’ perpetual skeptic, Claudio Borio, who is also Head of the BIS Monetary and Economic Department, said a rally had been justified by the vaccine news and ongoing fiscal and monetary stimulus, but there were also signs of an overshoot.<\/p>\n

“A certain amount of daylight between risky asset valuations and economic prospects appears to persist,”\u00a0<\/strong>Borio said diplomatically in his latest warning that markets and equities are disconnected, adding that “questions about overstretched valuations” had already been present before the coronavirus crisis.<\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n<\/div>\n<\/article>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The BIS Issues A Dire Warning: “We Are Moving From The Liquidity To The Solvency Phase Of The Crisis” There are three certainties in life: death, taxes and the BIS – the central banks’ central bank – warning about excesses from monetary policy (the most recent amusing example of this was last October when as […]<\/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":[1733,1269,124,487,1973,4318],"class_list":["post-55911","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bank-for-international-settlements","tag-bis","tag-central-banks","tag-liquidity","tag-solvency","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/55911","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=55911"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/55911\/revisions"}],"predecessor-version":[{"id":55912,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/55911\/revisions\/55912"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=55911"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=55911"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=55911"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}