from Zero Hedge:
“There is this sort of collective psychology that says that the Fed can keep this going, that the Fed is in control. But, in fact, central banks are not in control… Central bank balance sheets are twenty-trillion, the whole global securities and derivatives market is a half-a-quadrillion. So, in fact,central banks are miniscule compared to that. The only thing they have going for them is this collective psychology.It’s an illusion of control.”
Central banks have created a bubble in the stock market, which will come down “very, very hard” when it finally prices in a series of Fed rate hikes, said Universa’s Mark Spitznagel, warning that “the markets are absolutely not positioned for this.”
CNBC anchors were stunned into relative silence as Spitznagel unleashed truth-bomb after truth-bomb. Those ‘facts’ are just hard to argue with…
CNBC: Well what’s the precipitating factor?
Spitznagel: Well, the ultimate cause of that would be the fact that the central banks got us here in the first place. Ultimately, my view is that central banks are the cause of bubbles.
CNBC: So you’re betting essentially that the central banks, whether it be the Fed or the ECB, they can’t unwind the trade that they put on years ago. It’s going to be a messy unwind for their trade.
Spitznagel: There’s no doubt about that.
CNBC: But is that really a black swan? Because you’ve got all these people at Delivering Alpha talking about it, isn’t a black swan supposed to be something that nobody is talking about? Godzilla attack on Tokyo, out of the blue, or something like that?
Spitznagel: So it’s great that everyone’s talking about this now. I had a little less company a few years ago when this was sort of building and now it’s so obvious, you know, the casual user has become an addict, and now we’re concerned about this. And that’s great. But you’re right it’s not a black swan. The reason I’m going to still call it a black swan is because the markets still price it as a black swan.
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