The BIS Issues A Dire Warning: “We Are Moving From The Liquidity To The Solvency Phase Of The Crisis”

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by Tyler Durden

Tue, 12/08/2020 – 05:45

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”). Actually, to this list of 3 certainties we can add one more: central banks roundly ignoring the warnings from the central bank mothership.

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 Quarterly Review 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.

Sounding surprisingly similar to Goldman, which as we reported earlier today issued an almost identical warning, when it observed that its sentiment indicator is now +2.0 standard deviations above average…

… which has left positioning extremely stretched and represents a 98th percentile reading since 2009…

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