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Albert Edwards On The Market: "I Do Not Really Have One Scintilla Of Doubt That This Will All End In Tears - Again"
Sometime we wonder if we are the only ones who are stunned by the ridiculousness coming out of the stock market on what seems a daily basis. Luckily, there is at least one other person out there who, like us, take a bemused approach to the endless insanity. As Albert Edwards says in his latest note: "I’ve been doing this job long enough to recognise when the markets are entering a new phase of madness that leaves me scratching my head with bemusement. The notion that we are in a sustainable economic recovery is as ludicrous as it was in 2005-2007. But investors are back on the dance floor, waltzing their way towards the next, inevitable implosion – yet another they will no doubt claim in retrospect was totally unpredictable!"
In that vein, it is not surprising that Edwards shares our disdain toward the Chairman:
Very little surprises me anymore in this business. But even I was surprised by Ben Bernanke's comment on CBS's "60 minutes" that he has "100% confidence" that he can act quickly to stop inflation getting out of control. Surely if there is one thing Ben Bernanke should be 100% confident about, it is his own fallibility. Remember this is the man who was not only adamant that US house prices would not decline, but refuted the very notion that there was even a house price bubble in the first place! I realise these guys have to pretend that they know what they are doing, but you would have thought that, having been at the epicentre of the biggest economic and financial crash since the 1930s, he would show a little humility and uncertainty. Apparently not.
But when the entire system, the whole global ponzi pyramid, knows it has no choice but to continue ploughing ahead, as otherwise the consequences would lead to the end of the financial system as we know it, what can one do but join the banks...
In July 2007, the then CEO of Citigroup, Chuck Prince, told the Financial Times that global liquidity was enormous and only a significant disruptive event could create difficulty in the leveraged buyout market. "As long as the music is playing, you've got to get up and dance," he said. "We're still dancing?. This of course was a variant on the Japanese saying "When the fools are dancing, the greater fools are watching." Well, I suppose if Bernanke is specifically targeting the equity market with QE, who but the most curmudgeonly bear would not be gyrating their hips in time to the music?
Unlike Ben Bernake, I like to retain some sense of humility. And it?s at times like these that I really start to think I haven?t got a clue what is going on anymore. It really is a mad, mad, mad world. Although on the sell-side I think I remain a lone voice of bearishness, there are other commentators who share my extreme scepticism of the current situation.
You are correct Albert, even though in this case you refer to another Zero Hedge long time favorite, Fred Hickey of the High-Tech Strategist.
In his last missive he makes the very simple point that we have seen the current pattern of behaviour before. We saw it in 2005-2007 and in 1999-2000. In both cases easy money conditions led to asset bubbles and reckless investor behaviour. Now we are seeing it again even more blatantly, egged on openly by the Fed. Without wanting to sound as over-confident as Ben Bernanke, I do not really have one scintilla of doubt that this will all end in tears ?- again.
What is the primary driver of Albert's scepticism? Deleveraging, deleveraging, deleveraging.
We keep making the point that while the private sector de-levers, continual growth disappointments are almost inevitable -? as seen in the wake of the 1991 recession (see chart below). History suggests growth jitters of this autumn will come back again and again.
Far more important is the correlation between bond yields and equity valuations, for the period that Edwards has coined the trademark phrase of "The Ice Age" (i.e., the time over the past 12 or so years in which equities have gone exactly nowhere even as cost of credit has plunged):
In the 1990s, we were still in the midst of a secular equity valuation bull market where equity and bond yields enjoyed a tight positive correlation. In a post-bubble, Ice Age world, lower bond yields go hand in hand with higher equity yields. So, in contrast with the early 1990s, we are locked in a secular bear market for equity valuations.
Edwards also has some amusing observations on the plight of a bears in an environment in which the market spends far more time going up than down... but when it does go down, the move is savage and instantaneous:
Having been underweight equities in our model portfolio now since the end of 1996, I am used to the derision that starts to be heaped upon my dogged views at these times. Since I turned structurally bearish, equities have spent far longer rising than they have falling. Bear markets tend to be quicker and more violent than bull phases so I tend to appear totally wrong most of the time. But let?s put the recent equity rally and bond sell-off into some sort of longer-term context. Can you see any break in the uptrend of government bonds? Not yet, I can?t.
Albert's target for the next equity "challenge point": 4.25% on the 10 Year, which is the upward bound on the historical 10Y channel.
Despite the savagery of the recent rise in yields, again let?s put this into some sort of longer-term, bull market context. Yields would have to rise above 4¼% before the bond bull market was to be seriously challenged. For the moment I remain a structural bond bull. I see yet another attempt from the authorities to levitate the equity markets to boost economic activity as I have always done; as an ultimately fruitless endeavour that merely produces bubble upon bubble and inevitably bust upon bust ? each one bigger and more dangerous than the last.
Since the 10 Year has moved by 100 bps in about a month, this means that should the move continue, we may get an advance look on what stock performance in 2011 will look like just around the corner...
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fuck around
No gold stocks are down enough to trigger a buy, this sucks
I am simply making some observations about how some key areas are holding up. It is important to do this to determine overall market health and direction. If you guys want to keep shorting, go ahead....LOL....
"There's always a bull market somewhere and I here to show you"
You know, the observation game is being played by every script kiddie with an Ipad.
Tell us something the avg 15y.o. doesn't see.
I agree with your comments about the general market holding up, just disagree with the suggestion that gold stocks are breaking down.
Robo,
Don't bother engaging with religious zealots. For them, the sky is falling religion is the only one that counts. All other views or religions are worthless. Let them bend over and grab their ankles shorting.
Also, it's possible they may have buyer's remorse from the infamous chinese solar panel stocks.
Ah Leo, I'm glad to see you got your electricity turned back on.
Or are you posting from a public library?
I kid, I kid. I love solar panels, and others probably do to, so there might be good fundamentals out there, but China is too much of a wildcard right now, and political risk is running wild everywhere.
I would rather invest in the panels themselves, and have. Not enough to run the house yet, but I have enough for the well pump and a couple of freezers. Thinking of getting some more in the New Year, but I can hardly bare to part with my silver.
Leo, you are such an arrogant and clueless asswipe that it makes me feel soiled to even respond to your contemptible ravings here. Suffice it to say that it is certain that you and RobotTraitor will soon enough reap the full rewards of all your paper-chasing labors, in spades, but by then you will undoubtedly be long gone from public view and from the reach of the much-justified gloating that you would otherwise face here and elsewhere.
After these guys and others of same unload onto public will we see the crash.
http://www.bloomberg.com/news/2010-12-16/carlyle-gets-500-million-abu-dhabi-investment-as-fund-prepares-for-offer.html
Is anyone looking at the S&P futures ? Thing is going fucking parabolic .
Yup - str8 up! buy buy buy, baby! (Sarcasm/off)
End in tears for who?
Bailouts = bonuses
Bogus profit = bonuses
All roads lead to bonuses so who exactly is going to be crying?
Never mind, I already know the answer.
Should those guys fail to get out of fiat, they will be crying as well.
Is Albert Edwards Jonathan's descendant?
http://www.youtube.com/watch?v=8uxn1KL9gsw&feature=related 1:43
Looks like POMO liquidity going into equities with the Greenback effect
SPX indeed going parabolic
Another Bond bull? Stand in the loser line, pal. You and Rosie can hold each other's hands. The greatest bubble in the world is in U.S. Bonds. What a suckers' bet.
Almost time for the afternoon swoon...stocks down...bonds up?
Confession: I don't know who Albert Edwards is. But a Bing search suggests an exec from SocGen?
Debt saturation has a nasty aftertaste.
Global Debt Saturation - The Human Reckoning
http://www.alternativeinsight.com/Tulips_of_Stone.html
Good link Atomizer.
Green Acres is the place to be
Farm livin' is the life for me
Stockpilin' ammo make me feel so fine
Eatin' grain from a bucket is so darn divine.
Sure one day this rally will end they always do. You must be flexible, just go with the flow. The markets are rigged, always have been, always will be.
So the thing is - every one will be watching this. Upon the real exhaustion of the fear that keeps this from happening comes the madness that will create it. Which means, IMO, recognize the craze in yourself as an investor or tarder and get out or - reverse your postions and rob the bandits!
Assange gets bail
David99 gets FAIL
David99 gets FAIL
Assange gets bail
Assange gets bail
If I hadn't seen it with my own eyes,I wouldn't have believed it. At bang on 10.00am the NQ reversed violently(after collapsing thru support it looked like a flash crash day was on the cards).
The whole thing looked fixed-the sudden collapse followed by the sudden strength,well done Brian,you have bought a bit more time but sold a few more kids futures down the river.
Dude that happens everyday, straight down, then straight up, little to no retrace.
Don't forget about the state level and munis :D
Albany, NY (December 16, 2010) -
New York State's economy added 700 private sector jobs, or less than 0.1%, on a seasonally adjusted basis in November 2010. This was the smallest monthly jobs gain during the state's current economic recovery.
http://www.labor.ny.gov/stats/pressreleases/pruistat.shtm
Don't worry they'll find that 12.5 Billion somewhere
Two words: Options Expiration.
One acronym: PPT.
Roger Wilco... over and out.
"Sometime we wonder if we are the only ones who are stunned by the ridiculousness coming out of the stock market on what seems a daily basis."
Only sometime? I worry about that a lot. I just have to try real hard to develop an internally coherent context for what I see. It's very difficult.
Albert Edwards is a bear. AEP at the DT frequently quotes him. AEP is also into gold and in my view often spot on with his analysis as is ZH. Anyway the point bieng that there are so many things out there that are economically insane that Joe Public and many other seasoned investors have shut out all the crap and started listening to the men that get the most main stream media coverage .... and this guy........
I had some guy calling me today saying c'mon invest (wall street company) with us the economy is firing on all four cylinders. (i'm in europe, he'd probably tell you all 12 in the US) He was pushy. I told him he was a sad delusional figure who sounded as though he was now grasping at Fed and Roubini soundbites. Again he persisted and even put 5 calls in after hours. I get calls from this number about every three months. They are a boiler room who give the new guys the same numbers to call each day until they either make a sale or he gets fired....poor bastard..... probably lives in a tent city by night. In the end I told him straight.... You have 300 hundred million americans you could sell to who no longer believe your ponzi scheme, except for Bill Gross.... what makes you think europeans are any different. We know your pimp bosses have used up all the red-necks in the states and now you whores are trying to use your juices over here. You should be out growing vegatables before it's to late. A stunned silence followed.... the final words i heard were " we record all calls for quaility purposes, and " as I placed the receiver gently back on it's rest .... booo hoooo.
cheers 2 u SME MOFO!!!!!!
Earnings are just around the corner, I'm certain they will come in "better than expected" come on people can't you see it's all rigged to the upside, why fight the trend. The trend will reverse as they always do, but in the mean time just buy the bloody dips.....MAKE FREE MONEY $$$$$$$$$
The thing you have to remember is that those in power ... Washington, Wall Street ... The Bernank ... want to stay in power. You must assume that they will do anything within their considerable power to prevent an unmasking of their ponzi scheme.
The problem with trying to protect yourself in Armageddon is if it happens ... who's going to pay you for anything?
Assange makes bail,
also makes cover of TIME magazine this week,
It blew my mind. I like some of you dont watch TV or read the papers, but after discussing Assange all week, I was walking by Barnes & Nobles and thought I would treat my self to a serving of TIME magazine, by far the biggest propaganda magazine money can buy and see what I could confirm/disconfirm.
And there is Assange on the cover, entitled "Do you want to know a secret."
If I wasn't already convinced, I am fully convinced now that the gov leaked some boring as docs in order to set the stage and program your little minds about the un coming internet cenorship. And 2ndly, always a good motive, distract the masses from delving more into the the 911 stuff. As enough time passes the 911 stuff becomes less sensitive. But for know lets program your little minds about what to think about China, Iran and the Saudis. Time does a great job of programming your mind about the past and the future.
According to time the gov only has 90,000 top secrets that would endanger national security if leaked!