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BMO Has A Simple Message To Its Clients: Go To Cash Now

Tyler Durden's picture


In a surprising development, the most bearish, and easily most comprehensive, report that we have read in a long time on the broader markets, comes from Canada of all places, via BMO's Quant/Tech desk. The report's title is simple enough: Go To Cash - In Plain English. Not much clarification needed. Here is the gist: "We advocate switching out of equity positions and going to cash. The European sovereign debt crisis appears to be nowhere near over. The global credit environment is worsening. Cost of capital is going up and availability is going down. There are large gaps between where the credit market prices risk and where the equity market is priced. Equity is lagging the deterioration in credit conditions. Moves in currency, equity and commodity markets are mirroring the moves in the credit market. Global growth, in a credit-constrained environment, will slow. Profits will be squeezed by the higher cost of capital...We advocate a zero weight toward equity, and that investors convert their equity positions to cash."

Full report below, and here is a link to the original report with far more technical data.


Go To Cash


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Tue, 06/08/2010 - 09:40 | 401404 Noah Vail
Noah Vail's picture

Yeow! Zero equity weight. Where's the sugar?

Tue, 06/08/2010 - 10:32 | 401491 SteveNYC
SteveNYC's picture

"Mark it ZERO"....equity weight, that is.

Tue, 06/08/2010 - 11:35 | 401670 MrTrader
MrTrader's picture

Ha, ha ha. That's a quant desk ? OMFG, the most stupid, degrading recommendation I ever read. At least, if they would recommend buying gold or land, I would say there is an "alternative" to zero equity. Cash in a ZIR environment and supposedly high risk world is as stupid as saying throw it of the window.

Tue, 06/08/2010 - 12:27 | 401795 Mr. Anonymous
Mr. Anonymous's picture

Really?  In a deflationary environment, too?  I would think protecting capital is more important than increasing profits. i.e., anybody pulling their money out in December 2007 and sitting on it for 2+ years.  

Tue, 06/08/2010 - 13:20 | 401893 PD Quig
PD Quig's picture

I did just that in our retirement accounts (well, on Jan 4, 2008) and was laughed at in these pages by much smarter people who insisted that I should have bought the rally--phony or not. Of course I wish I had in retrospect, but there are many more who wish their accounts were still at their Jan 2008 values, too.

Now that my old 401k is a new IRA (I left my previous job), I intend to use futures to play the downside. Not an all in bet, but enough to be meaningful.

Tue, 06/08/2010 - 19:53 | 402674 jbc77
jbc77's picture

For the standard IRA or 401K if you rode it down and then back up again there is nothing wrong with hiding out in a fixed sub account at this juncture in time. If your observant of whats transipring in Europe you have to try to preserve and protect your asset, especially now. We have confirmation on whats going to go down.

Tue, 06/08/2010 - 20:32 | 402742 Cognitive Dissonance
Cognitive Dissonance's picture

There isn't a "fixed sub-account" for an IRA unless the IRA is invested in a variable annuity that offers one as part of the overall mix of sub-accounts. Or if it's invested in a fixed annuity, which is essentially all fixed account. An IRA doesn't quite have the same packaged asset mixes available as do larger 401(k)s.

On the other hand, IRAs can be placed in a wide variety of vehicles, from brokerage account to CD's in banks. Including Gold, though I would be very careful who, what, where and how.

Tue, 06/08/2010 - 21:07 | 402788 milbank
milbank's picture

I agree.  I moved a massive amount of equity oriented money, i.e., sold equities, out of the market in July 2007 near what became the top in October.  Bought bonds of various lengths and money markets.  I'm very happy.  Sure, in retrospect, I'd loved to have caught the runup from March 2009 but, this money is not for speculating.  I want back in, not after the first massive drop but, after the second, which is yet to come and will come.

It's the second mouse that gets the cheese.

Tue, 06/08/2010 - 13:02 | 401854 Don Gorgon
Don Gorgon's picture

You've just highlighted the inherent problem with quant analysis in a market playing liquidity musical chairs. 

Tue, 06/08/2010 - 14:59 | 402118 Alexandre Stavisky
Alexandre Stavisky's picture

I see another inherent problem.  Its predictive power and forecasting ability makes it a sure thing.  Herein lies our future.

Whenever a "cultured" four-lettered scion of the old-world power and money pyramid ascends near unto the pinnacle--the pyramid inverts becomes more a funnel to again loot the base, precipitating all to the capstone. BLUM or RAHM. All high are brought low, the common ashlars making up the bulk of the structure are tumbled, and a new cycle begins...usually in great turmoil.   Build the pyramid up, assume the pinnacle, invert and tumble.  Transposed those images could make a fine banner, and an emblem an ambitious mercenary tribe can get behind.

France in 1936...and what happened to them (the largest land army in the world at the time) in 1940?,9171,848594-1,00.html

USA in 2008, and what of its fate in 2012?

Curiouser, and curiouser.

Incidentally another powerful flag, one that rose up and devoured the infected Fleur-de-Lys was symbolic of what?

As I recall Nurnberg was a hub to all the European and far east overland trade routes used since Rome, the center to a multitude of spokes.  What was its significance to a maniacal, poorly mustachioed Hun corporal and his Flying Circus Richthofen cohort accomplice?  A cupped whirling mill centered there, reaching out to collect, harvest, and grind to pieces what commodity?

Were the colours, black, white, crimson chosen because of historical association with the state? or in mockery of this? Negredo, Albedo, Rubedo.

War upon the pyramid builders and malchemists, just to substitute another despotic hierarchy.,9171,932213-1,00.html

Ascend or descend the pyramid, grapple for the baton of dominion, play the cycles of man.

The faces and names and means of intrigue change.  The tyranny of such serpents, not so much.



Wed, 06/09/2010 - 00:29 | 403074 Woosirsir
Woosirsir's picture

very good history and reference!

Wed, 06/09/2010 - 03:47 | 403299 AnAnonymous
AnAnonymous's picture

Yep, France relied on gold as a way to retain value during the Great Depression. Did not serve them well. It served no countries in the little  based on gold association the French put up.

Every country involved was to have issues with modernizing their armies whereas countries with fiat currency would do much better.

Wed, 06/09/2010 - 04:14 | 403317 i.knoknot
i.knoknot's picture

wasn't it France that called in their gold for $$ in 1969/70 that led to Nixon essentially defaulting and ending the U$ gold standard?

interesting... all...

Wed, 06/09/2010 - 05:00 | 403337 Oh regional Indian
Oh regional Indian's picture

Thank you for the thought provoking prose and links.

Very nice. Great perspective.

Tue, 06/08/2010 - 13:34 | 401913 mephisto
mephisto's picture

Degrading to who?

The analysts? I dont care.

Not degrading to the clients for sure.

Wed, 06/09/2010 - 03:18 | 403268 GS is short Gold
GS is short Gold's picture

it's your constitutional right to load up on equities champ.

Tue, 06/08/2010 - 13:39 | 401928 BlackBeard
BlackBeard's picture

Wow.  That took some balls.  Expect somebody on that desk to be promoted or fired within the next year or so.

Tue, 06/08/2010 - 20:29 | 402736 johngaltfla
johngaltfla's picture

Agreed. But if we drop another 30-40% they look so brilliant Cramer might even hug their nuts live on his show.

Tue, 06/08/2010 - 23:36 | 403007 IQ 145
IQ 145's picture

 Yeah boy; that sucked all the air out of the room. No more of that silly optimism.

Tue, 06/08/2010 - 09:43 | 401408 Kataphraktos
Kataphraktos's picture


Tue, 06/08/2010 - 09:43 | 401410 Cognitive Dissonance
Cognitive Dissonance's picture

Is it me or are a large number of people/groups getting extremely worried? I'm seeing this not only on ZH but every where else, thou not as intense as on ZH. Unlike early 2008, when everything was still "OK" even as the market drifted down into the Sept/Oct crash, many people don't like what they're seeing.


Tue, 06/08/2010 - 09:45 | 401414 schoolsout
schoolsout's picture

Shrimp come fresh from the motherfakkin' sea?

Tue, 06/08/2010 - 09:52 | 401422 Cognitive Dissonance
Cognitive Dissonance's picture


No, they come from Piggly Wiggly. Right there on the front page of their web site. :>)

Tue, 06/08/2010 - 10:07 | 401433 schoolsout
schoolsout's picture

Where are you from?  You gotta be from around here if you know about the Pig!



edit....Nevermind...I never knew the Pig was in ~17 states.  I really thought it was an SC/Southeast thing

Tue, 06/08/2010 - 10:20 | 401474 Cognitive Dissonance
Cognitive Dissonance's picture

You may remember the other day when I mentioned my mother calling your area God's country. Her brother, my uncle, lives "in country" as he likes to say and when I was much younger, my mother would take the kids down to SC for a few weeks during summer school vacation.

Even after I left home, I would still occasionally visit the area with my family and/or my mother. Now that mom is in her 80's, I have the honer to take her down there twice a year to visit her brother, who is still going strong at 88.

I've always been impressed with the local people, who despite my clear Yankee accent, have always treated me with open arms and lots of smiles.

Tue, 06/08/2010 - 10:20 | 401478 schoolsout
schoolsout's picture

Well, if you get down this way again, look me up (not sure how you would) and we will go wet a line and have a beer....or three.

Tue, 06/08/2010 - 11:02 | 401565 Mikebrah
Mikebrah's picture

SC is awesome.  Planning a trip to Charleston this summer.

Tue, 06/08/2010 - 11:34 | 401663 schoolsout
schoolsout's picture

I'll be slightly north of Chas.

Hope you have a good time!

Wed, 06/09/2010 - 01:34 | 403146 hognutz
hognutz's picture

Man, I am from Georgetown!   Small world huh?

Tue, 06/08/2010 - 09:58 | 401429 papaswamp
papaswamp's picture


Tue, 06/08/2010 - 09:47 | 401418 Postal
Postal's picture

Agreed. I sense the same. I think in 2008 we still had hope and optimism. Since then, TARP has worked so well and full employment has returned... [/sarcasm]

As I posted on another thread, I'm more worried now than I was in 2008--and I was unemployed back then.

Tue, 06/08/2010 - 13:35 | 401920 Steaming_Wookie_Doo
Steaming_Wookie_Doo's picture

Agreed. We were willing to give Hopey McChange the benfit of the doubt. But he's turned out to be an innefectual exec, a liar, and keeping all of the same crap as W (i.e. Gitmo, war on 'terror', etc).

As for the markets and general sentiment, even the thickest Joe Public knows we can't have a jobless recovery. That kind of recovery is only for the bankster class. Speaking of which, that whole TARP thang, $24.7 trillion total obligations--that's enough to have paid off every mortgage, credit card and student loan in the US. You don't even need those pesky CDS's at that point (unless that's been your intention to crash everything).

At this point we stare straight into the face of of what we've been trying to avoid: the fact that the level of debt was untenable, and has been made more so by further QE. I think they will try another round of QE, and it too will fail and we inflate. Then come the distractions of war. The war on terror thingy isn't scaring the populace like it used to, so we may get something a little more 'engaging' to get everyone's mind off the wholesale looting of the country. Then, as wars are untenable and expensive, the existing framework collapses and we end up with a new system. Of course we could go straight to step 3 and mock up a new system, but the lunkheads in charge are too thick to just walk away while they've got what they've got.

Tue, 06/08/2010 - 14:41 | 402065 WaterWings
WaterWings's picture

Hopey McChange is prepared for starvation in massive portions of the United States, a la Stalin.

Strange crop damage? Gulf oil? Anything in common?

Imagine NO townhall meetings with constituents this summer:

Wed, 06/09/2010 - 00:41 | 403087 Woosirsir
Woosirsir's picture


Tue, 06/08/2010 - 14:10 | 401981 DaveyJones
DaveyJones's picture

I used to have hope and optimism

but that was just an economic aneurysm

Tue, 06/08/2010 - 09:56 | 401426 I need more asshats
I need more asshats's picture

If so many cash positions are maintained volume will be non-existent. A slight breeze will be able to move the market in a predictable agreed upon direction. S&P's -->2000 by Dec. Go momo's.

Tue, 06/08/2010 - 10:00 | 401430 Cognitive Dissonance
Cognitive Dissonance's picture

Or down.

Thou I agree that will few playing, the momo HFT can "own" the market and dictate direction. Maybe we're both correct. Down, then a pump up after QE 2.0

Tue, 06/08/2010 - 11:09 | 401571 Jeff Lebowski
Jeff Lebowski's picture

Or down. +1

If a stiff breeze can move the market, what can baby boomers, which comprise 26.1% of the population (78 million), do as they move their 401k into guaranteed funds?

Our thoughts and actions are not always the same.  Many boomers got caught in equities in 2008/2009 trying to expedite their retirement, and remained fully invested during the rally attempting to make back lost time.  What to do now, is the question I've no doubt many are asking... 

That's just my two cents...


Tue, 06/08/2010 - 14:35 | 402061 superman07
superman07's picture

wonder when the next 401k to annuity talk will begin again?

I cant see the government actually letting the people get thier money out to do what they wish.

Tue, 06/08/2010 - 22:40 | 402921 Gromit
Gromit's picture

Guaranteed by what?

Tue, 06/08/2010 - 23:48 | 403025 IQ 145
IQ 145's picture

  Cheese ! Gromit, Cheese !  I love that animation.

Tue, 06/08/2010 - 10:04 | 401446 ydderf1950
ydderf1950's picture

you meant dow 2000

Tue, 06/08/2010 - 10:11 | 401460 chumbawamba
chumbawamba's picture

Dow 17 (Denninger will still be invested, waiting for the comeback).

I am Chumbawamba.

Tue, 06/08/2010 - 10:50 | 401535 Mako
Mako's picture

There won't be an exchange when this one is done to trade on.

I tried to tell that guy years ago how it was going to go, he called me tinfoil.  Hahahah, yet here we are. 

Tue, 06/08/2010 - 11:22 | 401623 chumbawamba
chumbawamba's picture

Karl will setup shop on Wall Street with a plank lain across some bricks in front of the smoldering debris that used to be the stock exchange to keep trading going.

He will not be proven wrong.

I am Chumbawamba.

Tue, 06/08/2010 - 11:38 | 401655 Mako
Mako's picture

I am really starting to like you.

Some names for the exchange.

"Tinfoil Stock Exchange" 

"Call Your Congressman Stock Exchange"

"Implosion Stock Exchange"

"Short Below Zero Stock Exchange"

"Closed For Lunch Stock Exchange"

"Brick and Plywood Stock Exchange"

"Quit the BS Stock Exchange"

Tue, 06/08/2010 - 12:37 | 401815 sondog
sondog's picture

Folks, stop the looting!

Tue, 06/08/2010 - 13:27 | 401905 Mako
Mako's picture

And start the prosecution.  :)

Tue, 06/08/2010 - 14:18 | 402016 merehuman
merehuman's picture

Hello KD

Tue, 06/08/2010 - 13:26 | 401904 akak
akak's picture

"Black Letter of the Law Stock Exchange"

" 'No, Really, the Dollar is Going to Go UP!' Stock Exchange"

"You Can't Eat Gold Stock Exchange"

Tue, 06/08/2010 - 14:07 | 401982 FoodTiger
FoodTiger's picture

Karl's Exchange*

* Reserved for Gold Donors and/or boot lickers

Tue, 06/08/2010 - 12:14 | 401768 buzzsaw99
buzzsaw99's picture


Tue, 06/08/2010 - 13:34 | 401917 Young
Young's picture

Why can't the public just learn to go short... Sure we would have some volatility with ol' lady Smith (80+ years of age) putting a fat finger on the keyboard while putting in a short order on her Schwab account, but what the hell it would be fuckin' merry!

Tue, 06/08/2010 - 14:34 | 402045 Cognitive Dissonance
Cognitive Dissonance's picture

You would be surprised how many of my clients have been conditioned to think that betting against the market (which is how they see "shorting") is unAmerican or unHope or negative and thus "wrong".

It has taken me years to convince some of my more stubborn clients to see shorting as simply a tool and not an emotional outburst or incident when used.

Tue, 06/08/2010 - 15:10 | 402137 ocd
ocd's picture

How do they feel about buying puts?

Tue, 06/08/2010 - 20:39 | 402754 Cognitive Dissonance
Cognitive Dissonance's picture

Many older people feel like they are hurting someone if they make money when the market goes down. It's a psychology thing. They seem to think no one gets hurt when markets go up and everyone gets hurt evenly when markets go down. It is of course very simplistic and I'm not sure where the roots of this belief come from. It's more complicated than this and varies from person to person but it's taken me a long time to educate them.

Also consider that there isn't much pleasure from making money in a down market when most everyone else is losing. As a client put it some time ago, how much fun can you have when everyone else is unhappy? Misery loves company. While my clients don't want to lose money, it almost feels dirty to them to be making money when others are losing. In a way I understand and respect this feeling. It's about community, even if the community spans the globe. My clients are small town people.

Tue, 06/08/2010 - 21:22 | 402816 Howard_Beale
Howard_Beale's picture

Speaking for myself, I don't ever think of my making money shorting (which I do a great deal of) as a loss for someone else. Spontaneous combustion of assets is all on paper most of the time...people felt wealthier if the market was going up, but unless they cashed out the profits they were not in the bank. 

Buy and hold is over as we sit here at 1998 levels. Surely, CD, they can understand that simple concept.

Wed, 06/09/2010 - 00:25 | 403069 Woosirsir
Woosirsir's picture


Wed, 06/09/2010 - 05:37 | 403351 Cognitive Dissonance
Cognitive Dissonance's picture

In the 25 years I've been in the "bidness" I've learned one lesson. Peoples emotional response to their money is more complicated than love. And to apply logic to their understanding (or lack there of) of money is grounds for disappointment, both for themselves and their

The only thing that makes them happy is whatever makes them happy. I was making my clients money hand over fist during the Sept/Nov 2008 plunge and while they were "happy" it was a very restrained happy. For some, they felt bad because they were profiting while most around them were suffering. They felt like they were taking it from those who were going down. Others couldn't share their good fortune with friends who were losing money. How do you celebrate when everyone else is at a funeral?

Most of my clients are retired blue color workers who handed me their cashed-out pensions and 401(k)s to take an income stream and hopefully to grow. These are not sophisticated people or investors but you're average Jane and Joe. They are my friends as well and I try hard to empathize with them while also doing what's in their best interest. There has been the occasional time where I had to pull in the shorts so they could sleep at night. I'm not kidding.

It's more than just making money in a down market. It's being contrary. For many people, they just can't go against the flow, to walk against the flow of the crowd. It takes a special person to be contrary and when the adviser's contrary, the client by default becomes a bit contrary, even if they don't want to be.

Wed, 06/09/2010 - 18:10 | 404568 Geoff-UK
Geoff-UK's picture

Blue color workers?  As compared to white color workers?  You living in some Avatar type world?

Tue, 06/08/2010 - 21:17 | 402803 Hephasteus
Hephasteus's picture

How much would some dow 5800 august puts run?

Tue, 06/08/2010 - 17:58 | 402512 TSHTF
TSHTF's picture

Yeah, nobody likes the guy who bets on the don't pass line at the craps table.

Tue, 06/08/2010 - 19:53 | 402673 Fred Hayek
Fred Hayek's picture

I thought I'd read that that's actually one of the best odds plays in a casino.

Tue, 06/08/2010 - 22:39 | 402908 Crab Cake
Crab Cake's picture

The pass/don't pass with 2X odds is about as good as you'll get in a casino; on any given bet.

I'm a darksider myself.  I run a 3 step no 4/no 10 escalation, after 6 rolls with no 7 drop the wager on the table. I'm not saying I've never lost, but... it's pretty damn near never.  With the right bankroll, and if I lived in a casino city, I could make a living.  

I did two years worth of research on craps, and interviewed several professional gamblers.  What I learned is that the odds are beatable, in their way.  The lights in Vegas stay on not because you can't win, but because people are stupid. It's all bankroll exposure and money management.  The house will always get theirs, but if one is skillful that doesn't necessarily mean you can't get yours too.   

Ooops.  Wrong blog.

Wed, 06/09/2010 - 03:23 | 403272 GS is short Gold
GS is short Gold's picture

umm, you probably don't have much of a chance in the financial markets if you haven't figured out that craps isn't beatable, no matter what money management scheme you employ. sorry, but your 2 years of "research" was a huge waste of time. counting cards in blackjack though can lead to a positive expectation.

Tue, 06/08/2010 - 19:57 | 402684 knukles
knukles's picture

Oh and how about the chap after a round of golf the other day.  Asks how my portfolios are structured.  Told him of gold allotment, not amount but merely percentage ...substantial.  Jaw drops 

A Hope and Changie fellow, he told me that I was Un-American.  Helen Thomasesquely suggested alternative Country of Residence.  Pointed out to him that Under Federal Code, the US Mint must produce enough gold coins of specific type to "Meet Public Demand". 

Still should be thrown in Irons and Dipped in Oil for his Soul.   Folks uncomfortable?  How about Bat-Shit Emotionally Illogically Blind?  Scared.  Retorts such as that fellow's are Not Made Under Normal Circumstances. 

Tue, 06/08/2010 - 10:02 | 401440 Miss Expectations
Miss Expectations's picture

It always bothered my husband when I would stock up on staples.  If they were on sale, I bought a lot.  My stocking up has increased a lot over the last year and now includes lots of canned goods, seeds, tp, tissues, soap, shampoo...  He was always more of a JIT kind of shopper.  Last week I found 10 new tubes of toothpaste in the bathroom closet.  This is a really profound change.

Tue, 06/08/2010 - 10:07 | 401451 papaswamp
papaswamp's picture

Hormel canned products...indefinite shelf life.


Disclosure: I own no Hormel stocks...or any stocks for that matter.

Tue, 06/08/2010 - 19:30 | 402635 tmosley
tmosley's picture

Take a look at the Compleats line.  They aren't canned, but are packed musch like forzen dinners, but they don't need refrigeration.  They are quite tasty.  They are almost like little MREs.  If you stuffed some extra stuff into the box, you could make your own MREs with them.

Bought in bulk, they are about $2 each, shipped from Amazon.  Pretty good deal.  I've been using the mto lose weight (portion control).

Tue, 06/08/2010 - 20:30 | 402737 Crisismode
Crisismode's picture



Have you EVER read the list of ingredients on those things?


It reads like a complete chemical factory. I can't begin to name the massive multi-syllabic compounds included in this Industrial-Food-Conglomerate food-like substance.


But then, if chemicals taste wonderful to you, well, it's all good.




Tue, 06/08/2010 - 21:20 | 402810 Hephasteus
Hephasteus's picture

Nothing can destroy McDonalds french fries. 100 years from now people will scavenging undecayed McDonald's french fries from the seats of rotting cars.

Tue, 06/08/2010 - 11:21 | 401619 Cognitive Dissonance
Cognitive Dissonance's picture

"He was always more of a JIT kind of shopper."


Just In Time shopper. I love the unique use of the term. I too have always been a buyer in large quantities, if for no other reason than because it always made sense financially to buy when on sale, not when you need it, which usually is when it's not on sale.

Anyway, more and more of my friends and family are "putting in supplies" as my old and wise mother likes to say.

Tue, 06/08/2010 - 20:02 | 402678 akak
akak's picture

"Just in Time Shopper" -- I have to remember that!

I have always been the antithesis of the JIT Shopper, buying extra when things are on sale as a matter of course.  Living in perhaps the most earthquake-prone (not to mention volcanically active) areas in the world only inclines me that much more to do so.  But in the last couple of years, I have been trying to keep on hand as much extra consumables as is practical for me, and not just food ---- toilet paper, soap, toothpaste, razor blades, batteries, ammo, cash, etc., for a minimum of three months' worth of everything on hand at ALL times (water I can always get from the creek next to my house).  Now, I would feel utterly exposed and vulnerable to be a "Just in Time Shopper", which to me is the height (or depth) of complacency.

Wed, 06/09/2010 - 04:27 | 403319 saulysw
saulysw's picture

I recently wrote a fairly long rant on my blog about the evils of JIT...

Tue, 06/08/2010 - 12:38 | 401818 sondog
sondog's picture

No wonder Consumer Discretionaries have held up so well.

Tue, 06/08/2010 - 22:36 | 402916 SWRichmond
SWRichmond's picture

I know one thing with absolute certainty: when my kids look at me and say "Dad, I'm hungry", the wrong answer is "sorry kid, there's no food and the stores are all closed."

Tue, 06/08/2010 - 23:14 | 402972 Janice
Janice's picture

Miss Expectations,

Same here.  I also purchased a Berkey water purifier from Pleasant Hill Grain.  50 year life on the filter.  I have been stocking up for a couple of years.  Planted some fruit trees also.

Tue, 06/08/2010 - 10:03 | 401442 schoolsout
schoolsout's picture

As a side note, I sent the missive posted on ZH about FINRA and HFT/Algo causing the crash to the local AM radio show with the English broker and he is finally starting to talk about it.  Says that people are starting to realize that this isn't the same market as it was several years back (still needs to come around some more).  

And he did say he reads the same blogs as I do...I lol'd at that because he would have never even thought to look here (my assumption only) had I not sent him the emails...The DJ, who taught me, was thinking I was a lunatic because of the stuff I send them, but the broker almost sounded like he was backing me up this go 'round.


People's perceptions are changing, as you say.   Slowly, but surely.

Tue, 06/08/2010 - 10:07 | 401449 ghostfaceinvestah
ghostfaceinvestah's picture

Pretty simple to me - people have a gut instinct that money is drying up, and they are correct.  Since the Fed stopped QE1, there is no longer money to fuel the equity bubble, which in turn fueled a lot of spending (corporate and personal).

In addition, after over a year of can kicking, the squatter stimulus is coming to an end for more and more people as banks finally foreclose (which of course further shrinks the money supply).

QE2 seems inevitable to me, the only question is when.  Of course printed money is no solution, but it makes people feel good for a while.

Tue, 06/08/2010 - 10:40 | 401514 gdub53
gdub53's picture

"banks finally foreclose(which of course further shrinks the money supply)"...wrong, default default doesn't shrink the money supply, paying off debt does.

Tue, 06/08/2010 - 11:04 | 401541 Mako
Mako's picture

What are you going to pay it off with, more debt.... money supply in the system has no ability to be paid down.

Total US Credity System:

2009 Q4 $52.7T  Danger Danger Will Robinson

2009 Q3 $52.9T

Good luck paying that down, with what I have no idea since it doesn't exist yet.  Someone has request the commerical banks to manufacturer additional new credit, from that new credit you can SERVICE the existing debt.  "There is no out, there is only in"

The Books don't balance on day #1, all of the show is to avoid trying to balance the books, why, because the books can never balance.


Tue, 06/08/2010 - 11:11 | 401588 Bam_Man
Bam_Man's picture

"wrong, default default (sic) doesn't shrink the money supply, paying off debt does."


Debt default decreases money supply indirectly through destruction of bank capital. The replenishment of the destroyed capital is how the ACTUAL "hit" to money supply takes place.

Tue, 06/08/2010 - 13:45 | 401940 ghostfaceinvestah
ghostfaceinvestah's picture

Exactly, thanks, this is especially true to the extent banks have no properly reserved for those defaults (which they haven't).

Tue, 06/08/2010 - 12:22 | 401786 buzzsaw99
buzzsaw99's picture

Many of the short sales and foreclosures are taking cash only first. That cash is high powered money (the supposed basis for bank leveraged lending) being drained from bank reserves.

Tue, 06/08/2010 - 13:49 | 401948 ghostfaceinvestah
ghostfaceinvestah's picture

True, but even if a 200K loan is replaced with a 100K loan that also removes credit from the system.

To Mako's point(s), the system is deleveraging, hard, but it was never designed to deal with deleveraging/massive defaults.

Deflation or hyperinflation, there is no easy way out.

Tue, 06/08/2010 - 10:08 | 401453 Treeplanter
Treeplanter's picture

My current plan is to cash out gold and silver mining shares when (if?) the HUI goes above 480.  A major crash will take everything down, at least temporarily.    The gold and silver bull market have yet to break free of the big bear market.  One last fools' bounce in the bear rally would be very helpful but probably a forlorn hope. 

Wed, 06/09/2010 - 03:39 | 403287 Fred C Dobbs
Fred C Dobbs's picture

Treeplanter, this person doesn't see the miners going down in another crash.


Tue, 06/08/2010 - 10:09 | 401455 chumbawamba
chumbawamba's picture

Why?  Do you know something I don't?

[ Chumba leaves to inventory his stash, then returns ]

Nope, not worried.  Got me a crapload of gold, a shitload of silver, an assload of bullets and lots of toilet paper to wipe it all up.

I am Chumbawamba.

Tue, 06/08/2010 - 10:23 | 401483 MarketTruth
MarketTruth's picture

+1 Chumawamba.... but remember to stock up on feminine supples. Laugh all you want guys, yet when the sexy ladies need it you'd (probably not) be amazed at what they will do for it. And yes, am being serious as have read past recent reports when in other countries TSHTF.

Tue, 06/08/2010 - 10:45 | 401524 Popo
Popo's picture

Add a few cartons of cigarettes to that list... even if you don't smoke.   

Tue, 06/08/2010 - 11:08 | 401583 Arkadaba
Arkadaba's picture

and a few bottles of single malt

Tue, 06/08/2010 - 11:59 | 401732 three chord sloth
three chord sloth's picture

You're better off with blends. Single malts are too individual, too hit-or-miss in their appeal to be a good medium of exchange.

For maximum effect, get a case of vodka, scotch, and whiskey. Stick with decent mass-market names -- if few know the name the value goes down.

Wed, 06/09/2010 - 00:03 | 403044 Arkadaba
Arkadaba's picture

single malt is for me - not for barter !!

for barter I will take your advice and go for mass known market brands - lol

Tue, 06/08/2010 - 16:06 | 402255 RockyRacoon
RockyRacoon's picture

I'll go ya one better:  Stock up on Polacrilex 4mg gum!  Cheap from Sam's and will do in a pinch when ya need a nicotine hit.   Besides, the smoke gives away your position when you are taking aim.

Tue, 06/08/2010 - 21:25 | 402823 milbank
milbank's picture

And Hershey bars.

Wed, 06/09/2010 - 01:32 | 403145 chumbawamba
chumbawamba's picture

I had one but I ate them all (I didn't expect the bastards to keep this jalopy rolling for so long :)

I am Chumbawamba.

Tue, 06/08/2010 - 10:50 | 401537 chumbawamba
chumbawamba's picture

I have a bucket filled with sanitary napkins and tampons.

No, I'm serious.  A bucket.  It actually doubles as a latrine.  It has a little toilet seat that fits around the rim.

I picked it up during a clean-out of a nearby business (a staffing agency that went belly-up...whoulda thunk?)  They were extraordinarily well-provisioned.  Included in that provisioning was a bucket full of female hygiene implements.  As it were, they spent so much money on extraneous supplies and other things that they had none left over to run the business.

Chumba is all about keeping the ladies nice and clean :)

I am Chumbawamba.

Tue, 06/08/2010 - 11:29 | 401646 Cognitive Dissonance
Cognitive Dissonance's picture


But is Chumba all about keeping Chumba clean? Don't forget behind the ears and places. :>)

Tue, 06/08/2010 - 11:36 | 401674 schoolsout
schoolsout's picture

Just picked up 2 Katadyne water purifiers (small sports bottle type) from local marine retailer that was blowing them out for $15 each.  I bought them for hiking in the mountains, but they would serve well during TEOTWAKI

Tue, 06/08/2010 - 14:55 | 402107 Kali
Kali's picture

You are better off stocking up on bleach and rags (for filters), very cheap.  Bleach is gonna be hard to get and very useful for MANY things.  I would also recommend stocking up on small bottles of Hydrogen Peroxide, not large bottles, once you open them they degrade very quickly, Peroxide is very unstable.

Tue, 06/08/2010 - 16:47 | 402377 chumbawamba
chumbawamba's picture

The dollar store is your friend: one gallon of bleach for one dollar.

Or, try your local hardware store in the pool supply section: the "Chlorinate Liquid" is 10% bleach in solution.  About the same bang for your buck as regular Clorox but in easier-to-stack box form.

I am Chumbawmba.

Tue, 06/08/2010 - 20:48 | 402762 Kali
Kali's picture

Yes, very good, take less space too!

Wed, 06/09/2010 - 16:33 | 404327 WaterWings
WaterWings's picture

Loses its strength ~fast.

“We recommend storing our bleach at room temperatures. It can be stored for about 6 months at temperatures between 50 and 70 degrees Fahrenheit. After this time, bleach will be begin to degrade at a rate of 20% each year until totally degraded to salt and water. Storing at temperatures much higher than 70 degrees Fahrenheit could cause the bleach to lose its effectiveness and degrade more rapidly. However, if you require 6% sodium hypochlorite, you should change your supply every 3 months.”

Go with the Katadyn Pocket Filter(s) - two is one and one is none.

Woah. Better price check around. This sucker was $225 a little while ago - but 13,000 gallons!!!!!!!!

The Pocket hails from Katadyn's Endurance series, a high-quality line of filters that produce up to 100 times more water than standard water filters. The Pocket is so tough, in fact, that it's the first choice for extreme adventurers like Mike Horn. Plus, it's the only water filter with a 20-year warranty. Other features include a measuring gauge that indicates when you should change the filtering element, a cushioned base that makes it easy to pump on all surfaces, a prefilter, and a carrying bag.

Wed, 06/09/2010 - 18:18 | 404595 Geoff-UK
Geoff-UK's picture

Bleach=very short shelf life.  Alcohol better.


Tue, 06/08/2010 - 13:18 | 401887 Eally Ucked
Eally Ucked's picture

Our Jewish vigilantes friends are very persistent in junking you,whatever you say, I think.

Tue, 06/08/2010 - 13:30 | 401908 Cognitive Dissonance
Cognitive Dissonance's picture

Whatever you say, don't say..............


Tue, 06/08/2010 - 13:50 | 401950 Eally Ucked
Eally Ucked's picture

I was, at some point, a holder of junk record, according to Howard Beale for my remarks. At this time Howard is busy printing and selling ZH stuff and I feel much better. Chumba took over, my bow to his acheivement and I'm not afraid to fully support his views, maybe not 100% but lets say 99%. Hey!! guys are you there? Let me come close to Chumba!

Tue, 06/08/2010 - 14:01 | 401969 Cognitive Dissonance
Cognitive Dissonance's picture

At some point, the "old" Harry Wanger passed both of you. I saw him with 23 junks on one comment a few months ago.

The "new" and improved Harry is now clean as a whistle of junks most of the time. :>)

Tue, 06/08/2010 - 14:15 | 402004 Eally Ucked
Eally Ucked's picture

Are you suggesting I should take a path of  Mr.Wanger or improve my performance? I will think about it! 

Tue, 06/08/2010 - 14:31 | 402049 Cognitive Dissonance
Cognitive Dissonance's picture


Neither, just that you've been overtaken in the record junk category when you weren't even looking. Those that snooze loose. :>)

Wed, 06/09/2010 - 01:13 | 403126 Arkadaba
Arkadaba's picture

and that transformation was awesome! he came, he saw, he protested and he listened.  Really surprised me that he was open to changing his world view when challenged.

Tue, 06/08/2010 - 20:36 | 402747 Village Idiot
Village Idiot's picture

"Our Jewish vigilantes friends are very persistent in junking you,whatever you say, I think."


You might think a little harder.  Spend any time - especally past tense - on ths site, and you will see that Chumba has detractors for all sorts of reasons. Chumba is entertaining, and, enlightening, but I wouldn't blame all the "junks" on "Jewish Vigilantes."

Wed, 06/09/2010 - 01:36 | 403148 chumbawamba
chumbawamba's picture

I love my detractors.  Without them, my spite would not have direction and purpose.

I am Chumbawamba.


Wed, 06/09/2010 - 01:20 | 403131 merehuman
merehuman's picture

Man you are Eally Ucked.   Didnt you know not to use that word! It must be evil or sumten. Gosh . lol


PS  this is a junk magnet

Tue, 06/08/2010 - 10:57 | 401554 DosZap
DosZap's picture

A more realistic use, is for WOUNDS.

Tue, 06/08/2010 - 10:59 | 401558 papaswamp
papaswamp's picture

My still will be up and operating...alchohol has so many uses

Tue, 06/08/2010 - 14:58 | 402114 Kali
Kali's picture

Stills are also good for purifying water, distilling/extracting useful stuff out of plants (medicines, solvents, etc) in your garden.  I have a small distillation unit already, they are good for a lotta things.

Tue, 06/08/2010 - 23:19 | 402983 Janice
Janice's picture

Get a grip, all the survivalist ladies use Gladrags anyway.

All you get with paper supplies are ladies like helicopter Ben.  Is that the kinda trash you want to look down and see?

Tue, 06/08/2010 - 11:22 | 401626 ydderf1950
ydderf1950's picture


Tue, 06/08/2010 - 12:33 | 401806 Mr. Anonymous
Mr. Anonymous's picture

In a really bad scenario, good whiskey will serve quite ably as a currency of barter.  Stock up on enough cases of Jack Daniels and you can get whatever you need.

Tue, 06/08/2010 - 13:28 | 401907 Neo-zero
Neo-zero's picture

I like coffee and tea as well as hard liquid refreshment for the barter bin.  Think about all the caffiend's who will be looking for a hit.  Store's and travels easier, useful for making suspect water palatable after a boil.  

Tue, 06/08/2010 - 16:11 | 402264 RockyRacoon
RockyRacoon's picture

I stocked up on some little coffee packages.  Found them at the dollar store, 10 for a buck.  They are in little tubes like the water flavoring packages.   Coffee, sugar, and creamer in one tube -- not bad at 10 cents each.  Tried one out and they are pretty damn good.  Bought a bunch of boxes of 10.  Threw away the bulky boxes and put them in zip-lock bags which should preserve them quite well.

Wed, 06/09/2010 - 18:22 | 404606 Geoff-UK
Geoff-UK's picture

Ziplocks don't hold vacuum well over time--recommend canning jars.  Don't have some, get some.

Tue, 06/08/2010 - 10:10 | 401457 Agent P
Agent P's picture

I think it's a simple as in early '08 the frame of reference was very different.  The tech crash, Enron, etc. had long since passed, and investors shifted to a bullish mentality thanks to '03 to '07 performance.

Fast forward to today and it's a very different story.  Despite the strong rally since last March, people are still licking their wounds from the '08 to early '09 market experience. 

I honestly don't think the "worry" you speak of ever left.  We've seen clients with very itchy trigger fingers during the rally, because they're determined not to ride it down again, and now that we've seen a pullback coupled with shitty news around the globe, it's "Katy bar the door".

Those are my thoughts.  On a separate topic, do you plan on posting a PDF of your full manifesto after you release chapter 5?  I'd prefer to read it in one sitting, and it's too much for me to read on screen.  Thanks.

Tue, 06/08/2010 - 10:48 | 401531 taraxias
taraxias's picture

Beat me to it. A PDF file of the entire article would be an excellent idea.

Tue, 06/08/2010 - 11:34 | 401668 Cognitive Dissonance
Cognitive Dissonance's picture

If you guys would like it, I would be happy to comply. I would make sure it's ready after Chapter 5, but I'm not sure where or how I would post such a large file.

Any ideas? I don't have a blog and not very on-line technically orientated, at least with on-line posting abilities.

Tue, 06/08/2010 - 11:37 | 401679 schoolsout
schoolsout's picture

Can't you attach it here?  The Tylers do it all the time, don't they?

Tue, 06/08/2010 - 11:48 | 401706 Cognitive Dissonance
Cognitive Dissonance's picture

"They" have much more capabilities for posting than I do as a contributor. I'm limited in many ways though I will explore. There wasn't exactly an instruction manual when I was granted contributor rights. They sort of assume you understand many things, though there was a web page I received with some instructions. I will explore a little.

Can anyone save articles on DocStoc or Scribd?

Tue, 06/08/2010 - 11:57 | 401728 chumbawamba
chumbawamba's picture

Don't know what DocStoc is, but with Scribd you can create an account and upload files there.

I am Chumbawamba.

Tue, 06/08/2010 - 12:20 | 401784 Cognitive Dissonance
Cognitive Dissonance's picture

I'll look into it. I already have an account there so I will poke around. Thanks.

Tue, 06/08/2010 - 12:38 | 401817 MaxFrost
MaxFrost's picture

Scribd is free and easy...get an account, upload a PDF...

Tue, 06/08/2010 - 11:07 | 401579 CPJ13
CPJ13's picture

There is a large pool ($1.1B) of small-balance commercial real estate loans that is currently being bid by some big money, and will settle by the end of June. This pool is going to re-set valuations across the CRE landscape, and everyone I know is either a) elated because they're finally going to have some marks to use as leverage in negotiating with lenders, or b) scared shitless because they're not going to be able to defend their mark-to-make believes. Knowing the asset quality to be traded, I think it's going to be a pail of cold water on anyone who still holds out hope for any type of stabilization in CRE.


Everyone is starting to get really scared. And they should be.

Tue, 06/08/2010 - 12:19 | 401782 Brindle702
Brindle702's picture

Agreed!  A lot of money refuses to play because there is absolutely no genuine price discovery in the market right now.  No one knows what any asset really costs right now.

Wed, 06/09/2010 - 00:21 | 403061 IQ 145
IQ 145's picture

 Reality is threatening to arrive; my oh my.

Tue, 06/08/2010 - 11:32 | 401659 sumo
sumo's picture

Not just you. People (retail investors) sense change is in the air. Change for the worse. Lots of "spookage"  - markets make large moves on news and rumors from China and Europe, and all markets, not just stock markets. Bears like Marc Faber getting more airplay. Gold rallying. Copper falling.

Something ominous this way comes.



Tue, 06/08/2010 - 13:45 | 401941 Assetman
Assetman's picture

Well, some of the more conventional strategists, like ISI Group, have made a noticable turn in outlook and tone to the bearish side.  They may not be worried while they're facing their clients, but it wouldn't surprise me that many of these guys are in the early stages of battening down the hatches.

Tue, 06/08/2010 - 13:51 | 401953 gdgenius
gdgenius's picture

Only matters if the people you listen to know what they're talking to panic before everyone else does though...

Tue, 06/08/2010 - 14:13 | 402002 Assetman
Assetman's picture

I totally agree.

Tue, 06/08/2010 - 14:23 | 402029 Hammer59
Hammer59's picture

Extremely worried. Employment, housing, National Debt, political ineptitude have all worsened since early 2008, and Obama has proven to be an utter failure--surrounding himself with the worst economic advisers possible.

All that stimulus did nothing for us. And now EU is crippled, Bernanke is outta ink, we are still in Afghanistan and TBTF is still toxic. You'd have to be pretty worried to buy Gold at $1250/oz.  Extend-and-pretend worked to re-vive Mr.Market briefly, but Great Depression II is going viral.

Tue, 06/08/2010 - 14:47 | 402086 Hammer59
Hammer59's picture

Extremely worried???  The employment picture, housing, National Debt, political ineptitude have all worsened since early 2008. Gold is on it's way up due to widespread worry. The stimulus has been spent, and nothing happened. ZIRP...nothing happened.

      Bush doubled the National Debt in 8 years to 10 Trillion USD...then Obama pushes it to 13 Trillion and nothing good happened!

There was nothing to justify the rally in equities last year, and now that EU is boned, Ben's outta ink, and TBTF is on it's way to failure, well...frankly the parallels to 1930 are indeed worrisome.

If we had any real leadership in DC things might not be so dire, but Obama surrounded himself with idiots.

Tue, 06/08/2010 - 14:47 | 402087 Hammer59
Hammer59's picture

Extremely worried???  The employment picture, housing, National Debt, political ineptitude have all worsened since early 2008. Gold is on it's way up due to widespread worry. The stimulus has been spent, and nothing happened. ZIRP...nothing happened.

      Bush doubled the National Debt in 8 years to 10 Trillion USD...then Obama pushes it to 13 Trillion and nothing good happened!

There was nothing to justify the rally in equities last year, and now that EU is boned, Ben's outta ink, and TBTF is on it's way to failure, well...frankly the parallels to 1930 are indeed worrisome.

If we had any real leadership in DC things might not be so dire, but Obama surrounded himself with idiots.

Tue, 06/08/2010 - 14:52 | 402099 Anubis
Anubis's picture

CD - yes - an increasing number of people are voicing their unease/discomfort/disbelief/figures don't add up/concern...

Even a manager from PIMCO came out now and said Keynesianism endpoint is here.

Where do we go from here. That's an open question to most, for sure. Unsecurity equals cash stance/gold under harsh climate. 



Tue, 06/08/2010 - 20:08 | 402700 Bolweevil
Bolweevil's picture

Sat/Sun threads were testy to say the least, maybe the worst I've seen here. Hair triggers abound.

Tue, 06/08/2010 - 20:49 | 402764 Cognitive Dissonance
Cognitive Dissonance's picture

Interesting observation. I've noticed it can get pretty shrill around here. It comes and go but the cycle is ramping up.

Not to mention the Israeli Megaphone troops battling Chumbahouse to house. I saw Chumba take on 26 in hand to hand combat the Monday of the Gaza interception. Simply an amazing show of perseverance by Chumba. I was exhausted just watching. :>)

Wed, 06/09/2010 - 04:47 | 403329 Bringin It
Tue, 06/08/2010 - 20:18 | 402716 Sam Clemons
Sam Clemons's picture

I agree completely.  I even saw "double-dip recession" on Government sponsored CNN "news" today.  Where were all these bears at the top?  I was right here, but the pessimissm is bordering on temporarily extreme.

After all, we still do have a steep yield curve and full acceleration on the money machine.  I don't disagree that these policies are a road to serfdom, but we must step back and think before the baby goes out the window with the bath water.



Tue, 06/08/2010 - 20:31 | 402741 johngaltfla
johngaltfla's picture

I don't see it across the board. I see more of a 2007 attitude of "indifference" and the other dangerous sign "the Fed has it under control" type of attitude. Unfortunately for investors the Fed is run by a clown who has never worked in a bank and the Treasury is run by a dwarf who has never had a real job in his life either.

In fact of the top 10 positions of the ecnomic staff for the President and Fed, very few of them have ever signed the front of a check or worked in a bank beyond the teller position.

Tue, 06/08/2010 - 23:33 | 403000 reading
reading's picture

I think part of that comes from having seen "the dark side of 2008." The average person doesn't feel like things are that great...they started to believe it a little bit just based on the vast amount of propaganda about how great things are, but it seems now when things start to look a little shaky, people realize that how they really feel might be how it really is and that is pretty damn scary for most.

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