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The Details Of The CitiFX Contrary Call For A Watershed Bear-Market 2011

Tyler Durden's picture


The report making the rounds today comes from CitiFX' Technical group which goes against the Wall Street conventional wisdom and instead of a 1,550 on the S&P forecasted by discredited permabull David Bianco, expects to see the market drop 16% by the end of next year. The punchline is that "the peak may be posted as early as the opening days of January 2011 (possibly even 3rd January as per the other 3 examples) with a down month in the region of 5%." And if a down 5% January is not enough, the firm believes that based on historical precedent, we will also see a 20% intrayear drop, and close the year 16% down. The catalysts: i) The bond market falling sharply as it did in 1977 sending yields higher and fueling inflation or supply fears or both, and ii) Europe imploding. While this could stress our view on the dollar fixed income and commodities, this dynamic still supports our bearish equity view. The report's conclusion may prove to be very prescient: "Happy holidays, get some rest. You may need it." On the other hand, with the Fed now practically solely responsible for risk asset pricing, we would not be surprised to see the Dow end 2011 at 36,000.... of course as gas hits $36/gallon, but that's irrelevant. Wealth effect forever!

Citi's two catalysts:

  • The bond market falling sharply as it did in 1977 sending yields higher and fuelling inflation or supply fears or both.
  • Europe imploding. While this could stress our view on the dollar fixed income and commodities, this dynamic still supports our bearish equity view.

Incidentally, one of these (Europe) is precisely what Scott Minerd called for in his outlook for the next 12 months. It is the lack of the other, which goes hand in hand, in Guggenheim's forecast, that made us have a little fun at Scott's expense.

Incidentally, this is the same Tom Fitzpatrick who in August 2007 called for a 1987-type sell off in 2008, and uttered the following prophetic phrase: "without the Bernanke PUT we may have to entertain the idea of the Bernanke crash." Well, Tom was spot on with his call... and got way more than he bargained for.

Full report below:



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Wed, 12/22/2010 - 15:41 | 824565 plocequ1
plocequ1's picture

Gas at $36 a gallon? Damn!!!

Wed, 12/22/2010 - 16:13 | 824639 Sudden Debt
Sudden Debt's picture

Better start doing a LPG make over on that Corvette and that Hummer ;)

Wed, 12/22/2010 - 21:37 | 825382 espirit
espirit's picture

Title page has 21 December as the date, but the following two pages have 2 November. What gives?

Nuking the Santa Rally?

Thu, 12/23/2010 - 04:16 | 825736 e_goldstein
e_goldstein's picture

I think you mean 'lng', and frack you :-)

Wed, 12/22/2010 - 15:45 | 824570 SheepDog-One
SheepDog-One's picture

2011 has 99 problems and a bitch aint 1. Well Except for Blythe. Oh yea and that dyke Napolitano. Hillary...Pelosi...well OK theres lotsa bitches and this market/economic BS is set for mass detonation.

YouTube - Ice T 99 Problems

Wed, 12/22/2010 - 15:56 | 824605 cosmictrainwreck
cosmictrainwreck's picture

now, that dude got sum problemmz..... bitchez

Wed, 12/22/2010 - 16:17 | 824644 Cdad
Cdad's picture

Ummmm Dog,

Since you brought up Napolitano [although I don't know anything about her sexual orientation], I wondered if you saw this one:

I post it here for all my permabulls friends that are so confident that nothing could get through to this market [in search of credibility].  Yeah, I'm sure guys won't take these unprecedented profits with such competent folk in charge of making sure security is ship shape. [If you watch this video and sleep well tonight...then you have better meds than me]

Wed, 12/22/2010 - 16:21 | 824663 SheepDog-One
SheepDog-One's picture

Thanks man! Yea Im all over (figuratively speaking of course) Napolitano Big Nazi Sis, Obamas indefinite detention executive order signing, Internet Neutrality so-called. I think a lot of these people find confort in their ultrabull positions that nothing can go wrong now, daddy Bernank keeps me safe market will never fall and economy fine, and all the rest of the BS while ignoring the plain truth right in front of their face.

Wed, 12/22/2010 - 18:15 | 824939 goldsaver
goldsaver's picture

The 3 fucking stooges!!!


Wed, 12/22/2010 - 19:25 | 825114 macholatte
macholatte's picture

I'd like to believe those people. I really would. Problem is, I can't.

Big Sis is nothing more than a Progressive hack. No qualfications for the job. No experience in the military or security or anything that the job should require. She's all politics and being a Nazi suits her just fine. The other 2 guys are just the front. Air heads doing what they're told. Motivated by politics and the carrot of being the next Chertoff to make millions off their connections.

ABC is owned by Disney and is basically just another tentacle of the propaganda machine. Diane Sawyer makes about $9M per year regurgitating the party line. Tokyo Rose with blond hair.

 I am concerned for the security of our great Nation; not so much because of any threat from without, but because of the insidious forces working from within.
Douglas MacArthur

Wed, 12/22/2010 - 15:48 | 824580 HarryWanger
HarryWanger's picture

Until the Fed completely stops pumping money, this scenario is completely off base. Maybe a 5-7% pullback as worst case scenario IMO.

Wed, 12/22/2010 - 15:51 | 824587 bob_dabolina
bob_dabolina's picture

Judging by how well your business is doing one would assume you would have an S&P advance of 75%

Wed, 12/22/2010 - 15:55 | 824589 SheepDog-One
SheepDog-One's picture

Nope, youre wrong fantasyboy, just try to drop the money pumps down from present $8 billion daily avg to $4 billion, throw in raising ZIRP rate up to 2%, then tell me what happens. Total implosion and Bernanke has his finger on that 15 minute button already anyway, the money pumpfest is as over as last weeks linguini. Its no longer relevant.

Wed, 12/22/2010 - 16:17 | 824653 Common_Cents22
Common_Cents22's picture

agree fundamentally but if HFT is 40-70% of the volume, and could be dialed up higher, why can't the market take a life on of its own?  With continual departure of real retail money isn't a thinner market easier to manipulate?  The market will be propped up as long as possible to keep the masses in check, but if there is a govt funding issue and no other foreign suckers to take out at the time, the equity market will be flash crashed to scare the last few suckers into treasuries.

If wall st. doesn't want the market to decline, what will make it decline?   Those are the questions I ask myself.   I don't look at the fundamental cards in my hand, I look at how the other players are betting.   Like poker, many times the cards don't even matter.

Wed, 12/22/2010 - 16:23 | 824671 SheepDog-One
SheepDog-One's picture

Whats the point in doing so? Endless market pump towards nothing? It makes no sense to pump something you can never cash out of, unless they know full well they never can and never intended to in the first place. Which if that IS the case, which Im sure it is, I hope you realize the magnitude of how truely fuked we really are.

Wed, 12/22/2010 - 16:46 | 824717 tahoebumsmith
tahoebumsmith's picture

My guess is they know something big is coming. All the homeland security preparations, underground cities popping up everywhere and the blatant manipulation done in full transparency can only mean it's going to be ugly. When you create policy that has no future resolve it must only mean that it will never matter anyway. It would be the only answer I could give to the madness that is going on today.  

Wed, 12/22/2010 - 17:59 | 824911 SilverBaron
SilverBaron's picture

Maybe a big meteor. 

Wed, 12/22/2010 - 15:56 | 824603 Cursive
Cursive's picture

Harry, how do you have time to post comments during this really heavy holiday sales season? Oh, and what was the name of that imaginary home decor biz you're always prattling about?

Wed, 12/22/2010 - 15:59 | 824607 SheepDog-One
SheepDog-One's picture

Seems Harry and his 5 other ZH ID's would be very busy handling the massive number of orders from the consumers elbowing each other in the face to buy his discretionary goods this rockin holiday consumer sheeple season. What up with that Harry?

Wed, 12/22/2010 - 16:04 | 824621 gloomboomdoom
gloomboomdoom's picture

Time to Go on Record Folks.

Just got into FAS and OLO today. LONG AND HARD. Also added to my long position in SLV.

Wed, 12/22/2010 - 16:21 | 824664 Missing_Link
Missing_Link's picture

Why OLO?  There's almost no liquidity there.  You're bound to get raped on the bid/ask.  Why not go with USO, OIL, or even DIG, any of which has a lot more liquidity?

Wed, 12/22/2010 - 16:45 | 824716 SteveNYC
SteveNYC's picture

I wish you luck, but.....won't we need ANOTHER parabolic move, on top of the CURRENT parabolic move, to make this trade worthwhile??

Just asking.....I didn't junk you.

Wed, 12/22/2010 - 16:13 | 824638 HarryWanger
HarryWanger's picture

Hardly posted at all this month. Too busy. All of our holiday shipments had to be out by yesterday p.m. Now I am pretty much off for the rest of this month. Lucky you guys!

Wed, 12/22/2010 - 16:16 | 824648 bob_dabolina
bob_dabolina's picture

How do I buy one of your products?

Wed, 12/22/2010 - 16:19 | 824661 traderjoe
traderjoe's picture

Since you've been outed as a professional troll it's been sad to watch you post your drivel about a booming economy. I have friends in the housewares/furniture business and they are struggling professionally and emotionally because of the economy. You mock them with your made-up comments. I have friends in the construction and excavation businesses that have no work at all. You mock them with your made-up comments. I have friends that are struggling financially all around. You mock their pain with your made up comments. F/U.  

Wed, 12/22/2010 - 16:25 | 824672 SheepDog-One
SheepDog-One's picture

Harry can you link to your product catalog please? Thanks.

Wed, 12/22/2010 - 16:34 | 824695 TruthInSunshine
TruthInSunshine's picture

Harry, is your Dildo business really doing well, and do you offer free returns on used items?

Wed, 12/22/2010 - 16:55 | 824739 mukuch
mukuch's picture

you almost guessed, here's the product, he's right it's sold out:

Wed, 12/22/2010 - 16:37 | 824698 LowProfile
LowProfile's picture

Yeah, you must have kick-ass products if you're doing so well.  Wife and I are in the market for a new countertop.  Let me see your marble samples.

Wed, 12/22/2010 - 16:18 | 824657 Missing_Link
Missing_Link's picture

100 bucks says Harry is actually in the home foreclosure biz.

Wed, 12/22/2010 - 16:30 | 824683 tickhound
tickhound's picture

I'm sticking with floor safes and home security systems.

Wed, 12/22/2010 - 16:34 | 824690 SheepDog-One
SheepDog-One's picture

Me too, 12 guage #4 heavy game loads are very cheap, stocking up.

Wed, 12/22/2010 - 16:10 | 824635 Everyman
Everyman's picture

Harry you are WRONG agwain, this based on Crued Oil alone.  For every one penny that the crude oil goes above 9o bucks it takes out $600 million a year n GDP, so by the time it gets to $100 per barrel in Jan-Feb, that will have increased the Crude price 1000 pennies and that means a $600 million X 1000 pennies of crude increase loss to the Annual GDP. That would be $600,000 MILLION, or 600 BILLION DOLLARS which wipes out all the POMO for the year.

Wed, 12/22/2010 - 16:16 | 824649 Ferg .
Ferg .'s picture

I think that scenario is not too far away . The composition of the new Fed Board won't be as amenable to QE as the current one and there's been a good deal of criticism of Fed activities from the GOP , not to mention numerous prominent politicians from across the globe . And of course there's Ron Paul at the head of the Domestic Monetary Policy Subcommitee . The scope for further injections is narrowing .

Wed, 12/22/2010 - 17:10 | 824777 Escapeclaws
Escapeclaws's picture

"and there's been a good deal of criticism of Fed activities from the GOP"

How does restricting QE hurt middle-class people?

Wed, 12/22/2010 - 21:03 | 825336 Ferg .
Ferg .'s picture

I'm not sure I understand what you're getting at . I was responding to HarryWanger's post about the Fed pumping capital .

Wed, 12/22/2010 - 15:49 | 824584 velobabe
velobabe's picture

does anybody know where zerohedge Radio went?

i click on this and it says server not found. it would be nice to hear this during Xmass.

Wed, 12/22/2010 - 15:50 | 824585 Jason T
Jason T's picture

how much does a guy who makes this shit up get paid?  I have to wonder. If it doesn't come close to panning out, does he get fired?

Wed, 12/22/2010 - 15:53 | 824597 SheepDog-One
SheepDog-One's picture

Thing is, if and when this scenario DOES 'pan out', last thing anyone will be thinking about for years is who called what....dig out from under the rubble will be everyones only concern for years.

Wed, 12/22/2010 - 15:54 | 824601 Jason T
Jason T's picture

my bias is it will pan out too.  maybe at heart, i'm jealous of this guys job.

Wed, 12/22/2010 - 15:53 | 824595 monopoly
monopoly's picture

Damn, and I thought $4.00 gas would wipe us out. 36.00. geesh.

Wed, 12/22/2010 - 16:02 | 824615 cosmictrainwreck
cosmictrainwreck's picture

c'mon, dude...chill...ain't no $36. Dow 36K = 3.13x = gas at $9... oops, let's add a 50% fudge for supply problems, etc = $13.61. A steal! feel better now?

Wed, 12/22/2010 - 16:37 | 824700 SheepDog-One
SheepDog-One's picture

Whew! I was thinkin $36 gas would be a bit of a pinch, but revised to only $14 with the confirmed recovered economy is no problemo.

Wed, 12/22/2010 - 15:52 | 824596 tickhound
tickhound's picture

Could be argument to flip the governor on the printing press. Given that the talking heads assume now that QE had no inflationary pressures on the market, and that it has rallied on "the fundamentals of a recovering consumer", the fed just may need some bearishness to justify further QE dollar destruction.

After all, this forecast flies right in the face of "housing bottoming in June '09, the recovered consumer, the US being first in first out of the recession, our summer of recovery, 8% unemployment post stimulus, the metals bust, worldwide demand for US debt, and every other green shoot" we never witness, but seem to hear so much about.

Wed, 12/22/2010 - 16:01 | 824614 Kali
Kali's picture

whether they need "more bearishness to flip on more QE" or not, could it be, reality may not be ignored much longer?  As said before, I cannot believe this charade has lasted so long.  What will it take?  For every small biz to be put out of biz?  Unemployment to 50%?  Stepping over starving, freezing people as you walk down the street?  I don't see any trends in my biz getting better for the new year.  In fact, I fear the birth of Baby 2011.  Bad Seed he will be, methinks.

Wed, 12/22/2010 - 16:24 | 824637 tickhound
tickhound's picture

Reality, or the new normal, is that insolvency is bullish, and popular delusions are coming in better than expected.

Wed, 12/22/2010 - 16:29 | 824681 Kali
Kali's picture

OK. It's past noon here now.  Guess I'll go make me a strong egg nog drink or two to make sure I toe the line.  Maybe it will make the soul crushing EOY paper work I'm am doing so the government can confiscate my hard earned $$ go down faster and easier.  Which would be a good thing, then I can head back to the homestead for a couple of weeks.  At least I feel safer and saner there. : ) I'll take any excuse to start my holiday cheer a little early.

Wed, 12/22/2010 - 16:37 | 824701 Captain Kink
Captain Kink's picture

+1 enjoy your holidays.  And the same goes for all the rest of you ZH crackers. Seriously, you all make the pain bearable, and I dare say, a touch more profitable.

Wed, 12/22/2010 - 16:49 | 824725 Kali
Kali's picture

Yes sir Captain.  Same to you and yours.

Wed, 12/22/2010 - 17:06 | 824761 tickhound
tickhound's picture

Happy holidays to all... sheeps and creeps included.

Wed, 12/22/2010 - 16:50 | 824727 SteveNYC
SteveNYC's picture

It looks like all commodities are starting to call Ben on the carpet. When oil cracks $100, gas cracks $4/gallon, a box of cereal cracks $6, bread cracks $5, industrial input materials continue to sky.....

....Ben is about cornered. This bout of QE could well be his last.

Wed, 12/22/2010 - 15:58 | 824608 max2205
max2205's picture

But I have been trained to only buy the dips.

Wed, 12/22/2010 - 15:59 | 824609 SAME AS IT EVER WAS

How about the bac call in oct. for a 10-15% decline? The markets go where the wall st. wizards want it to go. PERIOD.

Wed, 12/22/2010 - 16:03 | 824622 buzzsaw99
buzzsaw99's picture

David Bianco, expects to see the market drop 16% by the end of next year...


Dude, you're harshing my xmas buzz.

Wed, 12/22/2010 - 16:06 | 824624 Jason T
Jason T's picture

Russia Today gets all the best shots by far of any news organization.

Italian students are pissed.

Wed, 12/22/2010 - 16:10 | 824633 gloomboomdoom
gloomboomdoom's picture

RT is controlled opposition.

Putin is a puppet of the Anglo-American establishment.

Gerald Celente was wrong 2010...

Wed, 12/22/2010 - 16:37 | 824691 Randall Cabot
Randall Cabot's picture

Celente was wrong in 2009 too. If his average in on par with a broken clock, what good is he?

He's just another gold crazy who wants a dystopia so he can sit in his room and count his gold coins over and over and over again-it's some kind of mental disease, I tell ya.

Wed, 12/22/2010 - 19:36 | 825147 macholatte
macholatte's picture

A dystopia (from Ancient Greek: δυσ-: bad-, ill- and Ancient Greek: τ?πος: place, landscape) (alternatively, cacotopia,[1] or anti-utopia) is, in literature, an often futuristic society that has degraded into a repressive and controlled state, often under the guise of being utopian. Dystopian literature has underlying cautionary tones, warning society that if we continue to live how we do, this will be the consequence. A dystopia, thus, is regarded as a sort of negative utopia and is often characterized by an authoritarian or totalitarian form of government. Dystopias usually feature different kinds of repressive social control systems, a lack or total absence of individual freedoms and expressions and constant states of warfare or violence. Dystopias often explore the concept of technology going "too far" and how humans individually and en masse use technology. A dystopian society is also often characterized by mass poverty for most of its inhabitants and a large military-like police force.


Good choice of words, but might be what we are already very close to.


Wed, 12/22/2010 - 16:56 | 824741 tahoebumsmith
tahoebumsmith's picture

Actually Celente was 100% correct in his predictions! You tell me what would have happened if the FED and the ECB didn't print another 3.5 TRILLION out of thin air to head off these problems. What would have happened??? exactly what Gerald predicted... You need to understand that Celent is reasonable in his predictions but he can't forcast unreasonable efforts to keep the curtain from being pulled back. Nobody in their right mind would have thought they would keep the ponzi going this long. Then again nobody in their right mind would print as much money as they have.

Wed, 12/22/2010 - 21:21 | 825361 Randall Cabot
Randall Cabot's picture

"Actually Celente was 100% correct in his predictions! You tell me what would have happened if the FED and the ECB didn't print another 3.5 TRILLION out of thin air to head off these problems."

Why didn't he foresee that the central banks would do this? He didn't even give himself any wiggle room! Sorry, he was 100% WRONG!! TWO YEARS IN A ROW!!!

Wed, 12/22/2010 - 16:09 | 824630 Rogerwilco
Rogerwilco's picture

El Presidente is planning his comeback tour with all new faces in the top slots (except for Jarrett lol). If he starts playing golf with Boehner, I'm coming off the sidelines, maybe all in long. APPL to $1K, CMG to da moon!

Wed, 12/22/2010 - 16:15 | 824646 Sudden Debt
Sudden Debt's picture

There are to many on main street calling for a market crash in jan. 2011.

This is what will happen:

Jan: DOW +5%

Feb: DOW +4%

March: DOW +5%

And in the process all the shorts will YET AGAIN be wipped out and GS will have a record Q1.




Wed, 12/22/2010 - 16:32 | 824684 cosmictrainwreck
cosmictrainwreck's picture

yeah, sure, smart-ass........ but "this time it's different..." :)

Wed, 12/22/2010 - 16:35 | 824696 SheepDog-One
SheepDog-One's picture

All the bears have turned bullish, guaranteed market has top ticked.

Wed, 12/22/2010 - 21:18 | 825359 espirit
espirit's picture

+1000 Bingo! I'm with you on that one.

Wed, 12/22/2010 - 16:20 | 824660 goldmiddelfinger
goldmiddelfinger's picture

Sentiment is at saturation levels yet even level headed TAs like T Hayes at Ned Davis Res are calling for 10pc up. Got to go the other way or at least sit out the last 2pc upside



Wed, 12/22/2010 - 16:53 | 824732 cosmictrainwreck
cosmictrainwreck's picture

I bet the bastards start selling, like, tomorrow.... like rats off the ship. Who's gonna wait to be the last chump out the door? Meantime, the same ol' same ol' BS 2pm fake push to end-of day having a little trouble here... only got 7 min. to stick that pig in the ass (again)

Wed, 12/22/2010 - 18:32 | 824978 SilverBaron
SilverBaron's picture

The flash crash was a test run.  When they decide the time is right they will be out instantly and everyone else will be f'd.

Wed, 12/22/2010 - 17:00 | 824747 StuartScottsLazyEye
StuartScottsLazyEye's picture

Link - correct me if I'm wrong here, but in the case of OLO, and all ETF's for that matter, doesn't the Fund Company provide liquidity thru creation units? So even if it is thinly traded you can redeem with the company? Regardless, most oil etf's are junk if you plan to hold because you get killed on fees when they roll the contracts. Compare the performance of any of these ETF's to the actual price of oil. They are a joke.

Wed, 12/22/2010 - 17:01 | 824749 Fat Ass
Fat Ass's picture

The Usa market's simply going to jump up and down (by say 50% base each way)...

exactly as it has done for the last ten years.

And just as it has done in Japan for - what - 25 years.

No amazing mystery.  If, incredibly, you can time these huge swings up and down, you're set to make good profits (maybe enough to follow gold or silver or keep up with consumer inflation).

Wed, 12/22/2010 - 17:02 | 824751 cosmictrainwreck
cosmictrainwreck's picture

VICTORY! another last-minute rocket burst to make goddamn sure they did not show a "lower high" the last 30 min. God, these guys are good....

Wed, 12/22/2010 - 17:05 | 824760 deepsouthdoug
deepsouthdoug's picture

That Jan. 3rd high date for the up leg is interesting, cosmically interesting.

Wed, 12/22/2010 - 17:16 | 824789 cosmictrainwreck
cosmictrainwreck's picture

certainly, but the pricks will sell out way before that, cause they know everybody else is thinking the same thing. I once thought the secret to trading was just to understand what the market players were thinking and scheming HA! boy was I a dumb-fuck; didn't know back then that the mo fo's not only could paint the tape, but cheerfully would. Paint me painfully wiser.

Wed, 12/22/2010 - 18:43 | 825001 wharfdaddy
wharfdaddy's picture

Say bye to dipshits

Wed, 12/22/2010 - 19:33 | 825141 huggy_in_london
huggy_in_london's picture

you the professional market citi tech's are renown for being a great reverse indicator (in fx at least).   i hope they are right on this one tho.....

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