Deutsche Bank's Binky Chadha Goes Permafull Retard, Sees S&P At 1,550 By End Of 2011

Tyler Durden's picture

It was less than 24 hours ago that we presented the latest 2011 outlook from Deutsche Bank's highly credible Fixed Income group, which had one of the bleakest economic outlooks for 2011, and we quote: "there are so many headwinds to work through, that recovery
is not consistent with premature monetary tightening by either the Fed
or the markets. Fiscal stimulus buys time in 2011 but little else.
Ironically the stronger growth looks, the more likely fiscal tightening
will come into play sooner keeping the recovery on a backfoot. However, in our view, at best this buys some time for recovery. The deficit is huge and meaningful fiscal tightening is not far behind
. Even if we dodge the Ricardian bullet of equivalence in 2011, there is at least 1 if not 2 percent of fiscal tightening slated for 2012. If underlying economic  growth remains in the 2-3 percent range, there is a sharp slowing implied for 2012." Yet this very rational view does not prevent that other DBer, Binky Chadha, who completely refuses to even cross check memos from other groups in the firm, and who in making even Joe LaVorgna sound credible, comes out with a report which can only be classified as going uberfull retard: "The strategic and tactical cases for US equities should come together to generate strong market returns in 2011 The S&P 500 YE 2011 target remains unchanged at 1550.We estimate $96 in EPS and a fair value multiple of 16.4x. These may look ambitious, but viewed against a Q4 2010 annualized $91.5 our estimate looks modest; a 16.5 multiple was the average in the 1930s. 25% price appreciation would not be atypical for a post-midterm election year, historically the strongest in the election cycle." All we can say is that when clowns take over the insane asylum, the end result is so much better than a hostile take over by lunatics: at least the consequences are so infinitely funnier. To all who believe that EPS can remain at projected levels once margins collapse across the board courtesy of an explosion in input costs should this prediction be even partially correct, all we can suggest is to buy every Cramer stock recommendation without question.

Binky's (not to be confused with Dinky from The Littles) optimism is based on the following 7 "catalysts":

The tactical case rests on 7 catalysts: A strengthening recovery, with jobs growth to pick up and credit growth to resume; positive data surprises; a low earnings bar; cheap multiples; a move toward the center in policy making; asset re-allocation back to equities; and a favorable demand-supply balance.

For everyone who wishes to feel their brain turn to mush, below is the full report.


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Mr Lennon Hendrix's picture

Many heads for the Hydra.

Binky and the Brain, Brain, Brain.....

The Trinity is breaking out!!!!!!!!!!!!!!!!!

Turd Ferguson's picture

OK, so this may seem hypocritical for someone who goes by "Turd" but how can anyone take seriously a market prognostication from someone named "Binky"?

Mr Lennon Hendrix's picture

I wonder if his Mama calls him that!  :)

SheepDog-One's picture

Binky's last big call was BBY at $44. Oops.

revenue_anticipation_believer's picture

Margins? well downsizing employee staff, and downsizing the debt loads with NEW low interest dbond issues, especially 2011, and downsized competition, bankrupcies etc  A&P, but also Lehman, same thing...less competition enables suppliers to POST prices, to a certain extent not yet appreciated....AND then goldman, and JPMorgan doing THEIR PART in keeping supplier wholesale metals prices higher, thereby encouraging a larger permanent supply of metals...the mines remain open..the wholesale can be passed on...just as PROVEN back in early Summer 2008, gasoline retailing at $5/gallon....couldn't be done THEY SAID...oh YAH? 

It WAS DONE, and gasoline turned-out to be virtually INELASTIC...$5 made no difference, indeed the HIGHEST demand WAS that very summer of 2008...

Margins? yes, some companies A&P deserve to die, and for them, 'the war is over' end game...other razor-margin companies are learning to apply computerization, decision-support software, and all that...THEY will thrive and survive,  in a less competitive enviroment, soon THEY will almost in collusion will SET MARKET PRICES at the retail level...

same computations, same results...THAT IS NOT COLLUSION, no legal action possible...

""The tactical case rests on 7 catalysts: A strengthening recovery, with jobs growth to pick up and credit growth to resume; positive data surprises; a low earnings bar; cheap multiples; a move toward the center in policy making; asset re-allocation back to equities; and a favorable demand-supply balance.""   



jus_lite_reading's picture

PermaBULL to Permafrost in 2 weeks.

Convolved Man's picture

Does FedEx deliver horse heads?  If you are a market bear and receive a package with a FRBNY return address, I suggest you not open it.

Don Birnam's picture


"Mr. Bernanke is a man who insists upon hearing bad news immediately."

jus_lite_reading's picture

In his Harvard educated reptilian mind, higher prices = growth, strength, properity. However he forgets, like Greece, the riots here won't be clam...

HarryWanger's picture

A tad too much. I'm looking at 1350-1400 but probably closer to the 1350 end of it.

Spalding_Smailes's picture

CNBC - All the large banks raising GDP forcast - (2011).

SheepDog-One's picture

Whole lotta bankstas got a whole lot of trash theyre dying to dump.

revenue_anticipation_believer's picture

Trash? you mean the Goldman conviction list of obsolete business model, obsolete locations/lack of Internet exploitation, lack of effective employee utilization at their highest and best potential (yes, some unions helping prevent this 'exploitation'...remember the 1982 aircraft controllers?  incompetent, unwilling to upgrade...all those were fired...

theres a whole lot of junk companies, well known names, fallen angels that will STAY FALLEN...

Caviar Emptor's picture

Only because they're expecting the Fed will continue to help pump the stock market through funny money. In other words, the market has become a Funny Money Gauge, pure and simple. Not about business so much anymore. If the spigot gets turned off, look out below.

Bonesetter Brown's picture

Data points from the semiconductor supply chain suggest strong 2011, up >15% in revenue and more than that in volume/units shipped.

This is after concerns there would be a soft December quarter this year. 

The supply chain had been holding its breath. After the biggest ever re-stocking of inventory from 3Q09 to 2Q10, there were fears that returns to organic demand growth would be underwhelming. So far demand growth has exceeded expectations.

I would like to understand if the Best Buy miss is a data point that suggests a rethink of 2011 demand, or if it is a loss in market share.  If it is a change in the macro demand picture, the semi supply chain will know by the first week of January as Q1 orders get rescheduled.

traderjoe's picture

A couple of points:

1. All of my construction friends (a fair number) have NO work except for a few government jobs. My house building/remodeling friend has never seen it so bad and his family have been in the business for 40 years. 

2. Even if BBY is simply a market share thing, then the winners will be AMZN and other online retailers. This will result in a further decline in employment, CRE values, etc. as the big box concept dies a slow death. Higher package shipping represents, IMHO, this online push and not necessarily net growth in economic activity. All of those local retail, especially mom-and-pop, stores will get further and further behind. 

3. Semi's might sell well, but they represent in part a push for productivity, i.e. computers replacing labor. 

Many of these macro trends will take years to play out, but we have no solution for long-term jobs. The S&P 500 companies will eventually no longer need US employment. We are hollowing out our economy. 

revenue_anticipation_believer's picture

YES, that is ALL correct sociologically...

business is not about 'welfare on the job'...if you are an equity market (not bond market) trader, NOW is the best of times to get in....DOW 36000 actually is more than possible but more than likely....Oh, did you ALL, forget JAPAN 1988-1989 ?? Nikki 39,000 which eventually douched a low of what? 8000?  

In the USA, yes, from 8000 to 39000 is quite within the possible range, with the help of Gods Workers Goldman/Jpm the Federal Reserve, the European Central bank...and a DESPERATE China, needing MIDDLE CLASS buyers (which no such thing, in quantity exists in China mainland)....

all this will require PERMANENT, secular unemployement and permanent reductions in force in government and residential construction...self evident...we, the World this time is going thru a once in 70 year Creative Destruction, no cyclical recession here, not at all....start RETRAINING, ASAP...

revenue_anticipation_believer's picture

Right thinking, right questions, full acceptance of the PIMCO New Normal

El Hosel's picture

Raising GDP forecast because bonds are selling off, "things must be getting better"...Now all we need is a sell off in gold to sound the all clear for Goldilocks and the three stooges.

revenue_anticipation_believer's picture

.""Now all we need is a sell off in gold to sound the all clear for Goldilocks and the three stooges."


Good THINKING, from your creative unconscious mind...yes, down deep, you KNOW thats what is gonna at 3x the mining cost...a fad...Gold will quite probably settle down back to near-cost of production...$500 or maybe less than two years, even 12 months, depending...and no further need of MANIPULATING THE GOLD PRICE, simple 'price discovery' will work just fine, SOON...



traderjoe's picture

Harry, you've NEVER answered me: when's your experiment on us 'permabulls' over? How many avatars do you have?

Biggus Dickus Jr.'s picture

I will know bear capitulation has occurred when you quit getting junked.

asteroids's picture

I only look at trailing earnings not hopium

Spalding_Smailes's picture

Ground Control to Uncle Ben
Ground Control to Uncle Ben ...

plocequ1's picture

From Deutsche Bank's mouth to Bernankes ears. So let it be written, So let it be done. Bernankes on it.

jtmo3's picture

I don't see this as full retard. It all depends on how long the bernak can keep the charade going. If another year, 1550 wouldn't be out of line.

Caviar Emptor's picture

Yup. With the market being a pure Funny Money gauge and not about anticipated earnings, this can go on toward a few end points: 

-Nasdaq cracks 2000 highs (good news) but inflation runs 18% (bad news)

-S&P cracks 2,500 (good news) but high input costs force de-listings of big companies every month to be replaced by speculative companies (bad news)

-Stocks get used as scrip for groceries and gasoline (very bad news)

-Social Security savings get invested in stocks as GW Bush suggested, pushing NASDAQ to 10,000 only to crash back to 500 (worse news)

Internet Tough Guy's picture

And oil will be 120, and gold will be 1800, and food...

TheGreatPonzi's picture

The very survival, not even the growth, of the modern financial system is based on credit expansion and M expansion.

So if they are permabullish, it's not just because they'd like more growth in the future: it's because they cannot do anything else than predicting higher levels of assets, for they own sake.

If Bank of America predicted DOW 4,000 in 2014, they would just be actively digging their own grave.

Cleanclog's picture

Likes US equities because expects European flight?  Riots in Rome, Paloma and Milan today, UK and Ireland last week, ongoing dust ups in Greece, Spain, Portugal, and warnings in Belgium?  Terrorist bombs in Sweden.  

But where to go when the riots start in the US?  Or will reality shows continue to dull the Americans?  Local bank robberies, pepper-sprayed clerks at retail shops while someone steals, and residential break-ins are up up up in the US.  Some from desperate need, but most because jails are full, DAs don't have staff to prosecute, and there are more important violent cases taking police and prosecutorial resources.

Dick Darlington's picture

But where to go when the riots start in the US?


As long as "Dancing with the Stars" is on there will be no riots.

Don Birnam's picture

Ah, yes. Deutsche Bank. I thought this outfit rang a bell, with their "Top 5" industry picks for "Black Friday 2010." Number "1" is certainly called to mind. Thanks for the memories, Binky.



SheepDog-One's picture

Best Buy their #1 bull pick, too funny.

Biggus Dickus Jr.'s picture

What if you are wrong?

pat53's picture

Very doable IMO. The bears who have been consistently wrong for the last 2 years will be wrong again. Like I've said for months .... DO NOT FIGHT THE FED...period. There are vested interests in blowing every last short out of this market. Until then, UP UP UP we go. The fact that the SPY is now the most shorted security only means the upside has WAY more to go. Until the bears understand that, they have no chance.

traderjoe's picture

Did you miss the move in silver and gold? 

SheepDog-One's picture

pat35 youll have about 14 minutes to escape implosion once Bernank hits the 'contain inflation' switch.

call me ahab's picture

"DO NOT FIGHT THE FED...period."


so-  I guess when the Fed was saying that subprime was contained and that there was no housing bubble-


folks should have taken that "as gold"  that nothing tragic would happen and stayed fully vested in stocks?


yeah . . .the Fed- they have it all figured out- always reacting after the market says what's up


no doubt in my mind that the Fed will be wondering what the fuck happened when all their little genius policy moves don't end up having the desired effect-  higher rates and high employment- what will be their excuse then?


That they're clueless?

LongSoupLine's picture

SO on a percentage basis that will put silver at...lets seeee....about $5000

TexDenim's picture

So don't these clowns talk to one another? Or is there some trick to this -- like a dollar so weak that 1550 on the S&P in 2011 translates into a loss?

SheepDog-One's picture

S&P 1550, USD -0-, cheers rang out across the land....

IQ 145's picture

 This is exactly the trick; just like the stock market average from 2002 to 2007; even with inflation; no gain. "Growth" is a dead concept, left over from the past; inflation cannot and will not drive the stock market to produce a real gain.

Dixie Normous's picture

His 7 catalysts are hilarious, the only thing he had to say is "dollar down the shitter, everything else to the moon."

shushup's picture

The market is doing the FED proud today and without any POMO money. Imagine that!