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Here Come the Black Swans
It is not my intention to ruin your day. But I may well do that if you read this piece. While traders pile on their longs with reckless abandon, and retail flows into equity mutual funds turn positive for the first time in two years, I am hearing a rising tide of negativity from the jungle telegraph. There are “black swans” circling out there everywhere, and the risk is that they alight upon us in great unexpected flocks, like a scene out of Alfred Hitchcock’s classic film, The Birds.
Let me give you a list of things that can go wrong this year:
*The ten year Treasury bond spikes to 5% and money gets expensive.
*Crude soars to $120 a barrel and gasoline rises to $4 a gallon.
*Europe blows up again, sending the dollar through the roof.
*Seeing stock prices soar, Ben Bernanke ends QE2 early, paring it down to QE 1 ½.
*The high frequency traders and quants hungry for a mean reversion smell blood in the water and trigger another “flash crash.”
*Retails investors conclude they were right to stay away and bail on what they have remaining.
And here is the scariest thing of all. All of these black swans could hit at the same time and reinforce each other, possible around March or April, triggering the recurrent double dip fears. Could this be the third consecutive “sell in May and go away” year? This conjures up the vision of a “ground hog year”, where 2011 is a carbon copy of 2010. A strong first quarter is followed by two dead quarters, and then a strong year end finish. This is what “lost decades” look like. Look at the 20 year chart of the (SPY) below and tell me this isn’t happening.
Of course, this is just one of many possible scenarios that could play out this year. As for me, I’m booking my chalet in Zermatt in the Swiss Alps now to beat out the rest of you.
To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.
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Is there a way to mass ignore posts from this Mad Hatter, really weak thinking from every one of his posts and then all the marketing about going to his site to read more of his dribble.
Worthless content, please exercise some judgment ZH.
April Fools Day or Armstrong's June 13; pick your collapse date. The disconnect today between gold down and silver up is very telling as to how delusional and/or manipulated the markets are. Has this ever happened before?
Ray Charles could spot those potentials. The "black swan" would be... a false flag/pandemic/terrorist dupe surely to happen should any of the above listed begin to occur. There is no way "they" will allow this "recovery" to fail due to economic policy... a true "unforeseen" fabricated swan will be blamed.
Don't forget to stock up that swiss chalet with caviar and grey poupon, before the other narcissists beat you to it.
These are not Black Swan events. Time to go back and read the definition again, friend.
Doesn't the author read ZH? I would venture a guess that most of ZH-ers think $120/bbl and $4/gal are pretty kind estimates, (and both possibilities on the 3 - 6mo timeline). Ho-hum "revelations", IMHO.
What's the deal, Mr. MadHedgeFundTrader? Are you just now waking up, rubbing your eyes and realizing you smell smoke in our house?
Another example might be the invention for or a technique to control or eliminate the physical "inertia" of an object. In which case most modes and infrastructures of transportation would become obsolete over night.
IMO the term "Black Swan" has morphed from Taleb's original concept to just meaning an event that most people were not expecting to happen.
The meaning Taleb assigned to this term was that this related to "unknown unknowns" that manifest themselves in such a way as to disrupt systems and customs which depend upon the unknown-unknown not occuring/being.
Nations being overthrown by popular revolutions is not a black swam by his meaning.
An example of a "black swan" event according to Taleb might be a practical "free energy" system that "produces more power than it consumes". The entire global economy would be altered materially by this type of invention, which "defies the laws of physics" according to the ruling group think of the planet.
How about inflation in june causes 3/4's of the world's population to be in a revolution because they are starving? The flock of swans you mentioned have been flying forever already .
Please re-read Taleb's book! A black swan was something nobody had ever seen!
All ten of your items have an assignable probability and some are quite high.
The only one that is even grey is the Bernank kicking his QE (you put in the #) habit.
well, a little better.
OK, now it's gone, but how come no sig line?
OK, now it's gone, but how come no sig line?
Why can't I change my picture?
pebcak
did your maid get those gold pesos yet?? I heard Leo sold her some solars but she doesn't know where to put them..
I prefer duck, actually.
I always like hearing from the mad hedgie. Lots of black swans and they.all seem incredibly.destructive of demand. Oil to 120 is domething i dont expect, but maybe manipulators are in control of these markets. Otherwise all this.rioting has to fade eventually.and.so will oil. Food may keep rising for.a while but so what? We dont spend much on food and it is our only way to end unfair trade and.force.a change among the mercantilist economies. I smell at least a temporary distribution top and the smart money may be.getting ready to bail on the stock market while the masses are just starting to enter. My magic 8 ball has been fairly helpful so far. Lets see if it is correct that the deflation monster is coming back, maybe just for a temporary scare though. Btfd.
The blame for causing the financial crises is to be shared by all the parties involved.
Individuals kept on spending even in face of declining incomes by using the cheap and easily available loans handed over to them by the bankers.
The bankers kept on lending to the individuals, who they knew would never be able to repay their loans, because they were earning commission. Moreover they were able to sell the poor loans after getting them fraudently rated as AAA to the pension funds and fixed income investors for commissions knowing very well they will go down in value when the borrowers default. The bankers were confident that the government would route tax payers collections to them in case of any mishap as they had become too big to fail and controlled the politicians, rule-makers and the rule enforcers.
The politicians around the world are nothing more than auction items which can be sold to the highest bidder. They will do whatever they can for the lobbyist paying them the maximum amount of money or votes, be it the unions, the banksters, the richest corporations or individuals.
The rest of the population is least of their concerns. The only activity they do is pacify the majority of the population using false statistics and promises of a better future so that they do not lynch them and their masters while they are robbing the taxpayers.
http://www.marketoracle.co.uk/Article24581.html
A nice summation of the rather sorry state we're in, and how we got there.
I don't classify any of the above as "Black Swans"
exactly. if you can see them coming, they aren't black swans.
So Netflix topping is off the list, noted.
Black Swan events? This list seems like pretty much a sure thing.
don't forget the "mulatto Swan"..the right man in the right place at the right time to bring it down and install the global dictatorship ..a nobody from indonesea - who's past is more secret than the launch codes...strange days for America indeed.
I wonder if perhaps you might be a bit undermedicated now.
Whiteness. It has a ring to it doesn't it? Whiteness is the term for a group of swans. A blinding Whiteness. That is what we are experiencing; we are in the middle of a wedge, a whiteness. The whiteness is descending, and when it lands it is all over.
The whiteness includes:
The fundamental system of FIAT is a lie. FIAT monie is a lie.
Silver and gold price manipulation by Major banks, including Central Banks.
The Fraudclosure scandal that is the MBS market.
And updated for the food riots.
It is a whiteness of black swans.
1. *"The ten year Treasury bond spikes to 5% and money gets expensive."
Agree can happen: Deflation is a distinct possibility, the best deflation hedge is USD.
2. *"Crude soars to $120 a barrel and gasoline rises to $4 a gallon."
Will happen: Lindsey Williams said so. Oh, he also said there are BILLIONS of barrells of oil discovered and not disclosed, oil is really worth 'bout 40 bucks a barrel, and there is a conspiracy to bring down the USA through inflation to hyperinflation. conspiracy theory fodder.
3. "*Europe blows up again, sending the dollar through the roof."
Likely. The euro is the most flimsy currency out there, the paper currency having no images of heroes or Sovereignty.. just nice architechture. no reminders of those that were paramount in creating individual european nations. I wonder why that is? Lets face it; europeans are entirely conquered by the elite; they will soon have their damn 'credit card microchips' attached to their foreheads...
4. "*Seeing stock prices soar, Ben Bernanke ends QE2 early, paring it down to QE 1 ½."
Never Happen.
5. "*The high frequency traders and quants hungry for a mean reversion smell blood in the water and trigger another “flash crash.”"
Likely, to get new higher lows and lower prices on everything; and to skew the chart monkey's.
6. "*Retails investors conclude they were right to stay away and bail on what they have remaining."
Retail stock buying is DEAD: JSP is busy hoarding food, guns, ammo, and bottled water. grandpa and gramma babyboomer will be NET sellers of all assets as they say "fuck it" and go on trips to europe and cross country, sporting bumper stickers that read "we're blowing our childrens inheritance".
IN ROBOTS WE TRUST
"having no images of heroes or Sovereignty" ummm yeah some pix of dead presidents, that should save a currency
I think it does do something psychologically. You can't deny U.S. bills are knwon throughout the world and Euros look like monopoly money. I think death of the dollar theory is highly overrated.