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"Irrational Exuberance" Is Back... For The Third Time
Back when the market experienced its first liquidity induced bubble, a rather discombobulated gentleman coined the term "irrational exuberance" to describe what was happening in the market (little did he know that that was just the appetizer to a far bigger bubble 7 years later). Well, frequent readers know our fascination with following such largely unfollowed by the mainstream media factoids as margin leverage, which recently has been near all time highs. Below we present a chart courtesy of Diapason's Sean Corrigan which proves that when adding mutual fund cash into the equation, the market is currently more "exuberant" than it was during the dot com bubble, as a near record low amount of cash is used to support a near record high amount of investment leverage. The silver lining: we have a little more ways to go before we hit an all time leverage peak. And since it is sufficiently obvious, there is no need to highlight how the market eventually responded after every single past net margin debt peak.
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Oh yeah... this is going to end REAL well..
Party on bitchez, its 2008
This will end with a Jubilee (debt restructuring for the entire world) or it will end with debt slavery for the entire world (except the 1% we are in slavery to, obviously).
Check out the latest from the Capital Research Institute "Misdirection, Disinformation and Lies":
http://www.capitalresearchinstitute.org
A few days ago, on June 26th, 2011 the BIS (Bank of International Settlements) released a warning:
“Interest rates must rise worldwide, says BIS”Hmmm, OK. Pretty sure the Capital Research Institute beat you to that revelation by 6 months or so. Thanks for that, BIS. Who is the BIS any way? What are they warning us, the common folk, for?
If central bankers want to discuss things with other central bankers, they would do so at the BIS...
Banks in Europe, North America, and China all have low reserves, and large amounts of low quality loans. The BIS talks a good game, but it knows that credit growth has been rampant in the last decade, and that it has failed in its attempt to ensure banks worldwide hold adequate reserves.
So what does that have to do with interest rates? And the BIS warning that rates ‘must rise worldwide’? Well, if you see that the BIS has been unsuccessful in its stated purpose, maintaining ‘capital adequacy’, then you can make an informed judgment whether the BIS will successfully complete its current task. But more importantly, you should realize that if the BIS was serious about interest rates being hiked it would not have to release warnings or official statements, it could merely have a meeting between the central bankers, who are part of the BIS, and discuss it at that time. The reason for the statement, then?
The warning is all politics. They are saying the right things, while doing nothing...
Interest rates can not even rise 1% from ZIRP or we're suddenly in 2008 to the 12,000th power.
That is the ridiculous thing. I tried explaining this to my parents. US debt while bad, isn't "that bad" if and only if there is no increase in interest rates. Nobody is REALLY that foolish enough to believe that ZIRP will continue on forever. Even the central planning clowns (i'd assume) believe that interest rates at some point should be more fluid (however they believe now isn't the time). Clearly whenever that happens, instant default or hyperinflation.
That's why I put my parents in an old age home. Got tired of 'splainin shit to them.
I'm assuming that your parents are Obama loving dimocrats.........
if the jubilee comes from Fannie and Fred taking over the US real estate market in its entirety and marking that sucker to market as it should have been doing since day one then yes "jubilee indeed." Should be an interesting election. In THAT sense i'll grab the popcorn...provided i live to see the day of course.
In inflation adjusted fiat....this peak has a ways to run.
there is nothing rational about irrational .... dont try to rationally pick the top
I try to tell people it doesn't take a fucking rocket science to read these charts and go.. uhm... there appears to be a pattern.
Yes. However, the size of the oscillations continues to grow until the complete collapse occurs. So, don't short the bubble just yet. The new peak will defy the odds and actually surpass the previous peak before the great plunge into the abyss.
Is that you, Mandelbrot?
You may be right, but all bets are off with the uncertainty of timing and form of the QE phoenix rising.
That is exactly what I thought. But you can't be sure either way really. Either way is little more than gambling which can be fun sometimes.
Nah, the last peak was a gargantuan $600 trillion real estate CDO derivatives swap behemoth that simply cant be matched this time. Smaller inner tube, but way more explosing gas pressure inside.
I would assume you're referring to the complete and total interconnectedness between US/China/Euro as your more explosive gas pressure?
Ever notice what happens to dead bodies that lay around in the afternoon sun for a week or so? Uncontained gas releases, little mini BP/Gulf of Mexico events.
Bad gas.
The developed countries are all dead and rotting in the afternoon sun. When are we going to bury the remains and make way for new birth? They most certainly will not "do the right thing" and bury their own corpses. When will we grow up and recognize that fact and then act on it?
It seems the answer is...........not until we are forced to as an act of ultimate self survival. The rabbit hole runs real deep here folks.
Cog made an excellent contribution to solve our energy problems today. Very bullish for the gas industry.
Oh, I am just a cynic. Sometimes it's just too much. Everybody - on the television screen, in the supermarket, in the newspapers - the white noise - just everybody tells me that we experience a boom. Not everybody is satisfied. But after months and months of telling the same story on an almost daily basis, people tend to think that everything might be positive in the end.
I might be one of the last bears in my country. Seen as an alarmist or a man that wants to watch the world burn.
things are so well here in Germany, I just bought more silver coins today (American Eagles for the first time...) - to celebrate the sustainable growth of our economy.
How's the saying go, being late/early is the same as being wrong? It's like playing chicken with a freight train, this market is.
I like to check in the longterm S&P chart, on a linear rather than log scale. That ain't right.
....this time is different
Tomorrow will be a telling day.
I think tomorrow will be a blah/whatever day. Just my hunch.
Yes - REAL WELL = watch focus shift to US muni & state debt in Q3.
More specifically:
1. US dollar will rally
2. US Treasuries will rally
3. Pretty much everything else will sell off
Get ready!
#3 has to happen first. Big question is how much lag time there is between the sell off and the movement over to Treasuries.
My guess---days to weeks (at most). Just like all the other times.
once you almost give up that bubble will pop and start feeling a bit insane.....it pops
Yes, It is.
The big one will come on a big irrational exuberance day.
Of course guys like Robo and Greeny will protest that its not irrational at all, as this time its different and theres actually 50% upside easily yet to be priced in here.
We just had four of the most irrational exuberance days that I have ever seen...courtesy of the ETF tools, of course.
And now that margin balances are insane, and the puke buckets are raised almost as high as P/Es based on criminal syndicate crack pipe dreams, the hacking out can begin any moment now as said syndicate members prepare to depart for the Hampton's after having completed a brilliant job dressing the windows.
Criminal syndicate Wall Street banker pink slips, please.
Reality is for the weak and feeble minded. Make your own relity. Just Do It.
the big one..
From turd's place:
Watch – Economic Armageddon and You
That was excellent Michael Victory.
Nothing that most of us do not already know, but that five minutes and a bit ought to be palyed to every high school & college class on Day 1 every semester.
"Prepare" is the word of the day.
yup.
it's simple.. my speed.
Corporations do not pay taxes, they collect taxes. It is buried in the price of things bought by individuals.
yeah sure, and the higher prices certainly have no impact on demand...?
So individuals either pay the corporate income tax via higher prices and/or via ownership of company stock (all of which is ultimately held by individuals). Individuals pay all taxes.
The government prefers to layer them in everywhere they can and make them less transparent because if each person knew how much in taxes they really pay, they just might revolt against government spending.
Ive got lots of peanut butter and fig newtons.
I have a fig bush. You would not believe how much food these things produce. Everyone should plant berries and fruit trees on their property. Freshly picked tastes amazing. Next is a bee hive (raw honey is amazing) and a couple chickens for companionship.
KFC slogan translated from English to Spanish, then back to English: "It takes a hard man to make a chicken amorous!" :>D
the USD taking a pounding. i guess china selling dollars (and treasuries) is US equity positive?
'Its all good' we live in normalcy bias and congitive dissonance USA after all....and besides all that matters is we're on the eve of yet another 4 days drunken BBQ fest celebrating our 'Independance'....mind numbing.
Well, at my house it's mind unnumbing, as we rightly celebrate Overthrow the Government Day!
Gives me a chance to keep my artillery skills sharp. ;-)
It'll come Jul 7.
If JCT messes with everyone and doesnt raise rates, the ensuing chaos in the EUR will be hilarious.
And it will go on longer than is imagined possible.
"The markets can remain irrational longer than you can remain solvent." - Keynes.
What a fitting end to the Keynesian Experiment.
Or not much longer at all as the end of the QE free crack for equities, and an invasion of Iran with Russia and China joining in within weeks.
Hmmm...we think alike... We've also got to act before the Pakistani's throw us out! Got to have a foothold there...control those nukes. Maybe our first invasion...before Iran? Some story about Al Queda getting ahold of one and we MUST act to secure the rest...? I'm thinking war is our only way out...and our savior! We'll come out of this smelling like roses...with control of cheap $50 oil to REALLY get the world economies cracking again. Fuck those Arab/Muslim middlemen...they've been ripping us off for too long! Screwing the Arabs over also cuts about 1/4 of our debt...just wiped clean! Shit...it'll be easy street...good times again!
Are you on crack?!!
The US is not the controller of this endgame ... It's the target of this endgame!!
I can hardly wait!
DavidC
My shorts are getting pummelled. Must. Hang. On.
Maybe try re-wording that one, s-slam.
Go long on shorts!
Amazing. I'm impressed. Why this author knows that after every peak things go down. That's brilliant. Maybe we could extend that wisdom to mountains?
What a poor and simpleton read on a pretty insightful slate of data. You must be on the north side of the margin ratio...
Well at least its a bit of sanity pointed out against the lead curtain of normalcy bias that has everyone believing their bubble equities will just continue to magically levitate from here on out some how, some way.
Well net margins havent really spiked so........
Maybe this its different.
Really, I promise.
Margins havent spiked? I thought leverage and margins were pegged at all time highs here?
Well relative to the size of the economy.... blah blah blah....
Net margin is still below all time highs.....etc etc etc...
Thus this time it is clearly different......blather blather.
So we recommend an overweight on equities for the long term investor......
Btw we are not acting as your financial advisor and this should be considered an arms length transaction.
Thank you.
AH yes...the bridge salemen recommend buying more bridges, since they have so many for sale and theyre a real bargain.
http://www.proactiveinvestors.co.uk/columns/fullermoney-markets/5769/new...
Gotta love china.
Doubt if this is different. The only unknown is the timing. And today and tomorrow have seasonality on the bulls side. Next week might be a better tell.
"It's baked into the cake"
"No problems at Lehman"
"Worldcom is a strong company"
"Enron is completely solvent"
"Netscape will never be eclipsed by another browser"
"AOL controls the Internet"
"MySpace is the new face of social interaction"
"I did not have sex with that Woman"
"I am not a crook"
this list is a GREAT START....how this is like page 1 of 10,000. Can anyone add anymore? I'd like to publish a book and on each page a quote with a summary on the quote and so on.
Just take Obomber's campaign speeches and divide them into 10,000 sentences. Enough material there for a 4-year master's in Leninist Deception. Throw in some GWB howlers for the comedy relief.
http://www.politifact.com/truth-o-meter/promises/obameter/rulings/promis...
The biggest lie of all: "Subprime is contained."
Trade small, be patient, and stay off of margin. Playing it safe.
Go big or go home man.
Triple levered FTW!!
in fx heh....
WHEN is the question. WHEN is it going to end. It's been ending for like 20 years.
When the last sheeple is on the slaughterhouse truck, then its over. Looks like theyre all onboard to me. All sheeple and complacent on the 401K's, convinced its all good from here on out, Uncle Bernanke got their backs. Wait till the 4 day drunk fest celebrations are over next week.
So my 401k is okay, right?
Riiiiiiiight.
WHEN is the question. WHEN is it going to end. It's been ending for like 20 years.
Another question: Will it be a bang or a whimper?
http://www.youtube.com/watch?v=WwlNPhn64TA
phallic-ly erectile. BANG.
greedscam was a pussy. the bernank can blow this mofo up to epic proportions.
Wooot, someone said irrational exuberance?
06-30 11:39: Netflix (NFLX) shares move higher no news as yet, updates to followMargin doesn't matter.
The leveraged PigMen players in stocks will simply switch to leverage positions in USD and U.S. Treasuries if the markets correct again. Or they will buy leveraged positions in DOG or SH.
More and more money made by the rich.
what, no junks
ohh, there they are
What are those stocks youre hyping now? DOG and SHIT? May as well be with your track record as the ultimate dumb money indicator.
I stepped in some o' that while tending my tomatoes this morning.
'If markets correct again'....what, do you mean theyre NOT correct here then? Youre such a douchebag.
for someone who complains about eric sprott's "whining" (many would call it pointing out the obvious) the part-time, contract 1099 processor sure does whine about pigmen and the rich quite a bit.
I told you guys to roll the dice with your play money for a equity rally. It surely is looking like S&P 1450 and Gold $2000.
Dollar is now cleared to take out the lows and pump equities / corp earnings to the moon. Poor Merikan's actually holding that fiat trash.
OT: I just got done reading the book Confessions Of A Economic Hitman and I enjoyed it. Does anybody have any other non-fiction book suggestions that deal with such topics?
Secrets of professional turf betting.
Robert Bacon.
Klein's "The Shock Doctrine".
gh
That book should be a MUST READ for anyone who frequents this site...
Confessions Of A Economic Hitman
IF YOU READ 1 BOOK THIS YEAR, READ THIS.
If you want to read about those who hired him, try: 'America's Secret Establishment', by Anthony Sutton (2002). Very well researched and will blow your mind.
It is time to buy silver again.
SLW is looking better lately..
The worst economy the world has seen in 100 years and the US fraudsters are running these trash companies to levels that are just laughable. Can you imagaine that Gold is down today on the Chicago manufacturing report? No one or nothing out of Chicago is the truth.
They saw to that put installing the ballerina Rahm Emanuel as Chicagos chief crook.
Exactly MFL Exactly
If this cycle model is even a rough approximation, the UK is also looking at a major economic contraction, due to show itself in equity prices this year. This chart is dedicated to flaunt.
http://econocasts.blogspot.com/2011/06/model-ftsa-ftse-all-share.html
Can someone please explain why CNBC, FOX, CBC, and all the other media outlets when speaking about the US debt always claim that the debt to GDP ratio is sitting at 71%.
I only have an eight dollar calculator but when I divide 14.some trillion by 14.some trillion, I always get right around 100%. Maybe it's because we are on the metric system here in Canada and I'm not doing the conversion right. Possibly converting the stack of debt to kilograms would bring it closer to 71%.
By the way, no one is speaking much about the debt/deficits of the provinces up here. Ontario has the same deficit as California with one third the population and quite a few other provinces aren't far behind. Federally we are better as we are basically sitting at about a third of the states debt on a per capita basis.
They are only counting the "publicly held debt".
Making believe the Treasury IOU's in the "Social Security Trust Fund" don't exist because "We owe it to ourselves". As though it doesn't need to be paid back.
It's worth thinking about that for a minute.
Yes. Same with the UK, they only release "net debt" stats.
Peak 0' The Week, BiCheZ!
a cat has nine lives.
Looks like the same thing that happens if you mix about 63 mustard McNuggets with a carton of Victoria Bitter.
PS: Do not try this at home kids.
Hey if any large investors here are looking to short the big picture bubbles forming here please make yourselves heard. I would like to see this dicusssed more in terms of strategies, so many bubbles. If your using an ETF you dont know what your doing.
...omg ...i jus pooped my depends...lol