The Meltup Cometh

Tyler Durden's picture

Bloomberg's chart of the day comes courtesy of proud "TARP 4eva" badgeholder Bank Of America. Basically it says to expect another 40% rally in the markets (yes on top of the 50% witnessed already) simply because America is now the same basket case economy that Japan was in the 1990s (and continues to be today), even though as everyone will attest the connection between economic reality and market stupidity ended long ago. 

According to Bloomberg:

A “melt-up” rally in the U.S. may be triggered by central bankers keeping interest rates near record lows, an economic recovery or an undervalued dollar, Bank of America strategists wrote in an Aug. 26 report.

“Even in economies overcoming credit booms, rallies can be powerful and last much longer than you think,” Bank of America’s Sadiq Currimbhoy, Arik Reiss and Jacky Tang wrote. Should the similarity between the U.S. and Japan persist, the S&P 500 will keep rising, partly because of gains in the dollar, the Hong Kong-based strategists said.

“If there is one persistent similarity between Japan and the U.S., it is they both seem to be fighting a debt problem by producing more debt,” they added. “So, for equity investors, if these relationships were to repeat themselves, the risk for the U.S. market is that like Japan, the stock market ends up with big rallies and then sell-offs.”

Granted the fact that the Nikkei subsequently tumbled to new lows is somehow lost, but courtesy of HAL9000 which only cares for reading and replicating charts, the possibility of the fabled melt up will likely soon become a self perpetuating truth, as everyone starts expecting, nay demanding, another 40% run up in stocks just so that the HFT can extract their last several hundred million for providing liquidity in 4 financial stocks, then call it a day and buy that much needed 8th summer villa in Monaco.

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mgarrett84's picture

HA,  That was real timely commentary ( if we got it 5 months ago)

AN0NYM0US's picture

I think TD provided a similar comment back in early March if my memory serves me correctly, if I find the link I will post it. (I definitely know that Rosenberg in a commentary a couple of months ago postulated a melt up to S&P 1200.)

AN0NYM0US's picture

and here is the link from June and an excerpt:



Tuesday, June 2, 2009

Equity Market Observations From Rosenberg

In his morning update piece, following up on his CNBC interview and providing much more clarity on the themes he touched upon, Rosenberg gives his explanation on the four factors currently in play in the market, which include i) technicals, ii) fund flows/market positioning, iii) valuation and iv) fundamentals. It is a tale of two cities, with the first two indicating a disconnect from reality as the market has likely more potential upside, while the underlying valuation/ fundamentals representing a market that has rarely been as rich.

On the technicals, Rosie sees a possible break through all the way to 1,200:"


D.O.D.'s picture

Tyler is that you hiding under the bag?

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sohbetme's picture

I like your ideas and thoughts. While chat and sohbet with my friends talking about it.

maximus's picture

Whatever comes out of these gates, we've got a better chance of survival if we work together. Do you understand? If we stay together we survive...

Anonymous's picture

How about Gladiator?

Missing_Link's picture

I take it you never watched Gladiator.  That would explain the commenter's name  ...  and his picture  ...  and his post.

Anonymous's picture


Valve YOU!

Sabibaby's picture

get ready for the hored!

NoBull1994's picture

I don't think that S&P chart is accurate.  Plus, there are no corresponding dates on the X axis.  The recent bounce is much larger than the bounce illustrated here.

Anonymous's picture

Agreed. I think it might be the $NDX (??) not the SP500.

where is my mind's picture

It looks like the SPX is inflation adjusted and the Nikkei is a nominal chart.

But, like the above poster said...could be the NDX

GTC71's picture

If you compare charts of the last few years against the great depression era ... this 50% rally appears done and we're headed for a big decline soon.

in this bizarro "market" I'm not sure what are the apples and what are the oranges?!

Anonymous's picture

But that doesn't factor in Ben's liquidity--we were on the gold standard in the '30s. Take a look at ZH's liquidity bubble article today...

Anonymous's picture

Ben's liquidity just sits around as excess reserves.

TumblingDice's picture

In other news, NASDAQ Composite has completed a 50% retracement of its move from the 2007 top.

Shell Game's picture

AND a concurrent 23.6% retracement from 2000 high.

VegasBD's picture

hahahah great post! very clever. hows that goin for ya? being clever...

paydirt's picture
paydirt (not verified) TumblingDice Aug 29, 2009 4:35 PM

whole market way overvalued

good articles; good articles 4 slow news day ..http://www..
hat tip: finance news & finance opinions

andrew123's picture

I know this is totally off topic, but I want to suggest this one more time and then I will shut up.  Electronic billboard with smiling Ben Bernanke's face and waving his arms throwing away dollar bills.  Times Square if you can raise enough donations.  This would engender more public discussion than 1000 bloomberg stories.  I will donate and I am sure hundreds of others will too.  I am typing this out of frustration at not being able to do anything about all of the curruption.  This blog is very informative but extremely frustrating for those of us powerless to do anything.  Tyler, if there is a more constructive way for us little guys to put pressure on congress to address the issues that you highlight every day, please let us know.  Thank you.

Anonymous's picture

Good idea. I would donate too.

Rex Crotch's picture

I would donate as well. I love the idea.

ghostfaceinvestah's picture

I'm in, open a special tip jar for this and I will donate.

Anonymous's picture

I think you have to be part of the problem to get billboard ad space. You think your money buys free speech or something?

Bolweevil's picture

Recruit graffiti artists to do it, they'll put them everywhere.  You'd be supporting the arts, maybe its a write-off?

AN0NYM0US's picture

sort of like the Obama Joker Poster contest that had them posted everywhere -- nice idea - Zero could have a contest with various poster templates - here is the vid of the Joker contest winner



D.O.D.'s picture

Thanks for the link ANON, that was an awsome video. 

This is much more project Mayhem style.  ZH, you've got to think of something to make your audience a part of the solution, then you will have a movement not just a sounding board...


Anonymous's picture

What is so unnerving is that the conspiracy crowd are making more and more sense - take for example the headline on Drudge right now about the Internet - meanwhile the MSM is non-stop Ted Kennedy, I even heard William Kennedy Smith interviewed today; it's like Teddy is a latter day Mother Theresa as opposed to the drunken whoremaster that he was.

Sqworl's picture

They left out maslaughter!!! Mary Jo was a living person.

lynnybee's picture

yes.   thank you for saying that.    funny how it's all just overlooked.      sincerely......

SteveNYC's picture

I'm in!! Bernanke in a helicopter, big, shit-eating grin, dropping dollars on lower Manhattan.....that will do it for me!

loki's picture

eeeeeeeeew.   Needs a manicure.  Badly.

Anonymous's picture

This is not especially effective. Instead, I would have a pit filled with common-looking folk, sweating and shoveling piles of money up to a stage where Tim Geithner stands. Then Geithner hands it to Bernanke, who bags it, and then hands it to a gathering of suited men smoking cigars and drinking champagne.

Ned Zeppelin's picture

Write your Senators and Congressman - email works fine.  Ask for passage of the Audit the Fed act. Tell them they are nuts to even think about carbon credits. Tell them to leave healthcare alone until we figure the rest of this mess out.  Tell them to stop authorizing social welfare programs for individual industries. Write, call and write again. 

deadhead's picture

agree with you Ned.  I've done same. My congressperson is a sponsor and he sits on Barney's committee.....downside is he is a freshman and a true Pelosi suckup. 

ZerOhead's picture

"Bank of America strategists wrote..."

I think they meant "wished" or "dreamt" ...

These are the same "strategists" that ran BOA into the ground... or did they find some new ones?

PBS's picture

Regardless of the accuracy of the call, you have to appreciate analysts who have the hubris to come out and say that even if, like Japan in the 90s, our real economy is nothing but a monumental, debt-driven, highly leveraged shitstorm, at least you can play it for some short-term market gains.

passive_lurker's picture

This is a perfectly logical and sound analysis. What's my broker's number again?

passive_lurker's picture

Ah yes, there's the number, right there on the floor...let me reach down and pick it up.

TwoJacks's picture

and now that the comparison is available for public consumption, it will play out completely differently.  The only thing you can count on is that the price will move left to right, but I'm sure the liquidity providers are working on solving that little dilemma as we speak.