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Regime Change - Jim O'Neill, Meet Humility: Ten Reasons To Be Bearish From The World's Biggest Permabull
From Jim O'Neill
Friday was , seemingly just one of those days. About the third attempt to break back above the 200 day moving average failed, some extreme comments about Hungary, some rather ill timed ones about the Euro from France, a disappointing payrolls………first week of June ends like the whole of May, and the bears are out in force…. Causing us with a more optimistic tendency to ponder……..
As I mentioned in the week, I am heading off to Japan for the first time this coming week, always things to be grizzly about there of course. At the core of Japan’s issues, is there anyone in Japan that is eager to do things to bring an end to their “ happy depression” as one of our seasoned traders dubbed it a long time ago. The Japanese populous are seemingly content to see their politicians come and go, but do little to generate productivity, and domestic sustained growth. I look forward to quizzing people if anything is about to change. Anyhow of note about things to worry;
1. Grizzle factor, one. Euro Area fiscal unsustainability. Those of us that have been arguing that the issue is containable, especially post the EMU policymakers package early May ,are starting to struggle as the price action remains pretty unforgiving, especially now towards Spain, and even France getting dragged into things. If you really want to grizzle of course, the EMU area’s fiscal position , nor its debt position are as bad, on a weighted average basis ( yes, Greece and Portugal ) compared to some others, especially the US and Japan. Japan’s is much worse. Many think that the EMU area fiscal position is just a “ warm up” act for the real stuff coming up?
2. Grizzle factor , two. Many people include the UK amongst those “just waiting around the corner to blow up”, but as I have pointed out recently, the very latest figures show the deficit is already 15pct lower than what it was as recently as December. It is incredible what a bit of nominal GDP growth can do for these things, and getting growth, and no deflation, are key for fiscal improvement. Many of my colleagues have written pieces on this issue in recent weeks, whether it is the UK or elsewhere, including EMU-land. And it is the key. Cutting deficits for the sake of it, without involving supply side steps to boost growth not a good idea, especially where demand is weak. But this is where many are even more bearish. The absence of significant supply side reforms in large parts of the developed world mean weak trend growth, and deflationary pressures persist.
3. Grizzle factor, three. The Euro. Why oh why, did I suddenly decide 3 weeks ago, that I now liked this stupid thing, after feeling most comfortable thinking it sucked for much of the past 2 years, especially in Q1 this year, when it was so clear. I certainly wasn’t banking on the French PM being so blatant about where his country would rather see it………..how inept in his timing? There is one thing for the EUR/$ to cyclically decline, which indeed might help those trying to restructure, but when EMU itself is under some questioning, and we are seeing the contagion we have… I guess 1.18-ish might be a fresh area for hopefuls to have a go on the long side, but………..
4. Grizzle factor, four. This is where it really gets going. After a somewhat disappointing US payrolls, and against the background of the above, what is the US going to do to get its unemployment to turn significantly, and life back to “normal”? Back in February, President Obama announced a plan to double exports in 5 years, which in theory strikes me as do-able, and at the core of what the US does, indeed need. Things not turning too helpful on that score since, with the European mess, the US$ rising, China not moving the CNY and China slowing their economy down. To get really grizzly, if we don’t get anything soon on the CNY front, then lets throw in some real Congressional impatience, and you know what comes next….protectionism…Just for good measure, it appears as though the G20 statement has incorporated the desire to correct fiscal imbalances, which makes it kind of hard for the US to push that button again, as it appeared to have been entertaining recently. I suspect the US will be more eager to stop fresh Euro weakness than perhaps Europe.
5. Grizzle factor, five. China’s imminent slowing? It is amazing how easy it is to grizzle if you really try….I have seen someone trying to argue that the big wage increases going through in China this year, including last week, are another really bearish sign, supposedly on the grounds that this is going to destroy China’s competitiveness, which undermines any rational for China to exist, etc… Here’s me thinking that we want China to be a/less competitive, and b/ have higher disposable incomes to sustain consumption, etc, etc. These developments are structurally positive. Now as it happens, China is probably in the process of slowing somewhat, which given the degree to which it has warmed up, is good. But this market might not like it for a while.6. Grizzle factor, six……….Middle Eastern politics…..tough to argue with this one at all…
7. Grizzle factor, seven. Growing financial stress. “ It’s just like Autumn 2008 all over again”. Financial stress is clearly been on the rise. As Lotfi Karoui and Francesco Garzarelli showed Friday, our own FSI- and index of Financial Stress, introduced in late 2008, and designed to measure systematic stress has deteriorated. But it is a relatively modest amount so far, and current levels of the index were seen a number of times last decade. We are nowhere near late 2008 territory , at all……….Aha, I hear some grizzling, just wait, that means there is plenty of room for it to still deteriorate.
8. Grizzle factor ,eight. Not only is our FSI tightening, but so are our FCI’s , and now our economic leading indicator , the GLI is losing momentum. All three key proprietary variables, that heralded the massive market recovery in the Spring of 2009, are now going the other way…… It is true albeit modestly at the moment, but if you look at things coldly, it is true.
9. Grizzle factor, nine. The G20. Against the background of grizzle factor eight, many say the G20 are impotent to do anything about it. They are tightening fiscal policy, intent on dramatic tightening of financial regulation, the only thing missing would be across the board, tighter monetary policy. Luckily , at least in the US and Europe, that is not coming any time soon.
On this score, there is some possible hope, because from what I can decipher from the Finance Ministers statement, they seem to be now thinking a bit more carefully about rushing to implement too much financial regulation, Basle 3 included. And of course, given the battery of measures they undertook from Autumn 2008 through Spring 2009, they will be watching measures of financial stress just like our FSI, and if needed, they will act to reverse them.
10. Grizzle factor, ten. Those dam charts. Of course we failed repeatedly to get back above the 200 day moving average of the S+P, and other “ growth financial variables trade poorly too. Now, as I have written about recently, charts are charts, and sometimes chart lines are there to be broken. It is also fact that during the whole rally from 2003 to 2007, we had a number of times when the S+P fell below its 200 day moving average-including for 3 months in 2004, so for big picture people, it doesn’t mean anything.
However, if a poor technical picture coincides with key signs like the FSI, various FCIs and our GLI losing momentum, then we have to take note. Let’s see what the week ahead brings.
Those interested in football, and see the number of top class players dropping out of the World Cup- Ferdinand, Drogba, possibly Robben, might want to have a grizzle about this too…
I managed to write something, with not a single mention of the phrase BRIC, or its young cousin, N11. It is a good job they exist, as without them, the world would indeed be a place to worry about more. Anyhow, good luck…
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isnt Leo the biggest?
Well considering the fact it's mathematically impossible for the US to repay it's debts without devaluation via debasement and that we at the end of this fiat sham...neither are permabulls but lobbyists (they must cringe as they type).
That's not entirely true - there was always a chance, albeit miniscule, that humanity would stumble upon some new, undiscovered channel of growth. That is, after all, what extend & pretend were all about: the great moon shot to save us all. I mean, who wouldn't turn down a little compound annual growth @ 5-7%? Shit, the global debt would be peanuts within a decade.
Unfortunately, it has failed. Of course, it was never likely, by why execute a full stop back in March '09 if you're gonna die anyway? We got 16 extra months, and what did we do with that time? Why, we bitched & complained how Congress had usurped the Constitution by turning over our so-called free market to be a completely managed & directed economy by the Fed.
Right .... like that was gonna work. So, now even numbskulls are waking up to our collective destiny. Enjoy the ride, sucka.
No, that 5-7% growth 'moon shot', with the help of traitors like Jim and Leo, was them herding the wealthy Euro-sheep in the USD pen (with it's capital controls) before they bring this sucker down and force a pan-western devaluation to bring our purchasing power in line with that of the average chinese bloke.
Obama said (when addressing the UN security council). "No world order that elevates one nation or group of people over another".
He's being in you fcking face about it and you muppets don't get it.
STRONG BUY SIGNAL !!!!!!!! See you at 1250 in December.
He is not that important.
I hate that guy
the biggest what? ..although whatever the word is I'm sure the answer is yes.
FRAC=Freakin Retards Always Capitulate
LOL!! +1
FRIC=Freakin Retard In Cognito
Now that the football season is over (at least until the start of the World Cup) Jim must have had lots of time on his hands. He must have been reading ZH and is starting to see the light!
Soccer is not football.
Football is where men run around, hit each other, and hope to score touchdowns.
Soccer is where men kick a ball back and forth for an hour, and put me to sleep before they eventually score a goal, maybe.
Football is what the britons call football.
What YOU americans call "football" is an ugly sport where "action" never lasts for more than 15 seconds, with long and boring interruptions. It is the reason why 90% of the world loves british football, and dislike american football.
By the way, armageddon have to wait until the end of FIFA 2010 World Cup. The world can not come to an end during the world cup, it would be a complete lack of respect.
And if Kim Yong-il starts a nuclear war right now, I'm sure he's just searching for a excuse to his national team not confront Brazil's team on June 15, in Johannesburg. He knows his team will be crushed. Brazil 5 x 0 North Korea, is my guess...
Kim could aways try to blackmail Brazil, " if you don't we will..."
Football is soccer in most of the world except the U.S.. BTW doesn't the U.S. play Brazil in August?
Football - a sport where the predominant means of passing a ball between players involves the feet.
Shouldn't you be writing a "Ticker" instead of displaying your ignorance here on Zero Hedge?
Actually both sports are the same: Entertainment for fat, depressed, middle-aged men who stare at wall-mounted televisions while nursing their pint of beer, bragging about things that probably never happened to them 10 years earlier.
Everybody needs a hobby I suppose...
Not into sports...eh? Way too enlightened, I suppose.
Wait a minute, that is so wrong!! One involves rioting, the other not.
I am going to digress here; hockey is a hell of a sport. The action stops for no one...well except that crappy icing rule.
+100
Hope you haven't offended Popo.
BTW 1stDiv..., if it wasn't for that crappy icing rule, we might have players falling dead on the ice, perchance, right in front of the net, maybe blocking that scoring opportunity.
One word...Douchebag
George Soros and a shadowy cohort of e-ville speculators are behind it all, crushing markets so they can load up on stocks at even cheaper prices.
I don't think Soros Hungarian investments are looking too good right now!
He gives the Irish a bad name.
There is only one reason to be bearish medium and long term. Production of US dollars created by the commerial banks at the request of the US consumer has STOPPED.
The people trying to sell me houses and books said this was impossible. The same lie is used over and over, just repackaged.
http://www.youtube.com/watch?v=BlK62rjQWLk
No need to fret, Goldman. This is from your PUMP MONKEY sibling:
June 7 (Bloomberg) -- U.S. stock-index futures advanced, indicating the Standard & Poor’s 500 Index may rebound from a four-month low.
It has been given a U.S. Goobermint RAM JOB for a .17% green and that is enough to reverse 2010 performance.
I just wanna PUKE!
Whats this mean? Time to go long the Euro?
Similar thoughts. Not interested in going long the euro, but was wondering if a decent dead cat bounce is not that far down the road.
Fuck you GS shill. I hope to see The Squid dead and buried under 600 trillion of derivatives margin calls. The squid will fall when we reach apocalypse DOW. These banksters and politicians have brought the world to the edge of chaos. Darth Bernanke=DESTROYER OF WORLDS.
I concur!!
Btw, Leo is another shill with multiple IDs on ZH.
(...and sometimes he gets his bullish/bearish ID's confused)
We should listen to the people who have been bearish throughout the entire rally, rather than listen to GS, who was right trading for 61/61 days last quarter. /sarcasm
Disclosure, GS is short goled, bitchez.
Hey, JB, you fucking idiot; im just posting this chart as a response to your "you would made more money being in CDs than gold" garbage from the earlier thread:
I say a 24% gain in one year is hell of an investment, and 416% in 10 years is an even better one. Fuck off to your Econ 101 classes kido; thats where you fit best; this isnt a game you should be playing unless you either have a wealthy daddy to finance all your margin calls or an insatiable desire to go into your first bankruptcy before you even get out of puberty.
Investing CDs. don't make me laugh!!
You're 24% in a year offside before you start.
The only way to make a small fortune investing in CDs is by starting with a large fortune.
Yes, but he's cranking out more grist for the ADHD audience. So from this if he says he's short everything, he wants all his customers/thralls to load up on puts that they will secretly take the other side of because Timmy already passed them a memo that another quadrillion in stim-cheques was about to roll off the printer.
What I can't figure out is what customers think when they're losing money while their prop trades are up 100.000000% of the time. Who keeps feeding the squid their money? Pension funds?
Is O'neill related to Cramer?
I think they were seperated at birth. By zoologists.
LOL!
Surgically.
See, buzzsaw99's avatar
Grizzle ,factor eleven, random, commas from a ,former permabull.
Just, laughed, out loud. Too, funny.
Their assholes are connected.
So that's why the Perma-BullShit can't leave the family.
Please don't create a poster showing whose "is" is connected to what's "what."
Definitely not family content.
There is a line I will not cross...
Why not; they show everything else here.
Choked when I saw Velobabe with a puppet head post on CD's lengthy tome on the meaning of things and how we shouldn't be materialistic.
Then V replies with her naked breast avatar and puppet head and CD givers her a howdy do as tho that image wasn't the definition and essence of materialism, which is porn images: the consumption of the image of another for your own pleasure.
LOL what frauds.
So I assume you didn't see the sarcasm when I asked for a translator?
I like the way he asks people to step in at 1.18 just so they can be slaugtered to have a chance to hold at 1.164
Jim's beloved football club...
"In addition to their mortgages in the US, a portion of the Glazer family's £700m Manchester United
debt will soon see them charged interest at a rate of 16.25%" -
http://news.bbc.co.uk/1/hi/uk/10237268.stm
16.25% - nice work if you can get it.
O'Neill is bipolar.
I would have thought that investors would have lost all confidence in the markets already.
Mind you, it's easy to avoid a complete collapse of confidence if you tell some investors what will happen later on this afternoon.
If I understand Martin Armstrong's latest (and I'm not sure I do), he doesn't see the mkt. going down much.
http://www.martinarmstrong.org/files/The-Two-Phases-of-the-Great-Depress...
At least that's what I think he said.
I am reading far too many "the market will crash" or "I am bearish in the mid-term" articles by seemingly "mainstream" people. I see this week as being fairly bullish, likely reversing last week. After all the consumer spending news is Friday and not much else to learn between now and then. When there's not bad news the bulls buy. Seems to me Bernanke has got to get a handle on the dollar. If it continues to climb the US is dead and all the inflationists (anyone who buys stocks or commodities) are in for a very difficult time.
Good points. I always cringe when I see these clowns act bearish/bipolar.
+ 1
I agree with your contrarian sentiment indicator theory. The day I become bearish is the day ZH becomes bullish.
On the other hand, it seems that bullishness on gold has reached extremes as well, which coupled with a rising wedge and fundamental overvaluation will prove bearish by the end of this summer.
We are beyond sentiment. The mathematics of a ponzi scheme don't depend on sentiment or confidence. Liquidity is drying up, the banks are as fucking insolvent as ever, people are losing jobs, they are angry and pissed. They see betrayal. There is no sufficient cash flow to support this scam. We are beyond the beyond, people have been bullish for a long, long time. We are due for a long, long bear market. Probably facing a century of decline and death. The fundamentals have been horrid all this time, the markets still have a long, long way to go to catch up with the reality of credit collapse, peak oil, biological overshoot and a possible 50-90% decline in population over the coming 50-60 years.
The psychology of a ponzi CON absolutely depends on the state of the Mark, no Mark pun intended (wrong!). Until the man in the street has a 10^24 dollar bill in hand and is looking at it with tears streaming down his face, yelling "F U, U worthless mind killing piece of Conspiratory Death!" and then he throws it to the ground and pisses on it (complete recognition and reputation). Then the Ponzi will be over.
At today's meeting the FED boyz are talking about which larger bore firehose to open.
DOW >>> 36,000 is just ahead.
I don't know about that, Edna, I heard people make this same contrarian argument throughout 2008: "everyone says we're crashing, so I bet we'll go up." We don't have the same momentum now as then, yet, but the longer term trend is down. Unless you're trying to catch a short term cyclical bull?
..too right... If O'neill is up to his usual self, its probably time to spec buy the stockmarket for a few days
What? WTF?
Not a single trade idea, "I guess 1.18-ish might be a fresh area for hopefuls to have a go on the long side, but……….." I guess you aren't a trader are you Jim?
Not a single educated, informed point of view. "I suspect the US will be more eager to stop fresh Euro weakness than perhaps Europe." No shit, I suspect you failed Econ101.
Note Mr O'Neill never said sell. He is optimistic but pondering.
He is just covering his asshole, old pro that he is. Useful. Thanks Jim. Here is your asshole, let me hand it to you. Enjoy.
This must mean we are going up to the 200 daily, accompanied by a bullish call from Jimmy. With a guy like that in-house it's impossible to go wrong, GS are now covering their shorts..
Jimbo; You failed Punk.
"The Japanese populous"?!?
Does he mean 'the Japanese populace'?
Don't these GS guys all have ivy-league degrees? This guy apparently didn't graduate from high school.
omg! this is a pro product as well.
GS job reqs. == just more slime.
Does this make anyone else bullish? I'm feeling like its time to take bearish bets off the table because goldman is bearish
Quotes. We've been this fucked before...
Treas Sec. Andrew Mellon in 1930: "There is no cause for worry. The high tide of prpsperity will continue."
Henry Ford, 1930, It was "... a good thing the recovery is prolonged. Otherwise people wouldn't profit by the illness... [The Depression was a]... wholesome thing in general. If we could realize it, these are the best times we ever had."
And, as remedy, Treas Sec Mellon advocated the "liquidationist" argument (they wanted to have people conserve assets until things reset themselves, naturally): "Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate."
Above quotes from "The Great Depression" by RS McElvaine pps 72-75
And, as hated (and currently mis-applied, or ill-applied) as he is on this site, a great Keynes quote:
"The market can remain irrational longer than you can remain liquid."
Duplicate
Anyone else surprised SPX up only 0.30% so far? Seems awefully weak!
Bernie Madoff - "Madoff stopped smiling and got angry. “Fuck my victims,” he said, loud enough for other inmates to hear. “I carried them for twenty years, and now I’m doing 150 years.”"
http://nymag.com/news/crimelaw/66468/
Ponzi schemes, eh?
OT - Why did gold just go parabolic? Up 17 in a matter of minutes.
I think that was the Italian masterstroke..?
http://www.zerohedge.com/article/italy-immitates-us-tries-lower-spreads-...
2nd leg down is needed to force us into another oil war, be prepared.
This is just the Cramerization of market analysis. One day you are a permabull -- buy,buy, buy -- then a week or so later you are cautious to negative. Down the road you can always play the video clip or refer to the analytical report that shows you were right!
People have been trying to say that the Euro thing doesn't affect us.... obviously it does, as this guy finally admits.. today the markets are rising and falling Tick by Tick exactly in synch with the performance of the eurusd. It's really kind of crazy.