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Russell Napier: The Bear Market Bottom Will Be S&P 400

Tyler Durden's picture





 

It is no secret that CLSA's Russell Napier has not been a fan of QE2. As he pointed out in his recent prominent note, "whether equities will fall further depends on how flexible and successful the Fed’s next monetary package will be. Given the risk, investors are better off watching from the sidelines." He further explained: "A risk to reflation would send equities sharply lower. The failure of QEII will undermine investor faith in a monetary solution. With equities near bubble valuations, based on cyclically adjusted PE, a failure to reflate risks major downside. The Fed will try again with a new package, but investors would do best by waiting to see how it plays out." Since as of now we still don't know when and if there even will be a package, here is Napier once again, interviewed by the FT's Long View, presenting his updated views on the economy. His outlook, which we agree with entirely, is that first we will see another major deflationary shock, following which the Fed, already boxed in a corner, will have two choices: let major financial institutions fail, or proceed to monetize outright. Regardless of which outcome is picked, Napier's target for the S&P, which just happens to coincide with that of Albert Edwards, is not pleasant for the bulls: 400 (or somewhere in that vicinity). And that will be the true generational buying bottom.

(Full clip after the jump, with the key part starting 7:30 in)

 


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Tue, 05/17/2011 - 11:41 | Link to Comment NotAllowed
NotAllowed's picture

Historians have a bad habit of being able to predict the future.  Irony I guess.

Tue, 05/17/2011 - 11:59 | Link to Comment Michael Victory
Michael Victory's picture

yup.

historians, economists, even clive ...

 

Clive on AGQ and Silver ETFs.

 

Tue, 05/17/2011 - 12:23 | Link to Comment JW n FL
JW n FL's picture
JPMorgan CEO Dimon sees self-sustaining recovery Bullshit! JP Morgan says its all Good! no worries! everyone back into stocks! sell your PM's for a loss! tax the tax benefit for all of the earning you have in Ralph Lauren and those other retailer stocks you bulked up on! 
Tue, 05/17/2011 - 13:04 | Link to Comment jus_lite_reading
jus_lite_reading's picture

Of course its bullshit! What comes from Jamies mouth that isnt?

Tue, 05/17/2011 - 13:04 | Link to Comment vote_libertaria...
vote_libertarian_party's picture

wow, talk about the potential for rioting in the streets...

Tue, 05/17/2011 - 13:02 | Link to Comment jus_lite_reading
jus_lite_reading's picture

The real doom is about the world running out of COFFEE!!!! Bring on the doom! 

http://fiatsfire.blogspot.com/2011/05/two-head-tuesday-nearly-3000-fukus...

World shortage of coffee..... taste of things to come!!

 

Tue, 05/17/2011 - 13:08 | Link to Comment Bastiat
Bastiat's picture

JPMorgan CEO Dimon sees self-sustaining recovery

Yeah should read:  JPMorgan sees only sheep protected by broken fences, drunk shepherds and geriatric guard dogs.

 

Tue, 05/17/2011 - 12:44 | Link to Comment Sub Dude
Sub Dude's picture

“Those who have knowledge, don’t predict. Those who predict, don’t have knowledge.” ~ Lao Tzu

Tue, 05/17/2011 - 13:10 | Link to Comment pan-the-ist
pan-the-ist's picture

All war is based on deception.

Lao's brother Sun

Tue, 05/17/2011 - 13:30 | Link to Comment jus_lite_reading
jus_lite_reading's picture

"All your money are belong us now."  Sun's brother ChowMein

Tue, 05/17/2011 - 13:55 | Link to Comment Hard1
Hard1's picture

"Sorry, I can't pay your back right now"  ChowMein's friend Turbo Timmay

Tue, 05/17/2011 - 14:50 | Link to Comment dmger14
dmger14's picture

That is funny as hell!!!

Tue, 05/17/2011 - 14:51 | Link to Comment dmger14
dmger14's picture

LOLOL!  True though.

Sat, 06/11/2011 - 09:26 | Link to Comment snowball777
snowball777's picture

You sure that wasn't Heisenberg?

Tue, 05/17/2011 - 11:41 | Link to Comment firstdivision
firstdivision's picture

Calling a bottom is as reliable as calling a top.  Just ask Cramer

Tue, 05/17/2011 - 11:50 | Link to Comment Temporalist
Temporalist's picture

Creamer always calls bottom.  That's how he rolls.

Tue, 05/17/2011 - 12:25 | Link to Comment Rick64
Rick64's picture

 He called the bottom in Bear Sterns which was actually the top, thats how he rolls.

Tue, 05/17/2011 - 22:06 | Link to Comment BC6
BC6's picture

Is he still pedaling his schtick on mad money? If so, does it even have a blip of viewership?

 

I read a recent article about him crying still for the Jon Stewart takedown.

Tue, 05/17/2011 - 11:45 | Link to Comment DK Delta
DK Delta's picture

"His outlook, which we agree with entirely, is that first we will see another major deflationary shock, following which the Fed, already boxed in a corner, will have two choices: let major financial institutions fail, or proceed to monetize outright."

I agree, but I thought you guys were predicting that QE2 would be followed immediately by QE3. Hasn't everyone on this blog been ringing the bells of hyperinflation?

Tue, 05/17/2011 - 11:47 | Link to Comment Rynak
Rynak's picture

No, Yes.

Tue, 05/17/2011 - 12:40 | Link to Comment scratch_and_sniff
scratch_and_sniff's picture

ha

Tue, 05/17/2011 - 11:51 | Link to Comment Temporalist
Temporalist's picture

Isn't stocks tanking a "deflationary shock?"  Then start the presses; Ben is back!

Tue, 05/17/2011 - 11:56 | Link to Comment DK Delta
DK Delta's picture

Yes, it is.

Tue, 05/17/2011 - 13:21 | Link to Comment Tyler Durden
Tyler Durden's picture

Not at all. Zero Hedge has long predicted that the economy would stumble in 2011 and reality would catch up with the market post June 30. The only question is what/when is Ben's breaking point, and what format QE3 (it may well not be in the traditional format as defined) comes. Incidentally, as was discussed a month ago, the Fed, as part of its extraordinary measures, could well be and continue to be selling curve puts, which have a far greater impact on curve shape than outright monetization. Ref: Reinhart segment in June 2003 minutes.

FOMC20030625material

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Tue, 05/17/2011 - 14:09 | Link to Comment DK Delta
DK Delta's picture

Yes, I read the transcript for that meeting after reading your post and the video from MarketSkeptics. It was a very good call, but I'm not sure what their manipulation of the options market for treasuries has to do with the deflation call. If the curve starts to steepen, then depending on how big their position is, we could be in for a real catastrophe, but it isn't clear that they are doing this to any significant degree, and even if they were, I still don't see how this answers the "inflation/deflation" debate.

Maybe ZeroHedge has been making the case for intermediate deflation. If it has, I just haven't seen it. My perception was that you guys were expecting no major adjustment in prices, and that in fact, PIMCO's short position on bonds was a play on the board's expectations that inflation would continue and that monetization of debt would continue. This also seemed to be your take on the James Grant interview on 60 minutes, as you chose to focus on his statement that "there will be inflation and there will be a lot of it suddenly" instead of the fact that he was saying that cash would be king in the short term.

Anyway, not trying to start a fuss here about who said what, just trying to establish if you guys are expecting a strong correction in equities and commodities going forward, or if you think this is just a blip. For what it's worth, I think the contraction will be severe, and I think that this is why PIMCO is 37% cash as you have been reporting. 

Tue, 05/17/2011 - 14:22 | Link to Comment nope-1004
nope-1004's picture

I can't see a short term deflationary shock happening.  For one, Benocide explicitly said (ya, I know, he's a liar anyway) that the Fed's #1 reason of QE was to fight deflation and #2 pursue an increase in overall employment.

Secondly, why the need for the exhorbitant take down in silver and oil if there were no perpetual QE?  Commod's would tank on their own, so why did the take down need to occur in the first place?

I am a firm believer that the Fed wants to keep everything calm, complacent, and without alarm.  A deflationary shock would send instant ripples, and that won't be good for Oscar's re-election bid.

 

Tue, 05/17/2011 - 14:41 | Link to Comment Lucius Corneliu...
Lucius Cornelius Sulla's picture

You assume that the FED is in control of the bond market.  I think that is a dangerous assumption to make.

Tue, 05/17/2011 - 15:21 | Link to Comment nope-1004
nope-1004's picture

The Fed controls everything.  They issue their own debt and buy it back.  It's one of the biggest ponzi schemes of all time.  Now if they let their own monetization efforts revert back and spiral out of control, in light of recent commodity take downs, it will showcomplete incompetence.  I don't buy it.... I think QE has to continue or the sheeple will notice.

We are in a deflationary trench now, that's why QE is being done.

 

Tue, 05/17/2011 - 23:34 | Link to Comment Lucius Corneliu...
Lucius Cornelius Sulla's picture

The Fed controls everything.

I don't buy it.  Personally, I think they are a bunch of morons who create huge messes that everyone has to deal with but they don't have a clue as to what they are doing and what unintended consequences will be stirred up as a result of their stupidity.

Sat, 06/11/2011 - 09:31 | Link to Comment snowball777
snowball777's picture

Even idiots can grab a steering wheel.

Tue, 05/17/2011 - 14:29 | Link to Comment Muir
Muir's picture

@Tyler

" His outlook, which we agree with entirely, is that first we will see another major deflationary shock"  

 

 

--

Well you do now, but you never explicitly said so.

I've said many times that your is the best coverage anywhere and still do so.

But here you are not truthful.

There were post after post after post on the inevitability and immediacy of QE(n + 1)

 

 

 

 

 

 

 

 

 

 

Tue, 05/17/2011 - 16:03 | Link to Comment Tyler Durden
Tyler Durden's picture

Which "post after post" would those be? Please highlight them. We have certainly said on numerous occasions in the past that there could very well be a major deflationary episode, which however will certainly be transitory, and which would certainly be the last as the Fed throws the kitchen sink at the problem. In fact, the longer the Fed allows the deflation, the more violent the snapback will be following the subsequent complete devaluation of the dollar. 

Tue, 05/17/2011 - 16:20 | Link to Comment Muir
Muir's picture

Just which Tyler am I speaking to?

You gotta be fucking kiddin me.

Just about any post before the commodities / PM risk off.

It was always the same, deflationary news meant the Bernak would have to start QE momentarily.

Inversely, inflationary news meant, well, just inflation.

In fact, I argued with one Tyler recently.

but to your point:

"Which "post after post" would those be? Please highlight them."

Tell you what, why do you not reread some of your stuff, as it seems another Tyler personality was the one in charge.

__

But I will take you up on the challenge and highlight at least 10 posts.

Tue, 05/17/2011 - 16:27 | Link to Comment Tyler Durden
Tyler Durden's picture

Please do. And while you are at it you can start here.

Tue, 05/17/2011 - 16:59 | Link to Comment Muir
Muir's picture

As I have said many times, you are the best source for info bar none.

Although, I (and many others) posted charts such as those earlier than you in other blogs (Housing bubble under Muir)

But you see things as inevitable.

They are not.

What today makes perfect sense could spiral out of control tomorrow.

While it is likely that QE(n +1) will come around, a complete deflationary collapse is not out of the question.

Tue, 05/17/2011 - 17:17 | Link to Comment Tyler Durden
Tyler Durden's picture

A complete deflationary collapse could very well happen... and will be met by an equal and opposite response by the Fed. Will it be successful is absolutely unknown, but what is absolutely certain is that the USD will be sacrificed in the process before the Fed gives up. After all, the value of the dollar - a liability on the Fed's balance sheet is contingent on the value of the assets held by the Fed's balance sheet.

Wed, 05/18/2011 - 10:14 | Link to Comment cranky-old-geezer
cranky-old-geezer's picture

After all, the value of the dollar - a liability on the Fed's balance sheet is contingent on the value of the assets held by the Fed's balance sheet.

Uhhhh..... no.

Did the value of German currency during Weimar times depend on the German government's balance sheet?   No.

Does the value of Zimbabwe currency depend on the Zimbabwe central bank's balance sheet?  No.

The value of the dollar has been maintained primarily by its status as world reserve currency, and by "the full faith and credit of the US government" (whatever the hell that's supposed to mean).

The Fed paid 100 cents on the dollar for trash everybody knows is worth way less if not worthless.  From a balance sheet perspective the Fed is already insolvent.  Just another TBTF zombie walking-dead bank keeping the doors open by mark-to-myth accounting. 

The value of a currency is determined by the public's perception of it's value.  It has nothing to do with the issuing bank's balance sheet.

And it won't be a deflationary collapse.  The money supply will not shrink.

It will be a liquidity crisis, exactly what happened in '08.

And yes QE in some way shape or form will continue, there's nobody else around willing to step up and buy the endless flow of new treasury debt, and yes the dollar will eventually collapse because of it.

Tue, 05/17/2011 - 16:50 | Link to Comment Muir
Muir's picture

Crispin Odey: "The West Will Become Flooded With Inflation" on 04/28/2011 13:58 -0400

Indirects Flee From Poor 7 Year Auction Which Pushes Bond Curve Wider Submitted by Tyler Durden on 04/28/2011 13:13 -0400

"Overall a very poor auction, considering that conventional wisdom was that when the Fed launches QE3 it will focus on bonds at the belly and to the right, in order to moderate inflation."

As One Million Exhaust Jobless Benefits, A Look At What Recent Deteriorating Layoff Trends Means Submitted by Tyler Durden on 04/28/2011 12:56 -0400

"  I think the number will be 160k, but in this world it makes no difference since that will encourage belief in QE3 which will trigger dollar weakness which will cause stocks to go up. "

Relentless Dollar Pummeling Continues Submitted by Tyler Durden on 04/28/2011 05:10 -0400

"But at least Bernanke's plan of inflation our way out of insolvency through a complete currency devaluation is working"

No QE3 Right - So Why Did The USD Just Hit A New Cyclical Low? Citi Explains Why Submitted by Tyler Durden on 04/27/2011 17:25 -0400

And Gold Is Back To Record Highs Submitted by Tyler Durden on 04/27/2011 13:01 -0400

"The market took a sniff at the FOMC statement, and the robotic consensus is: more QEasing."

Citi On Possible USD Surprises From Today's Overhyped FOMC Conference Submitted by Tyler Durden on 04/27/2011 10:22 -0400

"3) opening a door to QE3 if the outlook disappoints further"

On The Verge Of The FOMC Presser, Dollar Hits 3 Year Low Submitted by Tyler Durden on 04/27/2011 04:46 -0400

"gold is also back in fine form, over $1,506 and going higher now that the shakeout of the latest batch of weak holders has taken place. All in all, a perfect day for nobody to ask whether it is US policy to destroy its own currency."


"Gold Glitters Amid Economic Woes" - A Reuters Special Report new Submitted by Tyler Durden on 04/26/2011 17:16 -0400

After Dallas Fed, Richmond Fed Re-Confirms Economic Contraction: Manufacturing Index Plunges Submitted by Tyler Durden on 04/26/2011 10:22 -0400

"But that's fine: somehow the economy will really hockeystick in Q3. And if not, there is QE3, 4 and 5."

____

The above was during/after the silver "correction"

Now I'll go earlier.

Tue, 05/17/2011 - 17:02 | Link to Comment citta vritti
citta vritti's picture

Muir -

Yours was my impression, too. Thank you for the spade work.

And speaking of too, your avatar has two of the most entrancing DSK catchers. Reminds me that for the idle minded like me, ZH should provide means to increase avatar size in line with sometimes hyperbolic commentary

Tue, 05/17/2011 - 17:14 | Link to Comment Tyler Durden
Tyler Durden's picture

Where in any these posts does it say a QE3 on July 1 is inevitable (which goes to your "immediacy" argument)? But, yes, QE3 is inevitable,
in some form or another. We don't dispute that statement, just as we do
not dispute that we first called for a contraction in the US economy in
both Q1, H1 and full year periods, an event that is gradually being
perceived by all. Just as in H1 2010 nobody thought QE2 would happen
(except us), and yet it happened, so the same will happen this year.
However, the Fed needs commodities much lower before that happens. There
is no disputing that either.

And please go as far back as January 2009.

Tue, 05/17/2011 - 17:27 | Link to Comment Muir
Muir's picture

 

_

"But, yes, QE3 isinevitable, in some form or another."

__

You are wrong. You are brilliant. You provide the best reporting, bar none.

But you are wrong.

Of course,QE (n + x) leading to  inflation/hyperinflation is a very real possibility. Maybe even likely.

But so is a complete deflationary collapse.

Things can get out of control. Very fast. 

And just what is the FED fighting anyways if not deflation? 

And what of all the money destroyed in 08, or the bankrupt municipalities, bankrupt pensions.

The only difference is that you see an inevitability to a FED action that I do not.

I have always been respectful and appreciative to ZH and have continuously praised your posts. I will continue to do so. 

 

Tue, 05/17/2011 - 19:17 | Link to Comment DK Delta
DK Delta's picture

I totally agree with you man. ZH does great work, but people here seem to grossly underestimate the power of anarchy in markets caused by panic in the face of artificially created and maintained markets. The more markets rely on the Fed to keep things moving, the more anxiety builds up in the system.

Even if QE3 were inevitable, there is no guarantee that markets wouldn't reject it and sell like made ahead of what they would perceive to be a new credit freeze. 

Wed, 05/18/2011 - 13:34 | Link to Comment Rick64
Rick64's picture

Time will tell, but I have to side with Tyler on this. QE 3 will be implemented in some form.

Tue, 05/17/2011 - 18:05 | Link to Comment Texas Gunslinger
Texas Gunslinger's picture

Can't find one for July 1st, but is July 2nd close enough?

http://www.zerohedge.com/article/david-rosenberg-qe3-eta

Tue, 05/17/2011 - 18:18 | Link to Comment Texas Gunslinger
Texas Gunslinger's picture

And here, ZeroHedge predicts QE2.5 or QE3 to be announced (in some form) in May, with a QE4 follow-up in early 2012.

http://www.zerohedge.com/article/further-qe3-composition-hints-pimco-rai...

With all due respect, there is virtually no way ZeroHedge can deny they have been calling for a seemless, linear transition from one QE to the next.  Perhaps there might be a few recent articles suggesting some delay and some deflationary contraction, but those articles are few and far between.  ZH has been pumping the (hyper)inflationary story since its inception, which is why there are more whacked-out PM goons here than there are hams in Tmosely's backyard.

Allow me to add, I think ZeroHedge is the best blog around.  However, I do wish it was more balanced.

 

 

Tue, 05/17/2011 - 21:07 | Link to Comment malek
malek's picture

have been calling for a seemless, linear transition from one QE to the next

That's overdoing it as well. Next you accuse ZH of stating that markets always move in a straight line.
Also note that this post is discussing short-term events.

But the long-term result will be very high inflation, maybe hyperinflation. That's a given.

Tue, 05/17/2011 - 17:24 | Link to Comment malek
malek's picture

While I very much agree that a transitory deflationary episode could occur before QEx kicks off, it is a bit of a stretch to postulate such a short-lived episode could take the S&P to 400. That would be overdoing it, even if the FED thinks it needs a whiff of panic to convince politicians to continue queasing.

Edit: but that's a minor quibble in comparison to the fantastic work you are doing, Tyler!

Tue, 05/17/2011 - 14:54 | Link to Comment dmger14
dmger14's picture

I had come to the conclusion that the ultimate QE3 et al. would paper over deflation, which would cause a nominal rebound in stock valuations.  S&P 400 (and PM collapse) does not fit that thought.  Could this be another market expert who underestimates the Bernank?

Tue, 05/17/2011 - 15:19 | Link to Comment Jonas Parker
Jonas Parker's picture

I think we're headed for something of a "selective hyper-inflation". Real estate and high ticket items will deflate, food and energy will inflate. I can live without a new house or new car, but food and heat would be a problem.

Tue, 05/17/2011 - 11:44 | Link to Comment DK Delta
DK Delta's picture

I haven't smelled a whiff of deflationary talk on here until this week

Tue, 05/17/2011 - 12:14 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Bernankenomics, same as Greenspanianomics, SSDD.

Pump through monetary policy (with Greenspan it was massive relaxation in regulations on things such as CDS and other derivatives coupled with ELIRP (extremely low)  or ZIRP, and a dash of selectively highly favorable tax treatment on particular asset classes, that blew big bubbles - with The Bernank it's Greenspanian v2.0, which consists of all of the above but with supercharged ZIRP, a literal taxpayer blood sucking umbilical cord to TBTF financial actors, and the TARP/TALF/QE toxic sludge.

It all starts with insanity in monetary policy and Keynesian batshit crazy stimulus, with costs born by the taxpayers, any gains (fleeting and truly transitory) captured by the chosen TBTF and insider BSDs, leads to highly irrational bubbles, and ends in tears for nearly all.

These imbeciles are (take your pick) a) incompetent beyond belief, b) insane beyond belief, c) incompetent and insane beyond belief, d) acting with full knowledge of what the results will be, meaning they are criminally culpable.

Tue, 05/17/2011 - 12:25 | Link to Comment Texas Gunslinger
Texas Gunslinger's picture

Strange, isn't it? If you mention deflation at ZeroHedge, you'll be branded a troll and/or heretic. 

Everyone at ZeroHedge has been focused on red herrings like the price of cotton in Egypt or the availability of maple leafs at Wilber's Coin Store in Lubbock, while ignoring the ~$45T debt overhang on banks' balance sheets.  Bernanke's one or two trillion taps on the "return" key is no match against the overhang of debt that will snap the spine of this country. 

Never seen so many sheeple in all my life....

 

 

Tue, 05/17/2011 - 13:02 | Link to Comment DK Delta
DK Delta's picture

Yea, it seems like most of the posts and comments give the Federal Reserve too much credit in its ability to manipulate prices. Of course markets are manipulated and the Fed can move prices via base money, but credit is still the dominant force in the markets, and no amount of money printing can front-run a liquidation caused by panic selling. Individual investors and speculators still need to meet margin requirements and collateral calls. 2008 proved that the Fed is not omnipotent, and besides, nothing moves up forever. We have been seeing huge gains in equities and commodities over the past 2 years and the dollar has been getting hammered. We are in the midsts of a reversal, the only question is how deep will the contraction be and how much will the dollar strengthen before support gives out again.

Tue, 05/17/2011 - 13:17 | Link to Comment Nels
Nels's picture

Yes, there is a tension between the deflationary force of credit collapse, and the inflationary force of the Bernank.  Shadowstats.com M3 graphs suggests that QE2 had turned the tide and we were into inflation of the money supply, at least until this week.

The question is how much austerity pain the country will stand before Congress feels required to turn back to the usual borrow & spend policy, and Ben gets his helicopter license back.

Tue, 05/17/2011 - 14:57 | Link to Comment Lucius Corneliu...
Lucius Cornelius Sulla's picture

The FED is not in control.

Option 1) QE3 means high inflation which brings about an inflation crisis in the bond market.

Option 2) Deflation brings about a solvency crisis in the bond market BUT not for Uncle Sam because they are not yet perceived as a big credit risk.

Option 1 means the USG will find it difficult to roll-over its debt.  Option 2 means the USG will still be able to roll over its debt with relative ease.  Which do you think the USG will choose?

 

 

 

Tue, 05/17/2011 - 15:15 | Link to Comment Bad Lieutenant
Bad Lieutenant's picture

Um, option 1 because under option 2 the UST has a funding crisis when tax revenues collapse and the world wakes up to US insolvency. If you think the politicians will stand in behind the podium and cut 75% of entitlements to balance the budget (rather than back-door electro-monetization), then you need to check your history son.  

Tue, 05/17/2011 - 23:38 | Link to Comment Lucius Corneliu...
Lucius Cornelius Sulla's picture

My history books have plenty of deflationary collapses after an unsustainable build up of credit.  This build up of credit (as a percentage of GDP) is the largest ever.  Therefore, deflation is baked in the cake.

Tue, 05/17/2011 - 19:22 | Link to Comment DK Delta
DK Delta's picture

and it is exactly the "stuck between a rock and a hard place" dilemma that makes trying to project with certainty what the Fed will do absurd

Tue, 05/17/2011 - 17:26 | Link to Comment I_ate_the_crow
I_ate_the_crow's picture

Those of you discussing this issue definitely know more about markets, finance and the Fed's role therein, but to me this debate is kind of pointless - - however consider this caveat to what I say - - I am just a peon trying to protect my hard-earned wealth from whatever action of destruction the Fed has decided to undertake.

This is the key point for me: it's not about what the Fed is forced to do, it's about what the Fed has already chosen to do. Hyperinflation, deflation, biflation, stagflation...whatever you want to label it. The bottom line to me is that the bankster cabal has already chosen a particular path to destruction and reorganization. This is all manufactured, and it only takes a brief look into the history of central banks controlling money supply to see this fact. The mortgage fraud was only the first step. I don't know which path they have chosen, but based on history I know that the ultimate goal is to decrease the functional money supply and make money more and more rare. In this type of environment, physical gold and silver seem like the only safe investment, though a stack of cash sitting next to them is equally prudent.

You and Tyler obviously both know what you are talking about, but I think this is more of a policy issue than a financial one: the policy objective is to covertly steal wealth from the middle class. The financial policy mean(s) used by the FED to achieve this result can be labeled whatever you want, but it won't change the ultimate result - western monetary collapse and depression.

Just my humble opinion of course, feel free to make me look like an idiot.

Tue, 05/17/2011 - 13:30 | Link to Comment GoinFawr
GoinFawr's picture

"Never seen so many sheeple in my life..."
I think I see your problem

'Deflation' sure, but which currencies? The fiats? Not likely.

Tue, 05/17/2011 - 13:30 | Link to Comment jus_lite_reading
jus_lite_reading's picture

If gas going down 2 cents in a week is deflationary then yeah. Otherwise the only assets experiencing deflation are our homes and other assets we want to sell. Everything else we need to live is in inflation mode.

Tue, 05/17/2011 - 14:29 | Link to Comment Muir
Muir's picture

"I haven't smelled a whiff of deflationary talk on here until this week"

Now that is true.

Except for Cheeky (brilliant poster)

And then some regular posters like myself and a very few others.

__

Anyone who says different is not being truthful

Wed, 05/18/2011 - 00:16 | Link to Comment longorshort
longorshort's picture

Your a moron who just likes to hear yourself talk.  Go join the IMF guy he sounds lonely and make yourself useful in this world.

Tue, 05/17/2011 - 11:48 | Link to Comment tradewithdave
Tue, 05/17/2011 - 11:56 | Link to Comment falak pema
falak pema's picture

this media show is sooooooooooo american, it shocks the european to see presumption of innocence so blatantly trampled...(he is officially innocent until...) and to see minimal human dignity flouted. Just a big publicity hype for NYPD and USA/USA..."we don't take shit from foreign 'criminal' oligarchs." Now I wonder what the US press would say if the Belgians nabbed a US political big-wig like Gen Petraeus on charges of war crimes in Iraq.

Not that I defend DSK on the allegation by the woman who seems totally sincere. But in a law court he benefits from presumption, at least in front of the public. Or we are in the ROman Coliseum where we throw people to the lions! 

Tue, 05/17/2011 - 12:03 | Link to Comment I Told YOU So
I Told YOU So's picture

yes yes throw him (and the rest) to the lions

Tue, 05/17/2011 - 12:05 | Link to Comment falak pema
falak pema's picture

no problem...but after due process...or, you be as bad as the financial/sexual predator as vigilante...the issue is HAVING due process...for all the bankstas...or do the NYPD/Legislators/judges have double standards...?

Tue, 05/17/2011 - 14:14 | Link to Comment ceilidh_trail
ceilidh_trail's picture

Falek- the NYPD arrested him on the charge- they do not determine guilt or innocense beyond making the charge. It is now up to the court system to hold a trial where he will be judged guilty or innocent by 12 citizens on the jury. That is due process. What the media does is irrevelent to determining his status (as long as 12 serious people are placed on the jury) And oh, by the way, yes indeed, USA USA! This is still the greatest country in the world. If not, we would have been long done in already by the current crop of "leaders"...

Tue, 05/17/2011 - 14:59 | Link to Comment augie
augie's picture

Centh'urian Sth'rike him Sth'oundly!

Tue, 05/17/2011 - 12:10 | Link to Comment buzzsaw99
buzzsaw99's picture

I wonder what the US press would say if the Belgians nabbed a US political big-wig like Gen Petraeus on charges of war crimes in Iraq...

Do it. Like the Belgians or French or any other Eurotard has the balls for that. LMAO!

Tue, 05/17/2011 - 12:35 | Link to Comment falak pema
falak pema's picture

They don't have the balls up at the top...you're right. But there is a deep seated feeling amongst the people of europe that the US military action, 1 million locals killed for no reason, the destruction of a state to bring down a dictator, was a heavy price, inordinate and criminal, without a shadow of a doubt, and all about OIL. So the military leaders of this exercise should be tried for these crimes (Abu Ghraib only being the visible portion), but won't be 'cos the Euro leaders have double standards. That doesn't change the reality of the crime as on the current financial front, that thrives like a WS crony conspiracy since 2008. 

Tue, 05/17/2011 - 12:44 | Link to Comment buzzsaw99
buzzsaw99's picture

But there is a deep seated feeling amongst the people of europe...

 

They aren't the only ones, that's why I said do it. Nobody had the g'nads to stand up to the fascist menace.

Tue, 05/17/2011 - 12:54 | Link to Comment scratch_and_sniff
scratch_and_sniff's picture

Stand up to it? They couldn’t wait to get in on it - see sarkozy. That little runt thought he grew a cock inch when he entered libya, even though he was standing in high heels(no kidding) when announcing it. HIGH HEELS MAN!

Tue, 05/17/2011 - 14:22 | Link to Comment ceilidh_trail
ceilidh_trail's picture

Bullc&@p. If Iraq had been about oil, why is the oil being controlled by EUROPEAN and CHINESE co's? USA co's got VERY FEW contracts. The only "crime " that I see is the usual european sponging off the sacrifice of others (Our dead GIs)

Tue, 05/17/2011 - 15:10 | Link to Comment buzzsaw99
buzzsaw99's picture

oil is fungible. look it up.

Tue, 05/17/2011 - 14:29 | Link to Comment ceilidh_trail
ceilidh_trail's picture

dup

Tue, 05/17/2011 - 13:32 | Link to Comment Soul Train
Soul Train's picture

Of course, innocent until proven otherwise. So what do you expect? That he be released and return to France, without a extradition treaty to ensure that he would return for trial?

 

 

 

 

 

 

Tue, 05/17/2011 - 13:47 | Link to Comment Pegasus Muse
Pegasus Muse's picture

"Now I wonder what the US press would say if the Belgians nabbed a US political big-wig like Gen Petraeus on charges of war crimes in Iraq."

Much better if instead they would nab Bush and his war cabinet principals along with O'bummer and his. Round 'em all up, extradite 'em to Romania, and tell Vlad the Impaler to do his thing.

 http://www.castleofspirits.com/vlad.html  

Tue, 05/17/2011 - 15:24 | Link to Comment Jonas Parker
Jonas Parker's picture

We already know how the EU countries treat US sex-crime fugitives - baby-raper Roman Polanski is living well in France and Switzerland.

Tue, 05/17/2011 - 15:29 | Link to Comment Jonas Parker
Jonas Parker's picture

We already know how the EU countries treat US sex-crime fugitives: baby-raper Roman Polanski is living well in France and Switzerland.

Tue, 05/17/2011 - 11:46 | Link to Comment falak pema
falak pema's picture

If the S&P falls to 400 every major HF gets wiped out. They are all leveraged 30x. Imagine that! Soros would be like mickey mouse? Wake me up when that arrives!

Tue, 05/17/2011 - 11:51 | Link to Comment Rynak
Rynak's picture

Agree - i doubt they would let this happen just "to send a message".... that is, unless they lose control.

Tue, 05/17/2011 - 12:06 | Link to Comment I Told YOU So
I Told YOU So's picture

I respectfully disagree, the "chosen" HF would know in advance, and will "paint the charts" to suck in the retail investor, along the way to the bottom, after all some one has to sell to them on the way down so they may accumulate, as usual the herd will be killed and a few will do quite well.

Tue, 05/17/2011 - 12:10 | Link to Comment falak pema
falak pema's picture

A few HF would/could, but the herd would stay where their money is tied in. If they ALL moved out together they would trigger their own down fall!

Tue, 05/17/2011 - 11:46 | Link to Comment DK Delta
DK Delta's picture

I see my comment was flagged as "junk." Nice

Tue, 05/17/2011 - 15:01 | Link to Comment d00daa
d00daa's picture

Caring whether or not you get junked, while not only pathetic, generally gets you junked.

Why would you care what the "sheeple" around here think anyway?

Tue, 05/17/2011 - 11:56 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

DXY 240!!!!!!!!!!  Dollars for everyone!!!

"Bears" are as foolish as "bulls".  Finance is off, because economics is.  Economics, although it could be a study, is not, because it is flawed at its base.  Economics and the men who created it are either stupid, evil, or both.  Economics, this economics, will not last, and finance will go with it.

Tue, 05/17/2011 - 11:51 | Link to Comment SMG
SMG's picture

You know what really ticks me off is he could be right, or the hyperinflation now people could be right too.   It's all in the hands of a few people making decisions in secret meetings following some hidden plan.  Not only that, but what's going to happen is given to a privileged few to profit immensely from, while we peasants sit and scratch our heads.  Time for torches and pitchforks!  

Tue, 05/17/2011 - 11:54 | Link to Comment Rynak
Rynak's picture

It isn't just either depression or hyperinflation. AFAIK, the most popular prediction around here, is a combination of both: Let the market go into a depression.... though, not a crash, to create fear, then using this as justification launch the next QE-round (which may be named differently and may work a bit differently)

Tue, 05/17/2011 - 12:01 | Link to Comment DK Delta
DK Delta's picture

Exactly, but I think the debate around here is how deep will the deflation be before any new round of easing will bring prices back up. My contention is that the contraction and liquidation will be fare more severe than consensus believes.

Tue, 05/17/2011 - 12:23 | Link to Comment Rynak
Rynak's picture

Not sure about this. However, there is another aspect. I have in recent days, including today, still seen mini-flashcrashes in PMs.... i suspect that they will during this depression continue to attack PMs. Reason: When everything is down, where do people flee into? You see, they need to artificially bump up the dollar, before they can trash it :)

Tue, 05/17/2011 - 12:29 | Link to Comment Fancy Bear
Fancy Bear's picture

The next program of easing will be delayed until the budget is sliced and diced and people feel the real pain of an oncoming depression.

Tue, 05/17/2011 - 12:58 | Link to Comment Sophist Economicus
Sophist Economicus's picture

But there already is deflation going on -- look at real estate, look at wages, etc.     This is what the deflation trolls don't seem to get.  

Would anyone have thought that the FED would have purchased TRILLIONS of loans that are of dubious quality and keep them on their books - without marking them down?   

Would anyone have predicted that our Federal government would have explictly guaranteed trillions of loans from Fannie, Freddie and Sallie - and then move them OFF BALANCE SHEET - to be funded by Treasury without ANY approval by the people of the US?

Would anyone have predicted the POMO auctions that are then flipped - in broad day light, from the PDs to the FED -- a blatant monitization that gives Tresury the money to SPEND?

Would anyone have predicted that FASB rules would have been deliberately suspended to create zombie banks -- in public view -- in the name of preventing an implosion of financial institutions?

Did folks forget that once the FED brings the bulk of the US debt on its balancesheet, Treasury will not be paying interest on the debt -- so the bond vigillantes WILL NOT EXIST!   FED is now the number one holder of US debt.    It will support every auction via the PD mechanism.    THERE WILL BE NO BOND FAILURES.    Monetization, which has been going on, will just continue till all foreign ownership have been neutralized either directly or via the mutual currency debasement strategies

These were all supposed to be deflationary events -- yet, each one was blatantly monetized!

 

Want to see deflation?   Map the S&P, DOW or any other index to Gold since 1990.   In real terms, equities have deflated already, and will continue, along with bonds, real estate, etc.  

Now, in nominal terms - HA!

Tue, 05/17/2011 - 13:08 | Link to Comment DK Delta
DK Delta's picture

"These were all supposed to be deflationary events"

Totally right. I was caught off guard by just how brazen the Fed was in monetizing, but don't forget that just because we have been amazed at how much nominal deflation the Fed has been able to head off does not mean that it can deal with the giant debt glacier that is still carving a canyons through the economy as we speak. 

Ultimately, it is people's faith in the Fed's capabilities that matters more than what the Fed actually does. We all know that prices for commodities and equities are overvalued, and the only reason they have come this high is because of people's faith in the Fed's ability to print and their fear that their dollars will become increasingly worthless. So, people pile into risk trades, but if their perception of the Fed's intentions or capabilities change, this can reverse the entire trend.

I suspect that we are on the cusps of such a reversal. It will be temporary but everything is temporary. Prices can't continue to rise unabated. I don't think we are in Weimar yet.

Tue, 05/17/2011 - 13:34 | Link to Comment Sophist Economicus
Sophist Economicus's picture

I agree, there will be many ebbs and flows - BUT - the FED hand-in-hand with Treasury will monetize everything.   They have to.   People have been living in an asset inflationary environment for decadess.    The dollar has lost 97% of its purchasing power, it takes two people to 'afford' what one working person afforded.

The ingenuity of the private sector to deliver greater product value has helped mask the blatant theft and tax of inflation.   Look at the charts of the Dow or S&P in real terms .vs. nominal terms that the folks at Shadow Stats put out.    The real increase in our stock markets ar no where near the nominal return levels.

Also, compare the average wages of a worker in 1920 .vs. one today.   Did you know that a bricklayer in 1920 earned $1.25/hour and worked 44 hours a week.    That is 136 ounces of gold at the then $21/ounce price if he worked 52 weeks -- if he only worked 26 weeks that is still over $80K at gold/1250 .    Amazing isn't it?    No social security, medicare, high taxes, etc.      Who makes the equivalent of 136 ounces of gold today?  Talk about wage deflation!

We have deflation in life-style.   It is masked by industrial ingenuity and the nominal price game of government...

Tue, 05/17/2011 - 14:21 | Link to Comment DK Delta
DK Delta's picture

Yea, you are right that the long-term is inflationary, but that's a given when you are dealing with a fiat system structured on mounting debt. An increasing amount of debt means increasing monetization of that debt, but the ebbs can be very powerful, and being on the wrong side of a renewed contraction in credit can devastate you. It also isn't clear what will happen to the banking system, and that doesn't fit snuggly into the "inflation/deflation" debate. 

Tue, 05/17/2011 - 14:47 | Link to Comment Muir
Muir's picture

You are smart and I pick no bones with you but you are making a serious mistake in your analysis.

Simply put, shit happens, events spiral out of anyones control, defaulting municipalities, defaulting pension funds etc and it is no one in control time.

It's not a pure intellectual argument.

Tue, 05/17/2011 - 19:25 | Link to Comment DK Delta
DK Delta's picture

I agree that it isn't purely intellectual, but are you saying that because you dispute the notion that the long-term is inevitably inflationary? By inflationary I mean currency crisis or collapse down the line.

Tue, 05/17/2011 - 19:33 | Link to Comment DK Delta
DK Delta's picture

In any case, no one knows for sure, but we are forced to speculate because we live in a fiat money universe where savings are not respected.

 

btw, you said you posted on here before. what is your blog?

Tue, 05/17/2011 - 20:53 | Link to Comment Muir
Muir's picture

Sotty DK, I've no blog, I post on others.

Did check out your blog!

Way to go.

Articulate, thought out and out of the box.

congrats.

As you said, in a fiat system one must make one's bets as best as one can.

Peace

Tue, 05/17/2011 - 13:08 | Link to Comment Rynak
Rynak's picture

Mapping stuff to gold would be a bit unfair, because the *demand* in gold did not stay static but instead increased (granted, partially offsetted via manipulation). A more fair comparison would be monetary supply. It too will look like shit.... just not as extreme as when comparing it to gold.

Tue, 05/17/2011 - 13:37 | Link to Comment Sophist Economicus
Sophist Economicus's picture

I submit that maybe PAPER was in a bubble from the 70s till the 1990s, and as the 'emperor has no clothes' is becoming apparant - the paper bubble has begun to deflate - in REAL terms.

Tue, 05/17/2011 - 14:19 | Link to Comment THE DORK OF CORK
THE DORK OF CORK's picture

Wage deflation is perhaps the purest form of inflation you can witness - the price of everything goes up for the regular Joe who becomes unemployed or who accepts a lower wage because he fears unemployment.

Regardless the debt built up during the credit boom which masked the loss of Joes purchasing power must be repaid one way or another.

 Noted also Napiers lack of comment on Gold again and Jim Rogers dumb farm boy routine - treating Gold as a commodity..........................

Give me a break

Tue, 05/17/2011 - 14:20 | Link to Comment Sophist Economicus
Sophist Economicus's picture

YUP!!!

Tue, 05/17/2011 - 13:47 | Link to Comment you enjoy myself
you enjoy myself's picture

"My contention is that the contraction and liquidation will be fare more severe than consensus believes."

 

maybe, but remember that any severe deflation and/or market collapse would wipe out every pension in the country and kill every underwater mortgage holder.  it also kills tax receipts for the Feds.

 

i think a more likely reaction is to generate as much inflation as possible but avoid headline inflation -- ie, remove the current bans on drilling and fracking, cut ethanol subsidies so we're not turning a food into fuel, etc.  inflation is our only way out, or at least its the only thing that buys us some time until GDP can outpace spending and debt.  if the average citizen isn't being affected by runaway fuel and food prices, then letting PM's run is not that big a deal. 

Tue, 05/17/2011 - 14:16 | Link to Comment DK Delta
DK Delta's picture

But the deflation is so bad that banks are already walking away from foreclosures because the money they expect to recoup from the fair value of the house is less than it would cost to bring the properties to market and sell them. You can't ask for a better counterexample

Tue, 05/17/2011 - 15:33 | Link to Comment you enjoy myself
you enjoy myself's picture

i don't disagree that housing is undergoing deflation.  it went parabolic for 10 years so it had to come down some no matter what nonsense the Fed pulled (and of course there's demographics, where every baby boomer is trying to make their retirement nest egg liquid, and the smaller generation of new buyers already has $100K of student loan debt).  i'm just arguing what i see the Fed doing in response to a general deflationary environment.  it has no choice but to continue monetization in some form or another.  yes, housing will decline further, but what do you think happens to the housing market if the Fed stops buying 80% of all bonds and interest rates go Carter on us?    the Fed is not going to allow housing to completely implode, have every bank go chapter 11, make every pension fund in existence insolvent, decimate all tax receipts, and see interest service quintuple.   or at least its going to die trying.  because there's only two choices right now for them -- continue to monetize debt, buying time for our political class to get their shit in order and hope that we see a pickup in GDP, or stop monetizing debt, which is 100% certain to blow everything up immediately.

Tue, 05/17/2011 - 19:27 | Link to Comment DK Delta
DK Delta's picture

I don't know. Thinking about this makes my head spin.

Tue, 05/17/2011 - 12:10 | Link to Comment traderjoe
traderjoe's picture

+100 smg

Tue, 05/17/2011 - 11:55 | Link to Comment lieutenantjohnchard
lieutenantjohnchard's picture

if his scenario plays out the fellas on fast money will be begging the bernank to buy stocks.

Tue, 05/17/2011 - 11:52 | Link to Comment baby_BLYTHE
baby_BLYTHE's picture

Should I put on my DOW 13k hat or my DOW 6k hat?

Tue, 05/17/2011 - 14:28 | Link to Comment Rynak
Rynak's picture

This made me smile. Thanks :)

Tue, 05/17/2011 - 11:58 | Link to Comment cossack55
cossack55's picture

If you scratch really carefully you can have a DOW 1k hat.

Tue, 05/17/2011 - 12:06 | Link to Comment DavidJ
DavidJ's picture

Nice!!  How about Dow ?k hat?

Tue, 05/17/2011 - 12:08 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

There will not be a Dow 13k hat.  It is going to skip that number, because 13 is unlucky.  Once Bernanke says, 'Quantitative Easing is working' go ahead and buy the 14k and a bottle of bourbon.

Tue, 05/17/2011 - 12:16 | Link to Comment mendigo
mendigo's picture

If QE resumes, the DOW will not be allowed to fall below something like 12k$.

Question is: Are those 10 cent dollars or 0.1 cent dollars?

Tue, 05/17/2011 - 11:54 | Link to Comment TheWord
TheWord's picture

Of course there will be a "package"...however, it's best to wait on the sidelines, until they're "forced by market conditions", or some such shit, to unleash it on a punch-drunk public.

Then, buy gold miners and developers like your mother's life depended on it!

 

Tue, 05/17/2011 - 12:02 | Link to Comment cossack55
cossack55's picture

I always seem to have that nationalization/EPA thought in the back of my mind.

Tue, 05/17/2011 - 11:57 | Link to Comment carbonmutant
carbonmutant's picture

We aren't going down to 400 without a war...

Tue, 05/17/2011 - 12:04 | Link to Comment economessed
economessed's picture

We already have 2 1/2 active wars.... at this rate, we'd need to declare war on the sun and try to put it out for the market to give up 4%.......

Tue, 05/17/2011 - 12:12 | Link to Comment sabra1
sabra1's picture
Pakistan Troops, NATO Helicopters Clash at Border
Tue, 05/17/2011 - 12:02 | Link to Comment buzzsaw99
buzzsaw99's picture

Step away from the crack pipe Russell.

Tue, 05/17/2011 - 12:00 | Link to Comment economessed
economessed's picture

At S&P 400, I'd do something I haven't done in 12 years -- become an "investor."  But until that time, let the computers send 1's and 0's back and forth to one another over fiber optic cables -- I'm not playing.

Tue, 05/17/2011 - 12:03 | Link to Comment scatterbrains
scatterbrains's picture

so is the 1 off of buying emerging market currencies to buy pm's?  I'm thinking any deflationary take down will crush the pms too.

Tue, 05/17/2011 - 12:01 | Link to Comment dick cheneys ghost
dick cheneys ghost's picture

Im neither a techie or a charist, but will/can the s&p break long term support trend line?

 

just askin.............

 

http://www.ritholtz.com/blog/2011/01/spx-index-secular-markets-1900-2010/

Tue, 05/17/2011 - 12:33 | Link to Comment Sub Dude
Sub Dude's picture

I think the Romans had a chart just about like this one, until about 476, that is…

Tue, 05/17/2011 - 12:02 | Link to Comment TradingJoe
TradingJoe's picture

"If you must forecast, then forecast often"!

Tue, 05/17/2011 - 12:08 | Link to Comment CB
CB's picture

Does he not look almost exactly like Jerod Harris/Layne Price (Mad Men)

http://www.imdb.com/media/rm1763868672/nm0364813

Tue, 05/17/2011 - 12:26 | Link to Comment CB
CB's picture

.

 

Tue, 05/17/2011 - 12:26 | Link to Comment CB
Tue, 05/17/2011 - 12:07 | Link to Comment Hubbs
Hubbs's picture

Who in hell can predict what will happen? I'm getting tired of all these predictions of all these bottom callers. The fact is, if TSHTF, people(investors) in a panic may resort to anything, and so anything goes, and what happenms is anyones guess.

Tue, 05/17/2011 - 12:10 | Link to Comment shalomprintsgreen
shalomprintsgreen's picture

We wont get to 1200 SPX before Bernank steps in.....no way they will let deflation reign....Prechter has been calling for 600 since 09

Tue, 05/17/2011 - 12:15 | Link to Comment buzzsaw99
buzzsaw99's picture

+1

Tue, 05/17/2011 - 12:13 | Link to Comment Caviar Emptor
Caviar Emptor's picture

Soon a car will be exchanged for an ounce of gold

Tue, 05/17/2011 - 12:19 | Link to Comment pazmaker
pazmaker's picture

heck I'd give you my car for an ounce of gold right now!!  Of course it's 12 yrs old with 210,000 miles on it but I changed the oil every 3500 miles!

Tue, 05/17/2011 - 12:17 | Link to Comment ffart
ffart's picture

My car probably already exchanges for an ounce of gold. I tried opening the passenger door in late december and broke the handle off.

Tue, 05/17/2011 - 17:07 | Link to Comment sellstop
sellstop's picture

I heard that Meineke Muffler and brake reported good earnings. Makes me think that people are hanging on to their older vehicles and getting them repaired. But it still seems that every car I see is new...

I suspect the public thought the downturn was over last year and bought that new car on zero interest.....

gh

Tue, 05/17/2011 - 12:18 | Link to Comment Lord Peter Pipsqueak
Lord Peter Pipsqueak's picture

No questions by the interviewer regarding QEx then and the effect on markets?

Utter twaddle.

Tue, 05/17/2011 - 12:18 | Link to Comment Oh regional Indian
Oh regional Indian's picture

And that will be the true generational buying bottom.

Perhaps the hardest thing for anyone here to hear is that there may be no more market to speak off after this thing is dusted off. For generations. It's going to implode, not gently go away into the night and come back with religion.

ORI

http://aadivaahan.wordpress.com/2010/06/09/an-older-piece-pertinent/

 

Tue, 05/17/2011 - 13:30 | Link to Comment ElvisDog
ElvisDog's picture

I would argue that if the SPX does hit 400 it would be a good investment opportunity no matter which way things go from there. If the economy recovers, you will make a ton of money. If the economy goes downhill from there, the money in your bank account won't do you any good anyway because we're probably headed for societal breakdown. There's not a lot of risk investing at SPX 400.

Tue, 05/17/2011 - 14:27 | Link to Comment FreeNewEnergy
FreeNewEnergy's picture

dup.

Tue, 05/17/2011 - 14:21 | Link to Comment FreeNewEnergy
FreeNewEnergy's picture

I tend to agree with you, ORI, especially when I see that LinkedIn is about to be priced at a valuation of about $4 billion. Does the company even have earnings? We're close to the top of the latest bubble, with PEs exploding all over the place, AMZN, 83? CMG, 40+, NFLX in the 50s (don't quote me on those, taken right off Yahoo Finance, and they're trailing).

Meanwhile, C, BAC and WFC are crusin' for a bruisin' big time. Once QE2 is officially over, stocks should plummet, as will public interest in them. However, the manipulation will continue, but it can only go so far before it all blows up. I say WWIII may already have broken out all along southern asia, ME and Northern Africa.

What that means is more theft by the NWO types and less for J6P.

Tue, 05/17/2011 - 12:17 | Link to Comment vote_libertaria...
vote_libertarian_party's picture

Interesting little side comment about Treasury bottom.  He says they could sell off less if the banks are big buyers.

 

With what spare cash?  They have no spare cash now and the bonds are increasing by $1.5T a year.

 

Econ 101, supply and demand

Tue, 05/17/2011 - 13:49 | Link to Comment viahj
viahj's picture

excess reserves sitting at the Fed collecting dust, er interest?

Tue, 05/17/2011 - 12:18 | Link to Comment the grateful un...
the grateful unemployed's picture

the only problem with the market currently is the political need to punish commodities and curry some bit of favor for the adminstration, with those people who we had to flood (with liquidity) by opening the floodgates of 2008, so we could make sure the refineries (big banks) were still operating downstream. Earlier Obama flooded the people of Missouri to save the people of Illinois, now thats' the headline that should have been written. follow the money ducklings

Tue, 05/17/2011 - 12:26 | Link to Comment mendigo
mendigo's picture

It is funny how the people who blasted QE1/2 seem to be the same ones saying there must be a QE3 - seems like wishful thinking.

The problem is that it makes no sense - as has been widely pointed-out, QE1/2 were embarrasingly ineffective at anything but simultaneously enriching the bankers and beggaring the public.

Tue, 05/17/2011 - 12:26 | Link to Comment Rynak
Rynak's picture

Appeal to sanity and fairness among insane parasites. Sounds reasonable.

Tue, 05/17/2011 - 12:31 | Link to Comment francis_sawyer
francis_sawyer's picture

"as has been widely pointed-out, QE1/2 were embarrasingly ineffective at anything but simultaneously enriching the bankers and beggaring the public."

---

 

Umm... I believe THE SOLE PURPOSE of QE1/2 was to enrich bankers at the expense of the public... So from that POV it was wildly successful...

Tue, 05/17/2011 - 12:35 | Link to Comment vote_libertaria...
vote_libertarian_party's picture

uhhh...follow the logic

 

big winners from QE 1/2 = bankers

who votes if there is a QE 3 = Fed

who controls Fed = bankers

Do NOT follow this link or you will be banned from the site!