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Russell Napier: The Bear Market Bottom Will Be S&P 400
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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What would be the purpose of letting the S&P slip to 400???
On one of these 'CRISISES', the 401k's will be locked up if they run out of ways to fund the debt... You know... Your act of patriotism for national security (cough cough)...
In any case, why bother locking up 401ks with the S&P at 400?... It would make more sense to do it at 1,200 (before losing the perceived market cap)... Even MORE sense to do it at 1,800...
Not that these numbers really mean anything but entries on the ledger of a dying fiat...
I think that they will NOT lock out the 401k's in the future. They will do something more devilish. It has to do with bonds :)
401k's will essentially BECOME bonds...
You'll be sold the idea that the only way to save your 401k from mass destruction will be to let the Treasury take care and manage it for you... They'll offer you a nifty 2% SAFE & SECURE (save you from losing 70% in a big stock market crash)...
Of course, once you're in, then INFLATION will start ticking along at 300 basis points above your return...
Then, in about a generation, they'll inform you that all that money has been spent and is gone...
To be fair, i am not sad for those people who did in the last 10 years pay into their 401k. Anyone who in the last 10 years did let the government manage their retirement plan, was naive or ignorant on this topic.
What IMO instead is criminal, is what this will mean for people who have been paying for more than 10 years. It's like breaking a 40 years old contract retroactively. This is theft, plain and simple.
It would let the oligarchs, who just happen to, by coincidence, right now be flush with dollars. Rape the peasants of whatever assets they have left at next to nothing. Then destroy that worthless paper and switch to a new currency, destroying the ability of anyone to take care of themselves. Then the whole country will be like a southern plantation before the civil war.
i don't see how the Treserve can seize 401(k)s without destroying all equities...forever. seized shares are not tradable, non-tradable shares means no investment, no investment means no corporate issuance, means.....
I guess it is all good if you can ignore laws & regulations, manipulate markets and where that is not adequate, subvert accounting rules and make up values for balance sheet assets and lever into the 100s of trillions off balance sheet.
As of right now, we are in a secular bull market.
Perhaps the first "buy and hold" market in 15 years.
Too many Dow stocks are hitting lifetime highs. Same with the Transports.
And markets do not top out with credit card stocks hitting 52-week highs today.
My "Formula" remains 100% correct.
S & P 500 at 1,500 = Gold at $1,650
S & P 500 at 400 = Gold at $200
Robot Trader, how much time do you spend gazing in the mirror each day? You really are in love with yourself, aren't you?
you are a bufoon
This chart here says we are in a secular bear, not bull, what say you?
http://www.ritholtz.com/blog/2011/01/spx-index-secular-markets-1900-2010/
You may be right.
Bennie boy may have pulled a rabbit out of the hat.
Time will tell.
Highly doubtful prognostication from the king of hindsight. Check your backward vision...
S & P sub 700 in 3/09 = Gold at $930 uptrending since bottoming in 10/08, while S & P downtrended another @ 40%
The metals are the one "trade" that can have it both ways.
"Dow stocks hitting lifetime highs"... Sounds familiar. Hope you've been short... You are a trader, right?
.
By the way, the market is not going to tank from here as long as JPM and WFC remain on the leaderboard, both up 2% today.
JPM is a mutant sticking out of the belly of the fed.
JPM is part owner of the Fed.
Tuco Benedicto Pacifico Juan Maria Ramirez
...also known as the "The Rat".
JPM is part owner of the privately-held Federal Reserve.
Tuco Benedicto
Yes, the WFC is a marvel to behold, up 2% today after an 18% loss over the past 3 months, all while the market was going vertical.
Buy, more, Robo, you tool.
+1oz Au
"Fully invested" there, Robo? Disclose your positions, please, so I can destroy you after the 30%+ correction that's coming.
Are you a buyer of IWM here? JPM? Up 2% today, but completely and totally rolled over. Short the bounces, folks.
Have you not been listening to your hero Kaltbaum lately? Dow stocks are up because they are always up when everything else starts to roll over. Where are all of the "fully invested" mutual funds supposed to go? That's right, they always go to mega-cap, low-beta Dow stocks first.
banks buying bank stocks.
oops...dupe
Can I "supersize" my Bear Market Bottom S & P order with a side dish of complete annihilation of Ratings Agencies?
....that would be the "Coup de Grok" cherry on top for the house of cards "Fraudevillian Theatre" that's been engineered by our puppetmasters.
....Come on "Benny and the Jetsetters"....
"give us a real variety show for the ages" -AgShaman
Everyone os begging for QE3...and we need it or a serious deflationary depression will set in and take years to work out of.
"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."
As opposed to DECADES of stagflationary hell, 10%+ unemployment, etc. Sounds swell.
Feel free to screw your own progeny out of their future productivity, but leave mine the f*ck alone.
Thanks in advance.
The problem with that bottom is that in the current market structure it doesn't exist. The amount of inflation that needs to happen before the structure changes to reach the true bottom is the problem of that bottom not happening next. Debt needs to be extinguished and it will take a lot more dollar destruction before there is a consensus.
Nic Lenior has 380 i believe
The bottom line is that whether you like it or not, the banks have everyone by the short hairs...
When history is told, the housing crisis will amount to the biggest LAND GRAB of all time...
Initiate a bunch of loans out of thin air, foreclose on the ones who don't pay, VOILA you now own land without ever have had to lift a finger... If they'd have been allowed to FAIL, then it would be a different story, but it's been easy to grease enough politicians to have made things go in favor of the bankers...
All the rest is just accounting tricks... Encourage huge amounts of "fiscal stimulus", & "nationalizing" distressed assets... then MONETIZE what's not adding up (to keep making the monthly nut while the sheeps are occupied with Dancing With the Stars)... When commodity prices spike and "sheeps" get edgy, go massively short the bogus PAPER contracts of those, and engineer some new geo-political crisis to to a big BEAT DOWN across the board (but especially in commodities)...
Essentially... Get granny to sell her tea set...
Behind the scenes, print yourself all the FIAT money you need to take PHYSICAL off the market and hide it in your basement when paper spot prices have been butchered...
During the next phase, (the part where QE3 starts) when inflation turns to HYPERINFLATION, you hold all the physical (and make it impossible for JOE BLOW to accumulate any at the high prices)... You could actually "rinse & repeat" this for as long as it takes probably all the way thry QE18 & beyond...
If it ever gets out of hand, it won't matter if the FIAT collapses because with the fresh debt money being PRINTED, the banks can just use it to take physical off the market (vis a vis JPM's silver vault these past 3 weeks)... In the end, the banks have all the land & physical commodities... So when a call is made for a "backed" currency, they're already holding all the properties on the monopoly board...
The rest of you serfs & peasants can just sit back and COPE...
Not junk. This is the strategy used, as banal as it sounds.
The UK it's been going on since at least 1694 and certanly before in a less coordinated fashion for hundreds to thousands of years.
This is just surreal. Do I feel the earth trembling yet? Buy AMZN. NOT!
"It's tough making predictions - especially about the future."
- Yogi Berra
Yes, that's why this is such a golden opportunity to rub it in the faces (no pun to recent news items) to the many ZH readers I have called lemmings.
I hope you mean those bouncing tits.
From his mouth to God's ear.
Mr. Napier needs to familiarize himself with the parable of the scorpion and the frog.
The S&P will not hit 400. It will not come close. This is because the PTB will print, and print, and print until the economy is complete gone, to prevent that from happening. They will kill the economy to "save" it, the way Mugabe has killed his economy to "save" it. It's just what they do.
Remember people-this game is about money and control and the winner will be the last man standing which means that the U.S. with it's reserve currency, military might and skill at media manipulation is still the frontrunner. This is a war to end all wars-the survival of the U.S. at the expense of everyone else which means they will pull out all stops and not spare any expense to win. We'll see high volatility in all markets with both deflation and inflation effects until our weaker adversaries fall (China and Eurozone) and are forced to accept our way of doing things. We are in uncharted territory moving at warp speed so hold on to your seats.
Uh......we already won.
The other side is checkmated already. They are just unwilling to admit it yet.
No, "we" have not won yet. The final decision is made on the material plane, and i do not mean PMs. In the case of the US, the gov will have no hesistation turning into an all-out fascist dictatorship. The question is: Will the masses start a civil-war, or will they go into submission? A lot of people here say, that the masses will stand up and not allow this to happen. The same people simultaneusly are now bashing the masses for how dumb and docile they are. I personally am not sure about what would happen in this case.
However, if i would be living in the US, and would have seen over and over how the masses totally failed - not even putting up any fight at all, but actually encouraging the shit going on.... would i want to bet my life on them doing the right thing when the time comes? Or would i rather fight this battle on another more promising battlefield? In my case, the answer clearly is the later: I would leave the US before the showdown.
I don't see a forceful dictatorship forming, what armed force will physically do the suppression?
I was just discussing the dollar hegemony war and the subsidy the rest of the world gives us. We have won.....for now and hopefully the next ten years.
There's a German newspaper report out claiming Iran is building a missile base in Venezuela with DC within range. They're calling it obamao's Cuban missile crisis.
Your conclusions about the KKK empire being in the lead are facile. When you put people's back against the wall their liable to do something crazy. There very well could a "terrorist" strike inthe "homeland" (what did you expect would happen if you go murdering milions for their countries' wealth) or, since these fascist banksters never let a crisis go to waste, a nukular false flag. Hey, after 911 anything goes, bitchez!
Best thing for the world would be AmeriKKKa's collapse and rebirth under Dr Paul and no bank!
You gotta love america for the opportunity.
Where else, zacknick, would they give an oppirtunity to a third worlder like you to come here to work? At the same time you have a forum available where you can exercise your right to free speech and criticise the country that gave you such opportunity!
I hate to sound like robotrader but retail and restaurants are going gangbusters in my area. It is booming.
i think you got confused, those were soup kitchens!
"I hate to sound like robotrader but retail and restaurants are going gangbusters in my area. It is booming."
same here, but as ZH has pointed out, many are not paying their mortgage.
"retail and restaurants are going gangbusters in my area. It is booming"
---
Really??... So tell us... What part of Manhattan/District of Columbia do you live in???
Fort smith russellville I40 corridor.
Arkansas is a low wage right to work state. We are doing well in traditional manufacturing areas and tiny micro businesses serving the manufacturing base.
Anti union low wage states will show relative prosperity compared to the blue states.
Coral Gables, Fl
However, as ZH pointed out, many spending money freely have not payed their mortgage in years.
People said the same thing in 2007.
"What problems with the economy? Have you seen the restaurants and the malls? Packed!"
But, this time is different. Right?
If you look at 1990s Japan and The Great Depression, they both established new lows after rallying after the initial crash. Predicting a new low is not a radical thought, but something which has already been proven by history.
It is certainly the rule rather than the exception.
But that doesn't matter to bulltards. The market can never go down again. The Fed is in control.
This time is different.
This is quite simple..the government will have to "borrow" from 401k's. What better way to replace the funds then crashing the market buying the pensions enough SPY @40 to make up the difference through distributions and capital gains by inflating the markets again via monetary policy?
You like predictions, how about Obama running unopposed in 2012. Shaping up that way, though Ron Paul will probably get a Libertarian and/or Conservative endorsement somewhere.
Other than megalomaniacs looking for a sweet ride on Air Force One, Marine One and the limo, with lotsa secret service hunks to give him an air of Gravitas (with biscuits, yum) what sane person would want that job?
It has no real power, you spend 8 years kissing the dicks of those who put you there for their own benefit, and when you're done you get a fucking library, (like, INTERNET, you ninny) named after you to hold all those papers that you never read.
The job of POTUS is a money maker no doubt in the aftermath, but you're still a joke of a human being as much as your party would like to make you out as some kind of 2nd Comer, like Christ.
The smart men and women forego the limelight that this do-nothing job is about, which is to distract the folk with feel good, feel bad stories fo4 8 yrs while the Senate Appropriations Committee members steal away quietly into the night, like Arabs, with all the money.
You want a really good gig, get appointed as Chairman of one of the really powerful committees in Defense, Offense, Approp, or other and have some real clout, make even more money, and get more girl (or boys) than even the movie star makers do.
This is an Actor's job, no more, no less.
And I guarantee you that Senate Appropriations committee Chairman and Vice, Inouye and Cochran, aren't acting.
Kinda wondered about that. Wasn't it obvious the President is a puppet when they put Reagan in?
why do they never give a time frame?
400 ok sweet, when do you think......
Couple of things:
when the dow hits 12888 cash in 12%
dow hits 13888 ..clip off 13 percent. There's nothing hard about giving Wallstreet an old fashioned slipper on the backside
And thats what's scaring them shitless at the moment.....retail playing em at their own game
I agree that the dollar is eventually toast. However, IMHO, the USG can and will run these huge deficits with willing buyers of their debt a lot longer than most ZH readers think. There is zero pricing power in the economy because there is too much global capacity. Furthermore, there is too much debt in the USA, Europe and Japan. You take these two factors and what you find is little or no demand for debt. Furthermore, banks are tightening so there are fewer suppliers of debt. Bottom line is the economy must deleverage. Sure, the FED is going to attempt to ameliorate it because that is, ostensibly, what Congress put them there to do...but it is going to happen.
I have a small consulting business. I have not been able to raise rates in over 10 years. Most people I know in the private sector are making less or have had stagnant salaries. So where's the inflation? The only place I see it is in objects of speculation such as oil and commodity futures or precious metals.
So Long, and Thanks for All the Fish
Good riddens. All talk no content bimbo. Go bother Hugh Hef..... Maybee hell let you polish his walker before going to the scooter store shopping.
Wash, rinse, repeat.
Mako was probably right .
All the deflationists are right. They just generally mistake which currencies are deflating (hint: it isn't the USD,the JPY, CAD, AUD, or EUR).
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