The Fed has created a dead end street for everyone not in their .1% clientele... We’re all muppets to the banking cabal running this morally and financially bankrupt military empire of debt.
To believe this isn’t a bubble is to believe that all of the hot momo money from insti’s, high/biotech, flipper, flappers, fraudsters, and foreigners buying houses is fundamental and here to stay, which is exactly what everybody thought in 2006. Or, to believe that interest rates will keep falling 1% per year going forward, which would lend an element of support to prices.
It appears even Goldman Sachs was surprised by the recent rally in US equities - especially in light of the explicit hawkishness of The Fed yesterday. In a trading note this morning, the bank says that market risks are real and rising (but are not overwhelming) as it explains, we assume with no intent at humor or sarcasm, that they "prefer to think of the recent equity rally as 'macro-free' rather than 'low quality'," reiterating their view of the cycle and of markets as "fundamentally upbeat." They do, however, admit over the last month, the likelihood of a drawdown in the US equity market further increased, and remains at mildly elevated levels.
Every day when you flip on the media, there is someone telling you that now is the time to "buy" into the market. Of course, if you are buying, then who is selling? The only "net buyers" of equities this year have been "individuals," while "professional" firms have been "net sellers." This is the epitome of the classic "smart money/dumb money" analysis where individuals are used by institutions to offload positions that are no longer optimal. The question is with corporate profits and earnings declining, weak economic data, and the threat of tighter monetary policy - will individuals once again be left "holding the bag" while institutions derisk portfolios in advance of the next decline?
The "engine of our economy", the "cradle of innovation", the "land of tomorrow" -- whatever breathless hyperbole the fawning media is using this week -- is a sham. Silicon Valley has become a factory of hype, funneling gobs of early-stage capital into whatever half-credible concepts it can think of, and then pimping the artificially-inflated initial results of those tarted-up ventures to whichever "greater fool" is willing to acquire it or buy its IPO. Let that idiot figure out if it will ever turn a profit...
"The shale sector is now being financially stress-tested, exposing shale’s dirty secret: many shale producers depend on capital market injections to fund ongoing activity because they have thus far greatly outspent cash flow."
As it turns out it is not just in the US that the "smart money" is bailing out as fast as it can: according to Bloomberg, the wealthiest investors in China’s stock market are also scrambling for the exits. To wit: "The number of traders with more than 10 million yuan ($1.6 million) of shares in their accounts shrank by 28 percent in July, even as those with less than 100,000 yuan rose by 8 percent, according to the nation’s clearing agency. While some of the drop is explained by falling market values, CLSA Ltd. says China’s rich have taken advantage of state buying to cash out after the nation’s record-long bull market peaked in June."
At the peak of bull markets, when stock prices have been rising long enough for people who just recently started paying attention to conclude that they always go up - that’s when retail investors traditionally go all-in to snag some of that apparently easy Dow Jones money. That’s also when markets tend to peak and then roll over, once again transferring a sizable chunk of societal wealth from late-to-the-party “dumb money” investors to the pros who have been here before and recognize a peak when they see one. So it’s interesting to hear that retail investors are departing from the script in 2015.
Guess who was responsible for Wednesday's magical levitation that allowed U.S. stocks to stage the biggest turnaround in three years?
Something tells us the "CNBC Oil Outlook Survey" was not exactly scientific. Or perhaps it was double scientifically-adjusted.
Late in June, BofAML noted that during the previous week "sales [of US stocks] were the largest since January 2008, led by institutional clients [whose] net sales were the largest in data history." Whether that particular bout of smart money dumping was simply an effort to get out ahead of what threatened to be a rather ugly conclusion to six months of bailout negotiations between Greece and creditors we can't say, but what we do know is that not only is the smart money (still) selling, but now even the dumb money has joined the party.
One senior UK bank director said: “The problem with Martin was that he made so many enemies, partly for good reason because banks did rightly need firm treatment after the crisis. But he seemed to have a mindset that all bankers were evil.”
According to BofA's Jill Hall, "BofAML clients were big net sellers of US stocks in the amount of $4.1bn, following four weeks of net buying. Net sales were the largest since January 2008 and led by institutional clients—after three weeks of net buying, institutional clients’ net sales last week were the largest in our data history."
There has been an odd trend of late in stock sentiment readings. Despite major averages that are near all-time highs, sentiment has dropped considerably across many of the measures we track. One such example comes from options trading on the VIX. The interesting thing about present conditions in VIX options is that the Put/Call Ratio (using a 21-day average) is at the lowest level since the summer of 2008. That means that there are more bets on a rising VIX versus bets on a falling VIX than we have seen in 7 years. And again, a rising VIX is associated with bad markets. Contrarians would say this is extremely bullish but history shows it is anything but...