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The Persistence of Memory
From the Slope of Hope: Let's do a bit of a thought experiment, shall we?
Let's assume that, in some form or fashion, the general "conspiracy theory" (as it were) about the stock market is correct. Let's assume that the powers that be recognize that a persistent, widespread wealth effect is the only way to keep people calm, and keep themselves in power. Let's further assume that, in their hearts, the instigators don't (and can't) really know where this is all going, but they're hoping it will all work out. In the words of George Carlin, they are counting on the American Okey-Doke.
Now, honestly, I don't have visions of a group of thirty rich men sitting around a gigantic circular table at the top of a skyscraper, smoking cigars, chortling villainously, and plotting humanity's path. I do, however, firmly believe that the central bankers and political leaders of the largest countries were shocked at what happened late in 2008 and have vowed Never Again, not matter the future costs. Perceived prosperity NOW is a more important consideration to them than potential problems LATER. They choose to leave tomorrow to tomorrow, and let's face it, they are in their sixth year of success, so why should they change?
A succinct symbolic slope of success is shown below, by way of the leveraged S&P 500 bearish ETF, symbol SDS. Take a good, hard look at this chart. In particular, look at how incredibly smooth it is since October 2011. One could lay down a ruler and see hardly any divergence from this path downward (which, let's remember, is the opposite direction of Stock Wealth, since this is an inverse fund).
Let's go on to assume that nothing is going to change. The stock market is simply going to keep going up. Slowly, yes, but up nonetheless. The central bankers will, whenever required, create whatever programs, easings, or other actions are required to keep supporting equities. And, simply stated, the rich will just keep getting richer. What would this all mean?
Well, for one thing, it means there are a lot of people wasting their time. All the stock analysts, all the talking heads on television, all the bloggers, all the financial journalists, and - yep - you and I - really just need to hang it up, put all our investable assets into SPY, and be done with it. And I'm not saying this in a bitter or sardonic tone. I'm serious. If the recent past is indeed our future, we all just need to quit. We're wasting our time and emotional energy. Every. Single. Day.
For me, of course, this would mean an existential crisis. For most of you, it probably just means an interesting diversion disappears. But what I've done my entire life - - the charting, the blogging, the video commentaries - - it's all about the kind of analysis that would be rendered moot by the aforementioned scenario.
None of us know the reality of the situation. If you accurately predicted five years ago what has, in fact, happened in the market, you would have been considered insane. Thus, the prospect of the exact same reality for the next five years.........and the next...........and the next..........seems equally insane. And equally possible.
What I do know, however, is that recent weeks and days - - - - particularly days like yesterday and today - - - really make me wonder what on Earth we're all doing here. It's despairing, and between the ECB Thursday morning and the jobs report Friday morning, that despair has every opportunity to blossom into full-blown wretchedness. My love of trading is getting killed, one tick at a time.
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I want nothing more than to see a flaming pile of shit they once called "the market", as well as flaming bankers diving from skyscrapers.
Does this mean the the lapse of reason is no longer momentary?
My comment from a few years back, when people were still questioning if QE would continue (it did) and it still applies:
Cougar_w: Thu, 05/24/2012 - 17:18
Hope you didn't put much money on that bet, Dawg. These fuckers are going to print hard enough to wake the dead. They'll print like mo'fos, print like mad men, print like fly pimps. Print until their eyes bleed.
They will print via the swaps, via bank bailouts and mergers, via fixed Treasury yields, via real honest-to-God negative interest rates, via loans to banks on no collateral, via payroll tax reductions, and in the end via actual fiat paper instruments which they might very well drop in bails from actual mutherfucking helicopters.
They will not give two figs what anyone thinks.
Here is why.
Because this is the Goddamned end of it my friend. There is no accounting beyond this point. There will be no history of it. No one to take notes of rates of exchange, or of the graft and violence, nobody to worry about the deficit or the GDP or the national debt of any nation large or small under the blazing Goddamned sun.
End. Of. It. Does anyone bitch about how Rome totally debased their coinage at the end? Hell no. But whoever did it had enough to hand and grabbed some land with a nice vineyard and sat back and waited for the Middle Ages to start 700 years further on.
And that's what a singularity is about. Anything that passes through is striped of all meaning. Nothing we think is important now will remain so beyond the event horizon. Nobody will remember, nobody will write about it, nobody will be held to any standard. Ever for evar.
So yeah, they'll print like the mad crazed terrorists they are. Because they have nothing to lose, and maybe something to gain. Maybe a dollar. Maybe a day. Maybe a slim chance to escape with some of the loot. Whatever the fuck advantage they see in it, for themselves and their elite crap wanking buddies, they will full-on-full-time-fucking do it to advantage.
Watch for it, Dawg. It's totally on this time, on like Donkey Kong. And when the dust is settled in a generation hence it's going to have become another unbelievable episode among the ages of men.
I remember this post. It was good then and it's better now...
well this is almost a turnkey economic growth machine, except for QE and PPT, rehypothecated assets, and the Fed trading desk. the financial wizards are doing quite a lot behind the curtain, more than ever. there is so much going on behind that curtain that some of it has to be done in plain view, (the outside world) and that destroys the illusion of an independent fed, an accountable monetary policy, etc etc.
that last one is where things get weird, because the fed has had to do some illegal things, including what they did to BOA shareholders in 2008. someday one of these illegal business transactions is going to blow up on them. whether its rehypthocating gold, or giving money to the rebels in Syria, despite a congressional ban, etc etc.
its similar to being a lawyer for a mobster, its a very thin line you walk. they've already crossed it any number of times, but one day it will be too far.
Unchartered waters Tim. I believe you are correct in your analysis.
This is global reset. The US is the only place where money can realistically park, or move in and out of.
I recently compared this to casinos. Yeah, they are all rigged. But, some are worse than others. The US is like Las vegas. Other countries/currencies/markets are like stepping down to Atlantic City, Biloxi, then to remote casino's and into back-alley mob-like shit and alley-way dice throwing.
So, where is smart money going to play? And where is it going to go when governments are busy shooting themselves in thier proverbial, collective foot?
The only viable answers are hard assets like real estate/art/collectibles, and equities. Greshaw's law in action.
So, for now, you are probably right. Just start rolling SPY calls, buy the underlying and sell puts, whatever floats one's boat.
The big question though is what happens when the wave of shit comes our way? Is just a matter of time. Between now and then though... unless going Grizzly Adams is in the cards, we are forced to play the game. And, using the "bear" analogy, we aren't going to outrun it. We just need to run fast enough (make it far enough) that the system breaks before we do.
The Fed and the federal government (in the US and their equivalent around the world) have created an environment where a company like Vanguard can and has thrived. In a no-lose environment created by the aforementioned, a money manager, financial adviser, whatever you want to call them, are simply not required. Let's face it, you have to be smarter to wire a house, do any type of construction work for that matter. Advising on the stock market requires zero research, no degree and no experience. There are millions of DIY managing their money, but they have to call an electrician to change a fucking light bulb. So, bankers and government officials, go on about your Godly work of making investments levitate!
"Perceived prosperity NOW is a more important consideration to them than potential problems LATER. They choose to leave tomorrow to tomorrow, and let's face it, they are in their sixth year of success, so why should they change?"
A market going up on the basis of massive financial fraud, is not success. Perceived prosperity is not prosperity.
Tomorrow will become today.
Here is one market that has advanced consistently, which still has a lot of points to advance, and can still be argued that it will continue to inexorably advance, imo:
http://quotes.ino.com/charting/index.html?s=NYMEX_GC.M14_Z19.E&v=d12&t=l&a=0&w=1
SDS heads to Zero no matter what, though the slope is certainly impressive.
What I love is the VXX. VIX goes down - VXX goes down, but VIX goes up - and VXX STILL goes down! Gotta love them bankers and their Heads We Win, Tails You Lose rule.
BTW, "If you accurately predicted five years ago what has, in fact, happened in the market, you would have been considered insane" is really the stunning truth of it.
This is most odd.
Funny you write this article today Tim, as I was saying and writing the same exact thing the last 2 days. There seems to be a complete disconnect with reality. The markets are not corporate value determination vehicles but the playthings of policy and robots. Back in the 70s through the 90s, Wall St had to at least admit that retail still could wag the Dow dog. It is almost like the Fed and NSA got together, created a secret bill with Congress that the stock market is now a national security issue based on its impact on consumer "confidence". In 1998, HFT algos started running things and with retail leaving, volume dying, what you see is a hollow machine that serves only as a corporate buyback and enrichment scheme. There is no price determination. Everything bad is an opportunity to get in at a better price. Boomers have no choice but to go all in here as all other options have been taken away. Saving money at a bank is a joke. Boomers have $50K or less and have to put it all on red or black, thus the dash for trash...Exxon with a steady 6% gain each year doesn't let them eat mac n cheese vs. catfood. There will be a crash but we now see what the aftermath will look like...more jawboning, data manipulation, calming rhetoric, and inexorable rise in the markets to avoid a Depression. God bless the robots.
"It is almost like the Fed and NSA got together, created a secret bill with Congress that the stock market is now a national security issue..."
You may be closer to the truth than you think!
International finance is clearly a component of modern warfare (pen is mightier than the sword).
"There will be a crash but we now see what the aftermath will look like...more jawboning, data manipulation, calming rhetoric, and inexorable rise in the markets to avoid a Depression. "
They are working their way into a Great Depression. Global debt has increased 30 trillion doollars, digging a deeper hole.
Not sure SDS chart makes the point he's trying make. I'm thinking price of leveraged short is 2x the SPX dividend yield plus 2x stock borrows less interest (zero) back on cash. Even if the SPX was unchanged, the SDS would step steadily down over the year.
SDS chart just highlights the difference between stock yields (tiny) and o/n rates (moar tinyer).
Your love of trading is getting killed? Honey, that is a GOOD thing, celebrate it.
Trading is nothing more than siphoning profits off of someone else's transactions. It produces nothing of actual value. It is an illusion, a dream. Wake up, shake it off. Get some coffee. The world has got to get REAL, go in the direction fate seems to be pushing you in...
further, the "economic role" of a speculator is to provide liquidity to the market. and it's not as if we don't have enough liquidity
meanwhile HFT decreases liquidity, by stretching in time what would be a narrow, deep market into a shallow pond, where every little "wave" - movement in price - can be exploited
by 'liquidity' do you mean new capital or do you mean up and down movement? If the former, you're talking a sales job on retail to get the last few dollars out of their 401(k). If the latter, HFT can work just as well as humans, trading back and forth for increasingly tiny fractions of a penny.
Escaping our economic morass will most likely take an interesting route going forward. While those in power, the politicians, central bankers, and the infamous one percenters appear to have painted themselves into a corner they also have super powers that allow the constant creation of new exits.
Pray tell what you might ask. The power of the pointed finger and the placing of blame should never be underestimated for they are indeed magical. So I say to those who see this as a dangerous world, my solution is we should all try to relax and have some pie. Move on this thought in the article below.
http://brucewilds.blogspot.com/2013/12/dangerous-world-no-worry-have-som...
Try to predict and trade the gold stocks then, still plenty of volatility there in shorter timeframes, although the same fundamental predictability longer term (but in the opposite direction)
so he shorted the s&p and got crushed?
jb
The reality is the Fed reports to the US Guv/the WH.
And Barry does not want to go down in history as the one who wrecked it all on his own.
Recent baffoon like mistakes made by the WH make for a good diversion - away from these miserable markets.
Diversions only last for so long and too many of them and someone may figure our what's really going on.
Butterfly Spread !
I got nothing for you Tim......it's fucking crazy
"Relax, Jake. It's Chinatown".
I recall a time calling the Devil's Bottom +/- a few points, going on to state the markets would rally a great deal for an extended period. The post is somewhere on my old blog (some readers of this blog may be able to vouch for me if they're still).
The way I see it, you need plenty of foolish money in the system in order to develop a meaningful crash.
The global systems are far too complex for anyone to understand. A single person may actually have a greater advantage at understanding and reacting than any economy ever will. The more pieces there are to the puzzle, the more difficult it is to understand (let alone "control").
Fact is, to conceive of the markets going up another 500 pts is just as insane a thought as dropping 500 pts. Any extreme view is considered insane. Nevertheless, from a lay-realistic perspective I'm inclined to believe that the markets will collapse just like they did in the past. In fact, when I hear the long-term bears doubting themselves - that's usually a good sign that the top is setting in. There's no point in fighting the up-trend, you get to increase your captial to go short knowing in the back of your mind, you're going to kill it on the crash.
Hey Tim, some parts of conspiratorial reality are persistent and some are not. For example, the same people will pump the market and then dump it. Same people, different directions.
And what is "foolish" money?
That from which you are parted.
"Stop going for the easy buck and start producing something with your life. Create, instead of living off the buying and selling of others."
Carl Fox, Bud Fox's father in the 1987 movie Wallstreet.
Perhaps there's some wisdom in the quote.
Yup, roll over and be a good boy. And oh yeah, lick those boots too while you're at it.
Tim is not remotely being serious here. He's a chartist, and he knows very well what that chart is showing. It's a falling wedge, and falling wedges almost invariably resolve into an upside breakout. An upside break for SDS means a collapse in SPY.
Tim also knows that "if present trends continue" is a meaningless supposition, because present trends NEVER continue indefinitely. There is always a physical limit, a reversion to mean, a "critical state" that causes a major structural shift in an unpredictable time frame.
What central bankers are doing is burning the future to keep the present warm. We don't know much about the future, but we do one thing for certain: Eventually, Tomorrow always shows up as Today.
Tim pretends this whole thing is about money.
It's not about money at all. Money is just a proxy signal following the real signal and the real signal is energy.
The CBs cannot print energy, they can only print debt hoping that energy will some day catch up. They can use debt to wag the dog -- to pretend energy isn't driving the economy -- but at some point the energy simply isn't there and all the flapping you can do will not at that point turn your arms into wings and carry you out over the canyon to the other side, called tomorrow.
Gravity wins fuckers and she sleeps at the bottom of the energy well. All she has to do is wait.
I'd like to punch him in the face for this font
Kurt,
that is so fuckin Hedge. i get locked in a semi-serious state, reading post after post choc-full of thoughtful reflection, and then -- ka-boom! crack a nigger's jaw over font preference. you get a greenie for irreverence.
other than that, great-great post, Sloper. and with respect to your thoughts about long-term-bears slinking from their own moon-shadow, i tend to agree. all the psychological elements are in place for a fairly substantial correction. we've not only been telegraphed, we've been explicitly told that there will be a 30 or so % 'correction'. which -- and assuming that there is in fact rigid control from TPTB -- would make perfect sense. seeing how difficult it is to not only maintain but slowly levitate 'prices', i can see the mid-term strategic benefits of a 'correction' as the perfect pretext for an eventual re-topping, then new all time highs, moar QE, dip our toe in NIRP, now time for another correction; and then start the whole process over again -- full circle...well, not so much circular, more of a sloppy spiral, a road to nowhere.
https://www.youtube.com/watch?v=SKqzayNo4Dk
(yup, janus is on a david byrne kick...expect much moar byrne, bitchez)
we're on a road to nowhere/
come on inside,
janus
lol. Same reason I was compelled to give a greenie earlier. Made me laugh.