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How A 12th Century Mathematician Just Doomed Bernanke's Wealth Effect
Leonardo Fibonacci (1170-1250) may have just stuck his 'golden-ratio-based' fork in the equity market's rally. As the following chart shows, the diminishing marginal utility of Quantitative Easing's wealth effect has followed a rather remarkable pattern... and today marks the next turning point.
Applying a Fibonacci-based 61.8% retracement level to each of the time-periods following the March 2009 lows, produces a very interesting cycle overlay on the S&P 500 rallies...
(h/t Brad Wishak at NewEdge)
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Yea, but what did Leonardo Fibonacci know about mortgage backed securities.
QE1= 50% up & 20% retracement
QE2 = 40% up & 20% Retracement
Twist = 30% up and 16% Retracement
QE3 = ?
I'm short ES in part due to expectations of Fibonacci time and price resistance (and statistical evidence that sentiment is way overly bullish).
So we got another day, right?
Woo hoo! BUY BUY BUY
61.8%, fuck, that’s how much the fucking Fed inflated the money supply leading up to 1929. Buy ammo Zh’ers
61.8% of .357 is .22lr so i guess you are right....!
Peak QE.
Those quaint notions don’t apply to modern finance and banking as administered by scholastics.
The Bernank knows that it’s different this time.
Man who is failing to educate history is dooming to repetitive.
"The definition of insanity is doing the same thing over and over again and expecting different results." - Albert Einstein
http://thespiritoftruth.blogspot.com/2012/09/mans-seasonal-insanity.html
QE will soon mean QUICK EXIT
I love the new math. Thanks.
So I guess .357=zombies, .22lr=varmints.
...and Zombie Varmints?
And boiled rope.
Ummm....that really is kind of freaky. I had to get the calculator out...
I think I've conclusively proven that if you short the market enough times over enough days, eventually you'll be right :)
More leverage, please.
author michael crichton used the stimulus-frequency theme as a basis for his novel "terminal man"
"After resting for a day, [Benson] TPTB goes through "interfacing". The forty [electrodes] billion/month in his [brain] account are [activated] deposited by computer technician [Gerhard] Nank, one by one, to see which ones would stop a [seizure] global deleveraging. Each produces different results. [One] All of the electrodes stimulate[s] a [sexual pleasure] sexual pleasure.
[Gerhard] Nank realizes that the seizures are getting more frequent. [S]he explains that [Benson] TPTB is learning to initiate seizures involuntarily because the result of these seizures is a shock of pleasure, which leads to him having more frequent seizures."
...we start doing that inversely...
20% up & 50% retracement
20% up & 40% retracement
and so on and so forth
47.586% retracement. Then I'd bet a full retard session.
Oh that Lenny, always ruining the party
Law of deminishing returns for the win!
Look at the volume for the day...goddamn that's awful...they've finally painted themselves into the corner by being the entire market.
Awesome. Now let's see who steps out of the corner first because they have the most to lose.
One thing that is not diminishing is the massive debt load. It is a monster consuming all of this capital and more, disgusting.
Wow...great actor. Loved him in Titanic.
Didn't Fibonacci design Venice,...
Fibonacci - he worked for the postal service, right?
Leonardo Fibonacci is now considered a terrorist by the FBI, CIA, DHS, IRS, FOMC, EBT, etc etc etc.
I'll place him more in conspiracy theorist category. "Finding patterns, are you? We'll see about that!"
Didn't he die when the titanic sank?
Don't be silly. He was just playing as character.
I think you're confusing him with Leonardo DaVinci.
When the CIA catch him i dare say they will make him do the fib detector test....rimshot!
They will start by burning the museums, then notice they forgot to burn the libraries (which let us some more time for our virtual libraries)...
0, 1, 1, 2, 3, 5, 8, 13, bitchez.
A nice equity market crash prior to the election. Hmmmmmmm.....didn't we already see this movie?
September 19, 2008 - S&P shitsthe bed.
October 2008 - Hank "Tanks in the Street" Paulson
September 27, 2012 - S&P shits the bed?
October 2012 Tim "Tanks in the Street" Geithner?
nothing beats 1991 when Greenspan et al pulled the economic rug out from under Bush Sr. after he refused to guarantee that $10B loan package to Israel...
correction: October 2012 Tim "Yanks in the Street" Geithner?
need to tank the market to justify more intervention to keep the dream alive....and generate more interest income for the banks. IRS Tax revenue is just not enough.
More like 8, 5, 3, 2 ,1, 1, bitchez all the way down,....no wait, I meant turtles
yeah,..it's turtles
turtle bitchez I guess
+1 for the turtles all the way down reference.
I knew Leonardo de Pisa sir, and you are no Leonardo de Pisa.
Since when does math have anything to do with economics?
Two postmen times three animal control officers divided by two gas meter readers equals how many vendable, integrated community worker?
And there's hamburger all over the highway in Mystic, CT.
Now, if you're a Mr. Common Sense, you won't believe me when I tell you that I've got an envelope that'll clean your car while you're driving it home to work
Repeated operations on anything will eventually yeild deterministic results... simple as that. There is a pattern in everything excepting the fundamental Schrodinger/Heisenberg probability.
And, sometimes there are reasons for the patterns, yet people cling to their ideas about what moves markets long after it becomes clear their model of the market no longer makes sense and there must be more factors in play than are explained by their simplistic view.
Hence forth it shall be known as it truly is EVILNOMICS
How many is Jews to screw incandescent bulb?
All Jews - is global conspiracy you know!
How many is Mormons can screw incandescent bulb?
5 mormen - 1 can screw incandescent bulb and 4 is bringing refreshings
(I don't know how is funny, but mormon friends is chuckling when Boris say it)
Mormons think it's funny because it's an old Mormon joke with lots of truth in it and hearing an outsider tell it is even funnier.
Please for Boris explain enigma of Mormen humors!
For you, Boris. Enjoy.
http://www.youtube.com/watch?v=c1LAKAc3U6k
How many is banksters can screw incandescent bulb?
Only is one needed because bankers are screwing all time the worker and is efficiency master... but is bankers all competing to screw!
How many is public sector worker to screw in light bulb?
Only one is screw, but is two pensioners for every worker.
How many is Russian to screw incandescent bulb?
Is many in line but store is empty inventory so none.
How many is California to screw incandescent bulb?
Three, two is screw and one is watching! (something about California is voyeur capitalistic?)
Californians don't screw in light bulbs, they screw in hot tubs.
Better for hot tub than is screw nation in basement of Fed!
How many is Obama administration can screw incandescent bulb?
Only is need Obama hold bulb in socket. Entire Universe is revolve around Obama. Beside, all administration incapacitate with tingling down leg when is Obama raise muscelature arms!
(Boris is sarcastic, Obama is holding toothpick arms in bulb!)
Math is a B and so is reality.
Boxed in and diminishing returns. Like I've said for too long now.
The time bomb is getting ever shorter.
This reminds me of the Cricton novel The Terminal Man.
The US is self medicating, but the medication invokes an ever increasing frequency in the behavior that the medication treats, until the inevitable overload.
Run-up in days Ending Date
78 9/26/12
48 11/13/12
30 12/13/12
18 12/31/12 (Happy New Year)
11 1/11/13
7 1/18/13
4 1/22/13
2 1/24/13
We are so f&cked 1/25/13
Another space-filler from ZH. Ben never intended Qternity to create a wealth effect. Stop paying attention to what he says.
Next?
The sarc is strong in this one
The snark is strong in this one.
FIFY
i've been looking at these charts all year waiting for the line to go down and yet it only seems to go up
Wow. All year? It'll last forever, then.
Yes, technically it can go on forever. Same as the principle of Half Life.
i see what u did there
How about 3 waves up and 5 down to below the prior lows. Patience grasshopper.
You should get some sleep. A year is a long time to go without sleep.
That is a very cool chart. These "rallies" will eventually be measured in minutes.
That's perfect, then I can give Skynet durable power of attorney and it can invest for me, since it will be the only thing fast enough to keep up with market changes.
Yeah, I liked the chart in this article too, and also thought about how things appear to be happening faster and faster ...
For any who may be amused by these sorts fo speculations, there are lots of different videos, based on the Mayan calendar, that discuss how history as a whole is speeding up! Like from Drunvalo Melchizedek, and people who followed after him.
E.g.:
http://www.youtube.com/watch?v=LeUozRqJQXI
The Maya Of Eternal Time - 2012 part 1/14
The 14 parts, taken together about two and half hours long.
I do not know whether most of the particular points that are made there are true, and mostly I doubt that, but it is surely stimulating. There is no doubt that humanity IS changing faster and faster than ever before, and speculations about that are very interesting.
http://www.mayanmajix.com/index.html
In the bigger picture, there ARE analogous discoveries: Milankovitch theory describes the collective effects of changes in the Earth's movements upon its climate:
http://en.wikipedia.org/wiki/Milankovitch_cycles
There are many different influences, which add together!
Maybe there are analogous effects in economic systems?
2007 was the LAST "normal" year.
We are never going to return to the
kinds of "normal" times, before 2007!
High Gasoline Prices Caused The Financial Crisis
http://chartistfriendfrompittsburgh.blogspot.com/2012/09/high-gasoline-p...
OH now I see: at first you start with a large camel and as you're being QEed the camel gets smaller....verry interest-thing!
Eventually all you have left of the Camel is the toe.
Ah, but will it fit through the eye of a needle?
I'm short camel toes.
Short, I'm so sorry for you.
+10 ;)
ahhh... Stocks time continuum!
So we have on one hand a mathematician and on the other a mathemagician...
No problem, there should also be 12th century alchemists confirming the Bernank. A 13th century fiat central banker though does not agree
http://www.historyofinformation.com/expanded.php?id=305
mathematician VERSUS mathemagician
What a cute way to summarize the difference between ordinary calculations that stay within the laws of nature, like conservation of energy and matter, versus the economic systems based on the triumphant runaway frauds of privatized fiat money!
Central Banks, et alia, are practicing mathemagicians!
Everybody else must continue to only do mathematics.
Habituation to QE and no headline catalysts.
time to check the locks on the dumpsters
My third-grader math student understands penny candy.
These technical signals are a great opportunity for a back breaking short covering rally.
I guess you'd have to believe in conspiracies to think that was likely.
You just explained EVERYTHING in one picture. This is by far your best. Kudos, friend.
Thanks, that clears everything right up.
pmsl @ phi = square root of 1 + square root of 1 + square root of 1 + square root of 1 + ..
if phi approximately equals savings and at the same time phi equals fucked.
The moron hazard vector line should be waaayyyyy longer.
Nice pyramid...
Isn't that called Control Fraud?
A thing of perverse beauty, WB7!
Awesome WB7. A properly geeky public service message. :-)
You should make a t-shirt out of it. Left side on the front, right on the back. I'd buy one. But it would have to be a black shirt.
I feel like I'm standing...between two mirrors facing each other and my savings is way....out.......there....can't .....touch...it.
End game in 122 days..
Any relation to Fibozachi? :)
LOve the crony piramid! My friends won't underdstandFibonacci. Please post the pyramid separate so I can distribute it !
77 x .618 = 48
Which means...............what exactly?
The jersey number of the Seahawk that caught last night's ball?
That'd be the third Tuesday in November...followed by 12-21-12....
1436.50 es... all price action after qe... gone...
Nothing is gone, QEInfinity is still on the road. What happened today is just scare the chickens tactics, induced by banks.
Dang math.
Wish I could use FED and CONgress math with my bills.
He's my favorite Italian movie director.
We're going to need a faster printer.
So if you're saying stocks will go down, does that mean you think currency will go up?
Jumping the shark
Poor Fonzie.
Why did they make him jump the shark?
Damned Illuminati!
Oh, I see....You decided to use chart fundamentals to short the market? It's a good thing you didn't do that 150,000 times the charts said to do it - Prior to this time! BWHAHAHAHAHAHAHA! Charts are for markets...And we ain't that!
You must buy this market while everyone is scared and the money supply is exploding. Ignore squiggly lines and subjective ideas in favor of the objective brute force math of quantity.
Here comes the "end of day Vwap headline drive into close Fed pump"....Right on time! Got calls?
If you fold up the chart, do you get a death spiral?
No, but you do get a picture of Alfred E. Newman throwing money out of a helicopter.
How A 12th Century Mathematician my first grade math teacher Just Doomed Bernanke's Wealth Effect
there fixed it for ya...1+1 doesnt= 3
And just because I love this video
Doodling in Math: Spirals, Fibonacci, and Being a Plant [1 of 3]http://www.youtube.com/watch?v=ahXIMUkSXX0&feature=g-logo&context=G2f65e...
That young lady is simply amazing.
Yea right..markets are going to go down and all that money put in on the rebound by certain entities will be lost. Don't bet on it. You are witnessing a poker game where one player has unlimited funds. Are you able to match his infinte "all in"?
The boyz have been bidding up each other's stocks in hope that all that fabled "sideline money" will finally join the game. Having failed at that, the bearded one drains the savings and pensions and then creates trillions to throw it in the game any time he likes.
You are going to bet agains that in favour of a Fib?
I find it ironic that "FIBonacci" never lies.. farkin maths..
Herds move indeed in mysterious ways and in patterns which are much more important than trends. This time, however,
Bernanke will surely sabotage this fibo sequence by announcing tomorrow QE1,618*2,382.
Just a hop, skip and a jump till doomsday.
Very bright mathematicians proved that subprime lending was a great idea. Now you know how I feel about mathematicians and the inherent lack of rationality of the consumers/citizens/markets.
And that doesn't make Bernanke right by any means.
Fibonacci made very popular the use of beads in decimals for accounting purposes. The Fibonacci board was used by Arabs, good mathematicians who knew how to count since Khawrezmian days; the guy who invented zero; and kept the accounts of Frederick II Holy Emperor, king of Sicily. Altair, his court mathematician invented the Fibonacci ledger and could provide a balance of trade and a grain storage monthly statistic to his master. Sicily was an exporter economy, very rich, the richest nation in Europe.
They didn't have financial derivatives in those days; apart from those invented by the church called papal bulls, allowing you to pilfer all who didn't bow to the church; notably the infidel and heretic. Ironic, the 100% muslim guard protected the Holy roman king against the catholic church with whom he was at war.
The Old Man, The Constitution, & Propulsion
Nearly all of the old men have vacated the space, for kids, so they can make the world, as they see fit…
From the perspective of the old man, life is all about the kids that comprise labor, to implement quantum change. Everyone else, government, corporate, non-profit, all the middleclass peer pressure groups, are part of the gravitron machine, which incrementally moves to maintain time for legacy capital.
From the perspective of capital, nothing changes, or, the more things change, the more they stay the same. The world stage is just high school times a thousand, with peer pressure groups pitted against each other, and all their leaders playing to fear, growing their demographic ponzi currencies in a positive feedback loop accordingly.
The point of this exercise is to show the kids how the battery is formed, loaded, and employed, not to tell them what to do with it; here’s the keys, don’t tell me, I don’t want to know…
The explicit side is simply a function that builds momentum. It loads the battery, winds the clock, ratchets the catapult, however you want to think about it. Watching the fed’s effect on VIX is the easiest way to see it. The implicit side determines current, the extent to which these kids travel through the explicit side, creating a semi-permeable, semi-conductor.
The implicit side is quantum, depending upon the amount of gravity required by the participants to implement their designs. I don’t care for the dialogue, but the question is useful; what would you do with $30T, which is as good as any other number to represent the folly of the fed’s actions.
Pick a number, say $800T, to account for the derivatives representing unpayable, unfunded, middle class entitlement, expectation liabilities, which the socialists continue to grow unabated. What is a fair and payable bid to solve that problem, and, more importantly, how can the labor family best employ it for future symbiotic growth of all families. (Yes, the robots are programmed to expunge you; get over it.)
So, you have a 3000lb car and oil…aggregate human behavior cannot be altered in real time. What does physics tell you must be done, if you can assume the old man left behind everything required? The US Navy is gutted, with nothing but position holders…
The masters of the universe, their world opinion leaders, and all their middle class followers are going to war because they have no idea how electricity works, and as you have observed, there is no point in telling them, because their false assumptions are the basis of their lives, hence the mythology, a constitution.
What kind of navy you want to build depends upon where you want to go. My suggestion is space, in another dimension, but then again my favorite character was and is Scotty. You do what you want, and don’t allow anyone’s false assumptions stop you. That is why we draw blood.
Learn to respect the machine, even though it is just a sh-show, because it is life and death to the robots, and one day, you too may fall from grace, as the vast majority of us do. You cannot pick your biological parents, but seek and you shall find. The old man does what he does for a reason.
From the perspective of a battery, what is the outcome of equality, and what is the purpose of dimensions, relative to efficient, incremental positive feedback and effective, quantum negative feedback? What is the relationship between a point, a number line, a circle, and a helix, and why does DNA operate as a double?
Take responsibility and run with it. Let the empire catch you when you are ready to hand it off. So, the university technology park is a black hole, surprise, surprise. Throw the admirals overboard, and remove family law from the ship. Check your History.
I need to drop your acid
This reads like the liner notes from a Donovan album.
The intergalactic laxative will make you shit & pee.
This reads like the liner notes from a Donovan album.
But but but... this time it's different. Bernanke said so: "learning by doing". If we just keep experimenting surely some day we'll find the golden formula for creating sustainable growth! Why do you want to ruin the experiment ZH?
No, no, no .... Bernanke is just trying to reduce unemployment ... Who voted for the FED to have a 'Dual Mandate'?
Make that bankers unemployment.
Ben is buying up all those MBS that Lewis Ranieri fathered. Mortgage Backed Securities the gift that keeps on raping and pillaging, 61.8 billion a month. How's that for a fib?
Does anyone seriously understand this chart, what to conclude from it and why? I have been staring at this chart for a while now and I honestly don't get it. Can someone please explain this to me?
It shows a diminishing effect of QE (money printing) and a projection for QE3 using Fibonacci retracement. If this has any predictability it's very bearish for stocks.
Not perfectly sure, but something like this:
Ben prints money ("QE") and the markets jump higher - for a while. One way to measure the result of the QE is to see how long it takes to retrench some percentage of the gain - how long it takes to drift downward after the stimulus.
The Fibonacci series seems to be predicting (to some extent) how long it takes for the stimulus to wear off, and thereby demand more stimulus - but the series appears to be REVERSED, as in, the time grows shorter as the QE# experiment progresses. Therefore, we appear to be reaching a limit - that is, NO AMOUNT of QE will hold off a change ("market collapse") much longer.
All you experts - was that close enough?
It's like dropping a basketball and watching it bounce. Without additional force, its bounces become sequentially smaller until it stops.
The ruse is QE, which is not acting like a continued force but rather having no effect on fundamentals and only on raising investor sentiment.
Hence, the first bounce is huge, as people believe it will work. Next bounce is smaller as people's sentiment gets exhausted more quikly by the inexorable bad news of our economic situation. Next bounces are simply traders playing the market sentiment.
Bernanke has got a basketball jones. Increasingly, no one else does.
Q: If we are indeed in a QEn (to infinity) framework, when exactly would the market have expressed prices in net present value thereof?
A: Jackson Hole
oops.
www.tradewithdave.com
Relative value of Fib analysts and crotch shampooers?
to ZH
do you really need a 12th century or 500th century (future) mathematician to tell you that QEorganizer's ponzi scheme is nothing but a house of cards...how about corzine's? how about madoff's how about clinton's "i left you with a SURPLUS".
surplus = lewinsky's waist diameter.
besides you are NOT indicating to what price the casino will drop to...= not very insightful, OR how long...to get there..
just ask any "technician" they will tell you AFTER the fact.
Ya but what did Nostradamas say? :-) By the way - the Packer got screwed badly last night! I call for a congressional oversite committee to review the replacement ref officiating system before some one gets killed!
Go packers
It's almost like Eric Holder was reffing.
So does this mean that the Golden Ratio is no longer golden?
it ain't provided you know when the true tipping point is...
Even if it is tipping it doesn't say how far it will dip before it trips up again.
I'm missing something in this leap frog game.
Bad news: The Golden ratio has been found to be filled with tungsten...
The dollar has to rally now to empower the sheeple with spending ability / belief; it's pointless re-electing the same puppet when it takes $5 to buy bread.
It's all just smoke 'n mirrirs using funny fiat money.
$5? We should be so lucky going forward. From your lips to God's ear.
YEAH! NEXT RALLY BEFORE DECEMBER GUARANTEED!
(and next?)