The December 21 'Triple Witch' Zero Barrier

Tyler Durden's picture

Via Michael Naso of FBN Securities,

One of my favorite movies, recently relegated to AMC with commercial interruptions every five minutes, is “Armageddon,” starring Bruce Willis who leads a ragtag band of energy drillers enlisted by NASA to save the world from an impending catastrophe courtesy of an asteroid the size of Texas.  I will not spoil the ending for those who have not seen it save the presence of a “zero barrier” which if breached by the mammoth rock would end all life as we know it.  Yesterday’s price action offered a messy preview of what lies around the corner, for the U.S. economy confronts its own Biblical demise, otherwise known as the fiscal cliff, when it slips past its own zero barrier which I estimate as the December 21 triple witch expiration.

To be sure, I do not equate a near guaranteed recession and significant pullback in equities as calamitous as what Mr. Willis et al faced; however, the inevitable squabbling by each party would cause significant damage to an already fragile recovery.  Despite President Obama’s supposed olive branch across the aisle during his victory speech Tuesday, Senate Majority Leader Harry Reid quickly reminded everyone yesterday that tax hikes on the rich are a necessity.  On the other hand, Republican Senator Pat Toomey (PA) spewed the Romney debt reduction proposal plainly on CNBC yesterday afternoon with Speaker Boehner emphasizing the position further with the mirage of his willing to accept new revenue sources.  In short, the two sides are as far apart as ever as the Democrats will be emboldened by the Election while the GOP will point to roughly 50% of the country, exemplified by the popular vote, who agree with its views.

Politicians fail to understand that the markets project forward such that as each faction drags its feet, the damage done to stocks could be substantial.  In fact, some leaders in Washington have argued that going over the cliff actually would be welcomed given the amount of income it will bring into the Treasury Department’s coffers.  This is foolhardy such that the pressure of cutting a fast deal after such a dislocation would produce something few would applaud.  Other analysts are hopeful for some sort of compromise that kicks the Bush tax cuts well into 2013.  I do not suspect President Obama would cave so easily after such a resounding win in the Electoral College while Moody’s and/or Fitch would not look so kindly on the U.S. sovereign credit rating as a result.  In retrospect, my comparison to “Armageddon” may be unfair simply because the current fiscal crisis might not even have a zero barrier as the most plausible scenarios, when leveraging game theory, hints at an unfavorable outcome.

I do not subscribe to the speculation that Mario Draghi’s downbeat comments on Germany lit the match of Wednesday’s aggressive decline, for most investors had already reached the same conclusion about contagion spreading from Southern Europe for quite some time.  A simple gander at the economic figures, most notably the PMIs, backs this thesis.  More importantly, though, a recession for the EU’s economic engine would not only paralyze Europe, but also many large multinational corporations.  In short, the 12.5% expected earnings estimates for the S&P 500 for the next 12 months remain highly optimistic such that an inevitable reduction would weigh on shares.

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THX 1178's picture

Terence Mckenna. He makes the rest of us look bad. I like him. I think there's more to the universe than we can yet imagine.

willwork4food's picture

Hey Thanx for the link Silvertree. I studied the Iching years ago, and this looks right down my ally.

Ruffcut's picture

One of clients ran for congress, 4 years ago as a libertarian. He told me had zero econ knowledge knows the law.

They don't know the basics and don't give a shit, either. They like acting stoopid, rich and powerful all at the same time. They are artists". They are actors, but very bad ones.

Gringo Viejo's picture

Toorisky: Just read an article stating that Rep. Allen West refuses to concede. Apparently, he was ahead by 2000 votes until the election officials in Port St. Lucie did a recount BEHIND LOCKED DOORS and then stated he lost by 2,500 votes. In the comments section to the article, the first one stated "another scumbag gone" with numerous "likes". My point being, when a genuine war hero, patriot and moral man is viewed in such a light by both th PTB AND the general public, it's time to pack up your tent and move on. I am thoroughly, 100% certain America is beyond any redemption, socially, morally or politically. It's time to care for and protect your loved ones, and shun all else.

IT'S OVER!

10mm's picture

Allen West also endorsed the NDAA and that war hero shit is meaningless.

Gringo Viejo's picture

10mm: Thanks for adding the exclamation point to
IT'S OVER.

Urban Redneck's picture

Amateur Shit - Bagdad Bob moved to Phili on the DL and changed his name to Nutter.

I came cross an article on Philadelphia voting from a not entirely reliable source, so I checked the underlying data- which is incomplete since the web interface sucks and I don't have software to scrape the site, but-

Across at least 39 polling places where over 14,000 votes were cast NOT A SINGLE VOTE TO ROMNEY.  Saddam Hussein didn't score that high when he was the only name on the ballot. The beauty of the US electoral system is decentralized control.  Across over 14,000 votes cast (on machines that are calibrated by less than stellar election officals) it is impossible not to have a single ballot cast inadvertently for the wrong candidate (even if 100% of the electorate wanted Obama). To top everything off, the local papers were trying to explain the result away as a "motivated electorate".

http://filter.phillyelectionresults.com/comprehensive.aspx

RSBriggs's picture

I saw a twitter post on #Obama2012  that bragged about having hacked 10 million Romney votes to be Obama votes.  And also said, HA HA HA, it's easy a shit to spot and you can't do a fucking thing about it, either.   Want proof?  Just look for ballots that are stright line (R) votes, but have Obama for Pres.  They were straight (R) votes that got flipped.   HA HA HA.  No paper trail.  Tough shit.   

Urban Redneck's picture

Ten million seems more like a fanciful boast, with 70% of precincts reporting California was only pace for 12M ballots roughly half which could reasonably be assumed to go to either of the faux candidates.  But without a paper trail (and ideally paper ballots) all it takes is proximity to a voting machine or counting machine and a little skill...  

Urban Redneck's picture

If you are good at manipulating data sets you can take a crack at cross referencing Ohio data (link below).  But given that the phenomenon is not new to this election cycle (in Ohio), it would appear to be more complex than a drive-by hack, except for the fact that the precincts with 0 R votes changed between 2008 and 2012.

http://www.zerohedge.com/news/2012-11-08/its-not-so-rosie-what-keeps-glo...

eclectic syncretist's picture

12/21/12 = end of baktun and a new beginning = triple witching options exp. = expiration of opportunity to avoid fiscal cliff = excuse for banks to tank the market and show those in the know who's really in control, while convincing the populace that one of the other things was to blame.

 

TruthInSunshine's picture

Will GropedOn make it to 12/21/2012???

I think that's what the Mayans were speaking to, but I'm not sure.

 

It's okay, though.  Group On is going to lay off 80 out of their 11,000 employees, and announce it on today's conference call. That will surely save this company that has so much proprietary technology and high barriers to entry business model with a loyal customer base of companies that use Group On 1 time and then throw up when they have Genghis Khan Horde raids on their stores by customers that will never come back.

Curt W's picture

12/21/12 will be the day a large portion of the world population realizes that central banks are just screwing us.  With their supposed easing.

lolmao500's picture

Meh the fiscal cliff really isn't even the REAL ONE that has to be taken. When the real fiscal cliff hits, GDP will drop by 15%+ in a year... and that's if the bond market doesn't blow up. If it does, 15% will be LUCKY.

Raynja's picture

I'm about the only person who thinks this, but NOT going over the fiscal cliff is the worst possible outcome.

Going over will produce a well known drag on GDP while starting to address our revenue/spending problems.

Not going over the fiscal cliff will severly detriment trust in the US dollar and Treasuries.  If politicians decide to keep borrowing and spending instead of manning up to the bill the future interest payments will make this $600b 'cliff' look like a plain.

Panafrican Funktron Robot's picture

I think most here agree actually.  The problem is the level of knowledge of fiscal policy on this board is absurdly high vs. your average PhD in economics.  

Jason T's picture

I'm bullsh on Durable Goods.  Invest in Durable goods!

toomanyfakeconservatives's picture

I'm dumping dollars as fast as I can in favor of bullets, beans, fuel, spare parts, and so on.

Smiddywesson's picture

Help me Ben, I'm hanging from a fiscal cliff!

Sincerely,

The 200 day moving average

I Am Not a Copper Top's picture

This is bullish, right?

SheepDog-One's picture

Meh....they should just be able to 'Wile E. Coyote' suspend over the cliff indefinitely I guess.

Tenshin Headache's picture

It helps to be the one controlling the gravity.

mirac's picture

It may very well be an asteroid that gives the bears the expected stock market levels.  No joke.  I'll guess that no more than 5-10% of posters are following this story, but a simple search on your favourite search engine using meteorites, sonic booms etc, or even Youtube will open your eyes.

TPTB_r_TBTF's picture

.

 

a simple search on your favourite search engine using meteorites, sonic booms etc, or even Youtube will open your eyes.

With a socalled "simple search" i land on websites which tell me the Galactic Federation will save us.  A "simple search" leads me to sites claiming the ghost of Abe Lincoln says all is well cause the Galactic Federation is hanging out somewhere in our Solar System waiting to save us.  That's not Jesus' job any more!  But you are certainly correct- my eyes have been opened.

willwork4food's picture

Well you did better than me. I put in 'sonic booms' and got Hillary, Michelle and Rosie O'Donald mud wrestling naked in Reno.

Disenchanted's picture

 

 

 

So that's what happened to Janet...

Pairadimes's picture

I didn't know there was still a market. Huh.

Uncle Remus's picture

"This sucker's going down."

Yep. It's Bushes fault. Mofo put some voodoo on it.

OpenEyes's picture

"In short, the 12.5% expected earnings estimates for the S&P 500 for the next 12 months remain highly optimistic...."

Gee, ya think?  Who is expecting 12.5% earnings for the S&P for the next 12 years let alone months?  Man, if there was anyplace (aside from pm's) that I could get a decent rate of return on my retirement savings I'd be ECSTATIC.  As if inflation and dollar dilution weren't making it hard enough to even see the retirement horizon there is simply no place that you can 'save' money anymore where it will earn you anything.  It's pretty much as if you now have to save enough money, on your own, without the benifit of compound interest, dividends, basically without your money helping you in anyway other than just sitting there being slowly pecked away by various 'management fees' and spurious charges from my oh-so-friendly but never helpful 'wealth advisor'.  Sorry for the rant, but, This stuff just gets to me once in a while.  (last note, I tried to turn-off the bold but it wouldn't respond, sorry for the bold)

toomanyfakeconservatives's picture

I'm catching on... when something is up in monopoly money terms but down in gold terms, it's down... PERIOD!

Atlasshruggedme's picture

Read comment above... Re-read it. Your USD is garbage, buy gold.

Mad Mohel's picture

Fiscal cliff my ass. They have to create some kind of drama to keep the peons too busy to start gathering pitchforks and nooses. They will do as the always have and make some token cuts and print the rest.

At this point this Mayan baktun shit has more credibility than the clowns running this show.

TPTB_r_TBTF's picture

 

 

I'll bet those Mayans grew some good pot...

Terence McKenna smoked good pot.

 

Zwelgje's picture

Pot is the proof that God exists and want us to be happy.

Mercury's picture

So, either Congress decides on some mix of spending cuts and taxes or different cuts and taxes will kick in automatically?

Pardon my lack of excitement here but I'm pretty that in the end the government will get bigger and everyone else will have less money.

Smiddywesson's picture

I'm not scared.  I laugh at the coming collapse.  I'm young and strong and healthy and I know it all!!! 

Wait, that was 35 years ago.  No, suddenly I'm old, weak, unhealthy, and know enough to know I don't know nuthin'.  I guess it's time to be scared.

Joe Davola's picture

On a positive note, the death panels will call your number soon enough.

(Your avatar looks much like my Dwarven Hunter killing machine - Guns >>> Bows!)

DCFusor's picture

Smiddy, that's the most astute and compactly correct statement I've seen here in way too long.

Smiddywesson's picture

I can't predict the end of the world, but I can predict the top three best selling cookbooks of 2013:

1) Southern Living's Big Book of Roadkill

2)  Taste of Home:  Best loved Recipes if Your Home is a Doghouse.

and everyone's favorite who grew up with black and white TV,

3)  To Serve Man

 

willwork4food's picture

Yup. #3 is regretably right on the menu one day. Just like in the books by Nova-American Apocolypse. His premise was logical in that after the devaluation/collapse, the US goverment will have 'safe-zones' within the cities to maintain the rich, status quo and banking system, ignoring the rural areas. When the safe zones go, you have a mass of desperate, hungry and pissed of people that are heading out and want to eat.

TPTB_r_TBTF's picture

.

 

suddenly I'm old, ... and know enough to know I don't know nuthin'. 

A few youngins will survive, that is good-enough for the species.  At least we old folks get to watch [for a short while].  The youngins will pass "The Story of Benny's Debt" on to their offspring.  This species will learn [the hard way].

Gold will still be Money in another 6000 years.

Atlasshruggedme's picture

I love your picture... You can try planning to make money during a collapse. Or you can transfer your Fake money into Silver/Gold (Bean/Bullets). Understand that the dollar is daluted to pay for then WANTS of others. This make the debt to others (China and the FED) worth less and less. (This is good right?) But this also does the same thing to your bank account. The best way to hold on to the wealth is gold/silver. 

Accept that the USD will be destroyed. Buy Silver with your extra change every month. You can trade your Silver back for a profit the next day. Be 1 step infront of the Horde of people un-prepared. 

Market dropped 2.25% yesturday and 1.4% today.  

TacticalZen's picture

Diversification =
Silver / Gold
Food
Water
Fuel
Ammo
Guns (Glock/Springfield/Colt/Sig/M1A/FNFAL/AR15/AK47/shotguns, etc)
Knowledge
Tools
Healthy dose of skepticism
Dash of hope/faith
Loads of humble

blindchicken's picture

."..the fiscal cliff.."

is just another diversion, like 'elections' or 'Greece'. And it works well to divert people from the fact that not only our freedom and wealth are being plundered.

Finally they will agree to postpone the demise after giving a more or less convincing show to the contrary.

 

Al Huxley's picture

Hmm, I wonder if when push comes to shove they'll just do like they've done with every other artificial 'ceiling' and 'limit' they've ever had, say fuck it, print up some more debt for the FED to monetize, and let the show carry on.  Does nobody have ANY fucking memory about how these things have played out in the past?

johnjkiii's picture

See: Weimar; Hoover & FDR; Japan - 23 years and still getting weaker; Zimbabwe: Hungary: Austria: South Sea Bubble; Iran now & Argentina (too many times to mention); Greece every 14 years since independence from Turkey and a chorus of many smaller voices.