Where's The Money On The Sidelines? (Hint: All-In)

Tyler Durden's picture

Spend more than 10 minutes watching business television and you will undoubtedly be told that there's a lot of money on the sidelines, everyone owns bonds, and once 'some catalyst - election? fiscal cliff? year-end?' is completed then that rush of desirous greedy capital will send Tom Lee's own S&P 500 to new 'giddy' heights. Well, back here in reality-land (away from the total misunderstanding that the cash on the sidelines will always be there as the person you 'buy' your shares from is left with the same 'cash' you held before) it appears that these two charts suggest those sidelined investors are anything but. As Morgan Stanley notes, 77% of US investors are now bullish on US equities - near record highs - and if, like us, you prefer positioning (as opposed to sentiment) data, the net longs in S&P 500 futures are as high as they were in 2007 (right before the peak) and in late 2008 (right before the 27% plunge in the first quarter of 2009). But apart from that...





Charts: Morgan Stanley and Bloomberg

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Cursive's picture

All this talk of cash and no analysis of the debt that backs it.  Leverage should be a four letter word.  Having issued billions of debt to raise cash, corporations are also not as strong from a net cash standpoint either.  AAPL is an exception, but they have their own peak sales problem to deal with.

hugovanderbubble's picture

Free Cash Flow for Operations are lower each day

EBIT/Sales decreasing...

Less Labor Force

More Global Unemployment

Impossible to repay debt schedule without debt haircuts or reprofiling

Impossible to pay Pensions Plans.(demographicals mismatch)

The trend is your friend's picture

Don't hear much on the christmas shopping season?  Maybe i'm not spending enough time on CNBS and too much time on ZH

hugovanderbubble's picture

Nothing more to say.


CPL's picture

Overcrowded trade = Overcrowded herd.


So it's time to cull the herd again.

CrashisOptimistic's picture

You want an overcrowded trade?  Find me a CNBC shill who is NOT saying "YOU MUST SELL BONDS.

If you owned LT Bonds Jan 1, 2012, you are up 12.74% YTD with an EXPLICIT Fed purchase floor under you.

That's for the 10 year interest rate going from about 2% to 1.7%.  Next year, when it goes from 1.7% to 1.4%, you'll get another 13% return, and the next year will be a blockbuster, when it goes from 1.4% to -2%.

Money on the sidelines is waiting to get into bonds, assuming you don't call bonds "the sidelines".

buzzsaw99's picture

kevin will buy he has uber-bux

Critical Path's picture

Christmas Flooring Sale: Today only, get 15 or more percent off AMAZON quality show room flooring (BBY) and have it installed in time for the holidays!

ekm's picture

Finally. Finally.

People are understanding that Primary Dealers are all in and have no other option but to continue to be FORCED to keep buying until 1 or 2 get Lehmanized.


Quote from Seth Klarman:

"If you buy stocks looking to sell it to a greater fool, if there are no greater fools around, then you are the greater fool."

Conclusion: Primary Dealers are the greater fools and sooner or later they'll vote to let one or two go, same as in 2007-2008 when Bear Stearns and Lehman were let go.

LawsofPhysics's picture

Right, so this is like the movie "Highlander" then.  There can only be one left standing.

I see only one fool, The Federal Reserve bank.  But this is by design.  When a private bank fails with loans outstanding, they go after the assets of those who owe them "money".  Now remind us, who has been paying interest to The Fed for the last hundred years?   Yeah, this should end well.

ekm's picture

The more it continues the more I get convinced that once the Fed is loaded with crap, the congress will shut it down by mergin it with the Treasury

LawsofPhysics's picture

As the law (re-written several times by the Fed via the purchase of your "representation") stands now, the assets of the treasury and American taxpayer already backstop the Fed's purchases and any debt owed will be settled via the transfer of these underlying assets.  There is no need to merge anything.  Barring a real revolution, one is already beholden to the other. Remember, in the empire of lies, truth is treason and when fraud becomes the status quo, possession becomes the law.  There are many successful families that came before you and yours, they know what real wealth is and they want their rent bitch, now pay up.  Merry Christmas.

1C3-N1N3's picture

Consumption is the law. Possession is merely the identifier by which the law chooses its targets.

LawsofPhysics's picture

Ha!  +1 for the "consumption is the law" mantra.  Right, when the "law" shows up, the response will be the same "what assets?".  Besides, I know what the wages are for those who enforce the law.  Robocop might be a problem, but the human representative won't be.

TruthInSunshine's picture

Where is Abby Joseph Cohen? I haven't seen its* sell-side ass in a loooong time.

*It's time for androgyny. I can't guess its gender.

CPL's picture

He's a strange cat isn't he...sayd the pot to the kettle.

rqb1's picture

she player her role telling people to buy tech in 2001 as gs was selling with both hands, became a partner and is just spending other people's money as she moves off into the sunset.  job well done abby! 

realtick's picture

Back to the serif font, huh?

StoleYourMoney's picture

Fiscal cliff is the perfect setup for a market crash

magpie's picture

I don't know if it qualifies as a bonafide crash, will probably go long again in the 1360/70 S&p region

StoleYourMoney's picture

Markets are ignoring the fundamentals, what follows isn't good...

StoleYourMoney's picture

Markets are ignoring the fundamentals, what follows isn't good...

Tsar Pointless's picture

All's well that ends well, then, right?

mark mchugh's picture

2012 will undoubtedly be a record year for US corporate borrowing.

Why borrow when you're flush with cash?

orangegeek's picture

And here's the SP500 weekly - it could push past September highs - bullish news like fiscal cliff, euro insolvency, deflation - these are all bullish events that should push the markets high.

*vomit break*




It is amazing that the markets have been pushed this high - an almost 4 year bull run.  Q4 revenue/earnings should be interesting.

AynRandFan's picture

From the chart, a spike of bullishness following a downtrend would indicate a future rising stock market.

The real bubble is bond prices.

madcows's picture

Well, as a guy on the sideline, I'll say that I have very little interest in Getting back in.  I'm far too distrustful of the system.  If I had a bunch of money to play with, then maybe I'd risk it in the casino.  But, I've got some other things I'd rather do with it than throw it away in the market. 

I'm waiting for the SEC to lock away all the crooks before I ever think about putting money back in.  Of course, I'm not holding my breath.


Im a slow learner, I know.  You fooled me three times.  But, I've learned.  FU.

caimen garou's picture

+ 100 madcows, my cash is all out of the market all in assests I can hold on to. the talking heads don't understand that a lot of that sideline cash from individul investors is being used to pay down debt and to survive on never to come back to the market.

dolph9's picture

If you look closely enough you can see a top forming.

Don't let yourself get fleeced.

WallowaMountainMan's picture

(away from the total misunderstanding that the cash on the sidelines will always be there as the person you 'buy' your shares from is left with the same 'cash' you held before)

unless it goes somewhere else....