It's Deja Vu, All Over Again: This Time Is... Completely The Same

Tyler Durden's picture

It was the deep of winter... CNBC was talking about "animal spirits", had just touted "the best January in 14 years", was quoting Raymond James' Jeff Saut as saying that "The market "is amazingly resilient, and is no longer overbought" and desperately doing everything it could to get retail back into stocks, and was succeeding: retail inflows into stocks were surging and seemed unstoppable... The Chicago PMI had just printed at its highest level in decades... the VIX was dropping fast... Stocks were soaring... Bonds were sliding... NYSE margin debt had just risen to the highest level since 2008... A few brief months earlier the Fed had unleashed a new, massive round of unsterilized bond buying...  Bank of America was blaring about the "great rotation" for stocks, and yes - just shortly prior "global currency warfare" had broken out. Name the year?

If you said 2013, you would be right. And wrong.

Because the right answer is... 2011.

That's right: with institutional and trader memories so short, everyone has (again) forgotten that it truly is deja vu, all over again.

To wit:

Stock performance in the winter of 2011 and the winter of 2013:

Bond performance in the winter of 2011 and the winter of 2013:

NYSE margin debt - euphoria and leverage upon leverage was contagious... in January 2011 and January 2013:

Fund Flows into equities were unstoppable. Yes - that was 7 consecutive weeks of major equity inflows into stocks... back in January 2011.

CNBC: Monday 31, 2011:

Stocks End Up; Dow's Best January in 14 Years

 

The Dow Jones Industrial Average rose 68.23 points, or 0.6 percent, to close at about 11891.93, after falling 1.4 percent on Friday. For the month, the Dow gained 314.42 points or 2.72 percent, its best January performance since 1997 and its first January gain in four years.

 

The market "is amazingly resilient," Jeffrey Saut, chief market strategist at Raymond James, told CNBC.com. "After what happened on Friday you would have expected a second shoe to fall."

 

But, Saut said, the markets had been due for a correction for sometime, and had been indicating one was on the way. After the sell-off, however, the market is no longer "overbought," he said.

 

Saut remains bullish and one of his favored sectors are banks, which he had not bought for 10 years until last November. Since then, banks, as measured by the Financial Select SPDR Fund , have risen more than the S&P 500 on a relative basis.

 

"I think that is extraordinarily positive for the equity markets and the economy," he said.

The great rotation was rotating... and rotating... and rotating:

Currency war had just broken out... in late 2010

"An “international currency war” has broken out, according to Guido Mantega, Brazil’s finance minister, as governments around the globe compete to lower their exchange rates to boost competitiveness." Welcome to the new frontline. It is being played out at every 500x levered FX trade station. No prisoners are taken as those wounded are immediately shot. And the incursions have now entered stocks and bonds. Trading any assets is now retaliation against a central bank somewhere (most typically at Liberty 33 or at the Marriner Eccles building) which is engaged in open warfare against the world's middle class. And yes, the Brazil Central Bank earlier announced that it was heading unto the breach, buying yet more dollars for 1.7094 reais at auction, and has bought as much as $1 billion USD each day for the past two weeks, putting the Japanese intervention from two weeks ago to shame.

The economy was "recovering" and yet the Fed just announced it would inject $75 billion into the market each month:

To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to expand its holdings of securities. The Committee will maintain its existing policy of reinvesting principal payments from its securities holdings. In addition, the Committee intends to purchase a further $600 billion of longer-term Treasury securities by the end of the second quarter of 2011, a pace of about $75 billion per month. The Committee will regularly review the pace of its securities purchases and the overall size of the asset-purchase program in light of incoming information and will adjust the program as needed to best foster maximum employment and price stability.

So why is 2013 nothing but a verbatim, carbon copy of 2011?

Simple: between the Fed, the propaganda of "great rotations" and "massive" inflows into stocks, despite the endless decoupling of fundamentals with the market, all that the status quo was desperate to accomplish was to push the responsibility of keeping the market afloat away from the Fed and on the shoulders of retail investors.

What the Fed did not realize then, and does not realize now, is that the US consumer no longer has the disposable cash to push stocks any higher because while to some 1% of the economy the wealth is indeed tied to stocks, for the balance unless the economy, the jobs, the wages and all those other conventional things that determine inbound cash pick up as well, which they did not in 2011 and they certainly have not in 2013, the US consumer simply will not be able to pick up where the Fed leave off.

Which is why the Fed failed in 2011. It will fail again this time. But yes, the market is higher now than it was in 2011, why? Here's why.

Finally, how did the market close in 2011? Flat.

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King_of_simpletons's picture

Bubble time. The idiots in the media and the same tired anal-ysts are using the cliches of past bubbles.

Can't wait for the fun and sexy time when it bursts.

Say What Again's picture

Based on the first chart, it looks like I'll have to wait until Valentines Day for the fun to begin (in more ways than one).

Ham-bone's picture

This is 2013...this is QE4EVER...no end in sight like there was in '11...this time we go all the way baby (sociopaths don't do anything halfway...)

CH1's picture

I hold to what I learned a long time ago: If it makes no sense, stay the hell away from it.

francis_sawyer's picture

A nickle ain't worth a dime anymore...

CPL's picture

A dime ain't far behind.

BidnessMan's picture

My 1964 dimes are doin' just fine

JeffB's picture

64 Kennedy Half Dollars are worth $32.00

douglas's picture

Notice how curuious it is that even prior to the coming economic colapse, just by holding this 1964 Kennedy half dollar - the investment rule of doubling your money every seven years is maintained: 1964=.50, 1971=1.00, 1978=2.00, 1985=2.00, 1992=4.00, 1999=8.00, 2006=16.00, 2013=$32.00

 

jmk's picture

Mistake at 1985--that should be a $4--then 2013 is $64 not $32!

francis_sawyer's picture

Well I guess that means Blythe is gonna be rather busy this year...

dunce's picture

All sociopaths are not socialists , but all socialists are sociopaths.

BubbleBobble's picture

> Based on the first chart, it looks like I'll have to wait until

> Valentines Day for the fun to begin (in more ways than one).

 

Interestingly enough, February 15th is the first break in the Fed's POMO schedule this month...

http://www.zerohedge.com/news/2013-01-31/shorting-market-these-pomo-days...

 

 

bobthehorse's picture

The bubble already popped.

Now we're in an enless Japanese-style recession.

Wash.  Rinse. Repeat

The cycle never end.

http://angrysinner.blogspot.kr/2013/02/yesterday-i-used-my-phillips-air-fryer.html

Ham-bone's picture

not arguing bout the recession or similar situations but Japan and US reactions are different...

- Japanese Nikei topped in '89 @40k and never even got close to that height again...each attempt lower til now they are excited by 11k.

- Within 5yrs US is "achieving" new highs...maybe we'll even get the Nas back to it's peak within 2013...Fed is all in to print whatever it takes to maintain nominal fictions

There is such massive deflationary forces in labor, housing that Fed has unbelievable leeway to continue printing enriching those closest while impoverishing all the little people (formerly known as middle class).

EmmittFitzhume's picture

Japan actually makes products of value.  We don't

Ham-bone's picture

tanks?  sidewinder missiles?  F15's?  U saying US arming the world to kill one another isn't of value? 

cossack55's picture

Too bad the US let the drone market escape to every other country on the planet.  Oh well, autonomous kill decision is right around the corner.

EmmittFitzhume's picture

We make valuable products...for a few buyers

yogibear's picture

So when does the DHS start carrying the XM25's to use against any disorderly crowds when the SHF?

Plenty of orders.

http://www.youtube.com/watch?v=0d-n7i7hsKA

RopeADope's picture

The U.S. has a huge export industry in dollars. Nearly 1/3 of our country works very hard making dollars for the rest of the world so our leaders would beg to differ about this country not producing anything.

EmmittFitzhume's picture

Why not buy and hold short positions?  If the false market continues to go up due to CTRL-P then all money will be worthless so no loss there.  If market tanks and Fed capitulates, deflations ensues. Short positions explode to the moon.  USD continues to be the safe haven and gold goes down in the interim. Then wait a little bit and BUY PMs and other assets not nailed down!

BidnessMan's picture

Great strategy until you get Corzined....

unwashedmass's picture

so do you suppose that these two guys have the same agreement that Nadler had? You know, never ever mention gold as a valid investment, and bash at every opportunity> 

ParkAveFlasher's picture

Wyckoff is a TA, he just draws lines.

HyperinflatmyNutts's picture

About time they get rid of that schill....  Gold and Silver Bitchez...

Au_Ag_CuPbCu's picture

Fuck you Nadless.  Fixed it for ya.

chubbyjjfong's picture

Nadler, Nadler

Whos your Dadler,

Are you Fun, or are you Sadler?

Wackoff Hug Jon?  

Didya? Hadya?

Time to choke on that T-bone Straddler.

Randall Cabot's picture

I gave you a greenie for effort

ToNYC's picture

Seems like just yesterday..as do the Middle Ages as I recall the bus ride in here.

stateside's picture

How appropriate on the eve of Groundhog Day to do a "do-over"

stateside

Groundhog Day's picture

We are all living the same year over and over again.  Yesterday is today and tomorrow will also be today.....Just look at the POMO activity at the Fed.

Cdad's picture

Late.  Stage. Crony. Capitalism.

Motorhead's picture

L.S.C.C.  I like it!

Water Is Wet's picture

But what if it isn't 'Late Stage'.  What if it is 'Just Past The Beginning Stage'?

Motorhead's picture

Deja vu, bitchez!

BeaverFever's picture

What year? Sneaky question involves the Yankees and baseball. Does anyone know that we Canucks are playing hockey right now?
P.S. we invented basketball but forgot to invent tattoos.

Motorhead's picture

After the strike/lock-out/whatever, I'm not sure people DO know that the Canucks are playing hockey right now.

BTW, I think the Chinese invented tatoos.  Or was it spaghetti?

Motorhead's picture

Oops, almost forgot:  Charts, bitchez!

Cursive's picture

Wait, you mean just because stocks are up in January doesn't mean they will be up the rest of the year?  But I've been told that is a stone cold lock, so no way it doesn't happen.

max2205's picture

Its double dejavu 2001 like 2008 like 2013...  fuck

blu's picture

So next year at this time is Dow 15,000?

Will mean about as much as 14,000 means today; exactly nothing.

Shizzmoney's picture

"Shares Crash!.......Hopes are dashed!......People forget!

Forget their hiding....

Its just an Eminence Front!

Eminence Front!

It's a Put on!"

http://www.youtube.com/watch?v=b5kkcOvPW6Y

Motorhead's picture

"It's bull shit, bull shit"

NoDebt's picture

Nice Who reference.  I've been playing that one a few times since they chose it as the theme song for "The Americans" series.

In other news.....

BOYS AND GIRLS. CHILDREN OF ALL AGES!  IF YOU BELIEVE THE REAL INFLATION RATE IS ACTUALLY CLOSER TO 6%, AS I DO (if not higher) THAT MEANS THE DOW ENDS THE YEAR AT 14,840 (14,000 * 1.06) JUST FROM INFLATION.

WEE HAW!

Feeling a little light-headed yet?

 

LongSoupLine's picture

Time to drink myself into a fucking ranting stupor again.  My buds love it.

 

Fuck off Bernanke, I will toast to your fucking painful death tonight.

Archetype's picture

I would rather pay some of the money I still have left to hear you keep on every single day until it all ends than to put it in this fucking joke of a market. Remember you are not alone brother!