Faith Vs Fate

Tyler Durden's picture

The S&P 500 P/E ratio is testing 15x - its highest in 19 months. This takes the stock market's valuation back to its highest since the debt-ceiling debacle and USAAA downgrade (as if nothing ever happened). Since that time, expectations for GDP growth in 2013 has plunged from 3.2% to a measly 2.0%. The 'Market of Dreams' economy continues as Bernanke's "If you BTFD, we will recover" is the only mantra left. Was it only August 2007 that Bob Pisani was reminding us all that: "improved policies on the part of those steering the economy are the likely reason we have avoided recessions."


Though perhaps, just as we feel invincible, it is worth remembering how quickly that multiple expansion can collapse...


and from everyone's favorite floor-talker, Bob Pisani - August 2007:

Talk about a recession from a very small group of people need to be balanced against the fact that no major strategist is predicting a recession. Many are trimming their forecasts slightly, but that is a long way from a recession.




Looking at across the uneven economic history of the United States, one thing is very striking: how few recessions we've had in recent memory. The National Bureau of Economic Research (NBER) has noted that there have been only two recessions (1990-91 and 8 months in 2001)-- both of them mild--in the United States over the past 25 years; over the previous 35 years, they noted, there were eight.




This "great moderation" of the economy has been explained many ways--luck, structural changes in the economy, etc., but in the end even the cautious NBER admits that improved policies on the part of those steering the economy are the likely reason we have avoided recessions.


It seems we will never ever learn...


Charts: Bloomberg

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hannah's picture

you cant have a recession with bogus gov numbers....

Say What Again's picture

The Pissanti can say whatever he wants...

... but I wonder if he ever needs to buy a tank of gas?

The price of everything is going up at a much faster rate than my income.

Maybe I need to consult with that teen-age bitch from Desperate Housewives (Rachel Fox) to give me some help with my disposable income.

ziggy59's picture

I call him all the collared MSM widgets, they piss on u(and me) and say " free lemonade"

Say What Again's picture

I suggest that you not stand so close to your TV.

Spirit Of Truth's picture

It's all about Dow 14K and the Grand Supercycle peak in man's manic-depressive mood swings:

Lord Of Finance's picture

 I'll consult that teen-age bitch.

Damm right.


   "Somebody tell that bitch to be cool! Tell that bitch to be cool! Say bitch be cool! Get that bitch to chill!!!

Groundhog Day's picture

"if you build it they will come"...oopps wrong movie

"if you print them, they will rise"...fixed it

madbraz's picture

P/E is not 15, unless you want to accept fantasyland operating earnings - not that reported earnings are real anyway.


Under GAAP reported earnings, P/E is currently 17.  Shiller P/E is north of 22 and a clear indicator of bubble territory.

madbraz's picture

Also, if you check Standard and Poors and their compilation of sales for every company in the SP500 index, they will tell you that sales are some 5% higher than Q4 2012.


Look at their spreadsheet for compiling this crap,

on the tab "Issues", line 251 and 262, the sales of Philips 66 and Prudential show a gain of $76 billion over 2012!  This is due to acquisitions/mistake, not apples-to-apples sales growth.

Back those 2 items out and sales growth is 1%.  This is not even accounting for the fact that more companies made acquisitions of smaller companies rather than sales of subsidiaries in 2012.  I suspect when you eliminate that effect and have real "same store sales" kind of figures it would show close to 0% sales growth.





Yen Cross's picture

 Where is the "Spear of Destiny" , when we summon her?  Single Moms make for good Obamacare.

Seasmoke's picture

i do not believe these charts UNTIL Rachel Fox tells me what she thinks of them

Say What Again's picture

Rachel Fox & Mandy should be the only people talking on CNBC.

Well, Rick Santelli is OK

Itch's picture

Tyler, see if you want this market to drop like a stone, start putting out bullish vibes and everyone will shit themselves. Thats a fact.

Say What Again's picture

Speaking of that ...

Whatever happened with the Anon hack into the FED and others recently.

I haven't heard of any fallout from their deep probes.

Rustysilver's picture

even the cautious NBER admits that improved policies on the part of those steering the economy are the likely reason we have avoided recessions.

Should read: improved policies on lying about the economy


SheepDog-One's picture

'Improved policies' = more sophisticated lying and media cooperation to cover it up?

All we need next is Govt sponsored trolls like in Europe to try to shut people up.

rubearish10's picture

.....the Great Bluff continues. There's always somethin' that stops any kind of donwturn. Yeah, we sold-off" this week, what?

cliffynator's picture

Flat is the new down.  There are no more dips, just buy as we ramp forever up.


UPDATED: after the -1, let me add...  /SARC

rubearish10's picture

So true. I once believed there was at least a 50/50 chance the market could either go up or down, ugh!

NoDebt's picture

The only thing that will spook the markets now is a credible threat to the existance of the entire global banking and financial system.  2008 was such an example, as was the debt ceiling debate in 2010.  Nothing of less magnitude than that will move the needle.  Certainly not something as mundane as sub-par economic data.

Agreed with above- we may have seen the last DECLARED recession in our lifetimes.  There will only be preiods of steady recovery and periods of slow recovery.  The word recession is henceforth outlawed.  And using the D-word is punishable with prison time.

LawsofPhysics's picture

Correct.  This will be about as successful as outlawing gravity.  Now we all get to find out what a currency collapse is really like and what the "price" of things you can't get is as well as what the "price" of things nobody wants is.

There will be no animal spirits until the supply lines break.

ekm's picture

Supply lines already broken

SheepDog-One's picture

I don't believe there was any 'credible threat' in 2008, other than the banksters sensed that their scam was in great danger....nothing has been solved, and a 'crisis' will hit again as soon as the banksters feel the next 'squeeze' from the tuition bubble imploding or whatever....but make no mistake they're monetizing the debt and thats the LAST act of all imploding empires/currencies. Its all going down one of these mornings, make no mistake about it. 

rubearish10's picture

"Its all going down one of these mornings, make no mistake about it. "

There's no epirical factual truth that supports your claim. besides, PPT would quickly go into action by the afternoon.

SeattleBruce's picture

"There's no epirical factual truth that supports your claim."

Other than all recorded fiat money history, that is...

ziggy59's picture

Bernanke mantra,: I manipulate; therefore I Am

ekm's picture

This is no stock bubble no bond bubble


This is Liquidity Bubble


Its about to implode

SheepDog-One's picture

Implosion as soon as liquidity feast causes projectile vomiting.

ekm's picture


There's nothing left to buy,

Hence excess money has to die,

And die it will quite soon


SheepDog-One's picture

Gonna be ugly....there's no spin pretty enough to cover up a high speed head on trainwreck.

ekm's picture

Laws of physics blogger is quite correct in his analysis.


Only that supply chain already broken if you check oil price and posts from blogger ADR


WTF_247's picture

I would not be suprised if GDP went to -1 ot -2% for a few quarters and the market did not sell.  The Fed is actively in the market buying/supporting. 

Large participants have been geared that there is no risk - any macro even that might happen will just be mitigated by more printing and more free money.  Heck - I would love to buy bonds at a discount from the auction and then flip them a few days later to the Fed for free profits.  Anyone have a few billion you can loan me to get me started?

If everyone decides there is no risk and does not sell, then no one loses money.  Traditionally there were early movers who were smart (exiting as the market nears a peak), then the fast movers who saw the game was over and sold as the believers kept buying the dip, and the laggards who only sell after the market is down 10% and they are forced to.  If everyone is on the same boat (i.e no risk of loss therefore no reason to sell) then the market will not correct.

All this does is set up for a massively bigger correction when it happens.  

2007 was evidence of that.  6+ months before the market cracked there was evidence all over the place of danger.  However, trying to short during this time was anything but easy money - even in the face of pending doom the idiots kept buying the dips and the markets marched higher through October 2007 hitting an all time high.


SheepDog-One's picture

Well, for the so-called 'market' to 'sell', there has to be buyers and there are no more real ones left anywhere. FED can print and buy as much as they want, but they can never offload their scam to anyone.

q99x2's picture

Gator's on the prowl. 

Kilgore Trout's picture

"...those steering the economy..."

Reminds me of:

"When  I die, I want to go peacefully like my Grandfather did -- in his sleep.  Not yelling and screaming like the passengers in his car."  --Jack Handley

Yen Cross's picture

X15  is based on $16 Trillion of liquidity in 4 years. Tyler is being gracious/ fact is (sixteen trillion dollar equivalent)


  The T16 is valid. I'm tired Bitchez    catch you later, after I close My ponzi Hedges!

RopeADope's picture

Primary export of the US is USD, we are doing very well thank you. Stop looking at those dark ages GDP figures.

Totentänzerlied's picture

There is no growth here.

Who you gonna believe, them or your lyin' eyes?

Grand Supercycle's picture

DOW monthly chart shows impending Wile E. Coyote drop.

It doesn't take a genius to realise this chart will end in tears.

Longs please be careful.

kavaron's picture

I wish we had Bernanke here in Europe. You guys have no idea how good he is. If he stops printing then unemployement will go to 10-15%. Austerity is not the solution...