Why A 5% Correction Is The Least We Should Expect

Tyler Durden's picture

While cherry-picking individual macro data points to confirm self-referential biases appears to work for the majority of Wall Street's strategists and asset-gatherers, the sad truth is that fundamentally (top-down and bottom-up) things are not doing so great. We have exposed many of the divergences in the last few weeks and some cracks are appearing in the unbreakable vestibule of central bank liquidity; however, just as we saw late last summer (as gas prices rose once again), macro fundamentals have collapsed (based on Goldman's Macro data assessment platform) and with the normal hope-driven 2-3 month lag, equities are set to follow soon. The size of the shift implies a 5-10% correction to revert to 'reality' though we suspect - given positioning - if we ever saw it, the over-reach could be notably worse.



Chart: Goldman Sachs

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Aussiekiwi's picture

Be nice to have a chat with the boys, they have to bring their own beers though.

Hongcha's picture

There is a limit and we are fast coming up on it.

They need to take gasoline prices down.

$4.31 for 87 octane here in Contra Costa County.

This price is bleeding out the working class, everywhere in the U.S.

The wealthy do not care and Free Shit Nation does not care; so maybe the WH doesn't, either - but I don't see that we go much higher with gas this high.

Everything we do and eat depends on it.

All it will take is a quiff in the air to the effect that the punchbowl is empty and not being refilled; and -5% SPY in the first 3 days for starters.

stormsailor's picture

bullshit,  bet your damn money on a correction, and better still go long and make money.  it pays off in frn, wonder how much it devalued? nobody knows.  but i think it will be funny as hell watching assholes driving those hummer h2o's( a tahoe with ground effects) playing fred flintstone when they start off at the traffic light. 


some say gold, silver.  that is just as manipulated.  bad time to buy ammo now.  maybe raw metals if you can buy them cheap,cheap.  trouble is if the enonomy goes in the toilet a damned likely prospect,  raw metals go in the toilet for a while too. 


i say get out of debt,  stock up some supplies and rotate their use.  get a patch of land with springs, thats cheap right now, just for a bug-out place.   putting your hard earned coin into any of this market is clodhopper stupid. 


maybe you could buy up a dozen or so  92 geo metro's, so when gas goes to 8 a gallon you can double up, or trade them for ammo,  whiskey,  female hygiene products, toilet paper,  hand wipes,  water carriers. you know,  survivalist shit.


rant off.


i'm just about to the point where i might sell everything, business, properties, antiques, and buy  a large sailboat.  take my gold, silver, gemstones guns,etc. and sail off into the sunset.  spend my last 20 years totally off the civilization grid.  i'm a pretty good sailor,  and the biggest problem for a month being fixing a leaking bilge, or repairing a blown sail seems like a pretty cool life.  i know how to tie all those really cool knots, lashing and whipping.  i could have the fanciest schooner in fuji.

espirit's picture

Best to keep an eye out for smokers, in Waterworld.

espirit's picture

Better yet would be to buy a "solar powered submarine".

Tombstone's picture

Dream on.  As long as one zombie follows another, this brainless rise will continue into 2014.  You might see a 5% correction after another 10% rise.  With lower volume overall, the machines are buying and hardly anyone is selling.  Thus, we float up into the heavens with little rhyme or reason.  At least the goons on CNBC are having a good time telling us how great things are and how important every point is.

thismarketisrigged's picture

how sickening is it that every single time a market is up, its not due to any fundementals, its all due to endless qe.


look at the nikkei tonight, nothing whatsoever happened in japan that would be able to justify a 2 percent plus move towards the upside, but since it is believed that this guy kuroda is going to head the bank of japan and he is very dovish, the market goes up.


its just sickening, but let these assholes on cnbc keep spewing shit.


ppl wonder why santeli has so many rants on cnbc, well lets say u were working with a bunch of retards, wouldnt u also get very excited often and go on rants? he is the only level headed one on that channel who actually knows the reality of this economy.

espirit's picture

It's a good cop/bad cop rant for the ratings.

That's reality.

They Tried to Steal My Gold's picture

So Tyler either Goldman has their shorts already in place and got spooked by the recent reversal of Friday's performance or

They want to add to their shares for another run up and they are in essence selling against their clients....


Which one is it?



orangegeek's picture

We've been in a bear market since 2007.  The push from 2009 to current has taken four years and still has not passed the all time high.


The Fed can keeping pouring billions per day into the markets, but they will eventually run out.




It's sad that the coffers have been emptied for the purpose of getting re-elected.  Pork barreling is one thing, but this is historically unprecedented.