IceCap Asset Management: "The Worst Is Over"

Tyler Durden's picture

From IceCap Asset Management, February 2013,

The Worst Is Over

The dark ages were an awful time. Considering the brightest days delivered constant warfare, the burning of books, and the fear of barbarians, no one ever looked forward to the darkest days.

Fast forward 1,600 years, and the darkest days of the European debt crisis are finally over - not because the bad debt has been written off or due to the consolidation of all debt, but simply because everyone has said so.

First up to declare the worst is over was European Commission Vice President Ollie Rehn who announced “the worst is over”.

Next up, everyone’s favourite socialist president Francois Hollande of France confirmed “tonight I have the confirmation that the worst is behind us”.

The French President was then confidently followed by the meticulous German Finance Minister Wolfgang Schauble who droned “we have the worst behind us“.

And then to leave no doubt whatsoever, the scandal plagued Spanish Prime Minister, Mariano Rajoy convincingly reported “I’m totally and absolutely convinced that the worst has passed”.

And, just in case everyone needed a little extra convincing and confirming, European Central Bank President Mario Draghi blasted his favourite Journey song and told reporters everywhere to start believing because “the darkest clouds over the euro area have subsided”.

And that my friends, is how you solve the biggest debt crisis in the history of the World. If you say something often enough, pretty soon you’ll start to believe it. And when it comes to Europeans talking about the swift and miraculous resolution to their debt crisis, no one is singing off-key. Well almost nobody.

Since it is Europe, contradictions never run short. Just 4 short weeks prior to declaring “we have the worst behind us”, Wolfgang Schauble warned “the worst is yet to come.” Whatever very bad thing happened during those four weeks must have been a doozy, as it certainly caused Mr. Schauble to change his tune.

Of course, this was nothing compared to the moment of clarity shared by France’s Labour Minister, Michel Sapin who described his country as being “totally bankrupt”.

And, just to keep things real we should always remember Luxembourg Prime Minister Jean-Claude Juncker’s confession that “when it becomes serious, you have to lie”.

Exactly who is telling lies and who is telling the truth will only be determined in due course. Our view is that before declaring victory over this debt crisis, investors must remember a few things.

First of all, in the real World a resolution to a debt problem usually involves losses of some kind. Normally, when a person cannot repay the money they owe, they stop making payments and the lender takes the loss. Today in Europe, the lenders are the banks, pension funds, and insurance companies – and taking losses would make life very uncomfortable for all of these guys.


Without a doubt, global economic growth remains stagnate, yet stock markets are booming. The message is very clear – there’s money to be made in these markets. There’s no question that trend, sentiment and technical strategies are making money for investors. However, it’s those buy and hold investors who are not being told the other side of the very clear message – there’s losses to be made in these markets too.

Our message on financial markets remains very consistent – do not confuse strong financial markets with a strong underlying economy. While this may sound like hogwash to many investors and investment professionals, it is the extreme, unorthodox, and never-before-tried policies by the World’s central banks that is the reason for the march higher for stocks.

We fully respect everyone who says financial markets are going higher due to money printing. However, those who are telling investors that markets are going higher because the economy is recovering and stocks are cheap will eventually have some serious explaining to do during client meetings.

Whether it is China, America, Brazil or Europe - economic growth around the World is stagnant at best. We’ve written before about Stall Speed – the speed at which the economy will accelerate sharply in one direction, either up or down. The point we make is that economies cannot grow at a steady, constant rate. Regular business and inventory cycles produce the ebbs and flows that many expect during a normal economy.

The worrisome feature of today’s global economy is that despite trillions (we repeat: trillions) in various forms of stimulus, economies around the World have not returned to the pre-2008 growth rates. If Alan Greenspan and not Ben Bernanke was still Chair of the US Federal Reserve he would most certainly be as confused as ever and refer to this economic-monetary puzzle as a conundrum.

Bernanke of course simply refers to this as fun. Regardless, for those who honestly believe in the recovery, ask yourself the following questions:

1 – What would happen to current GDP growth rates if the central banks stopped their money printing programs?

2 – What would happen to short and long interest rates if the central banks stopped their money printing programs?

3 – What happens to all equity valuation models if interest rates are higher?


Full Letter below:

IceCap Asset Management Limited Global Markets 2013.2 by

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bania's picture

I give up, what's the answer?

francis_sawyer's picture

The answer is that if DARK AGES EUROPEANS could have entered a time machine to peep a glimpse of TODAY, they'd have climbed back in as fast as they could & upon returning, take a POLE AXE & half dozen MACES to the machine... Then melt it into something useful... 

James_Cole's picture

"Our message on financial markets remains very consistent – do not confuse strong financial markets with a strong underlying economy."

Do not confuse financial activity for economy, that should be the message. Hasn't really been an economy since Greenspan took over the reigns. 

Boris Alatovkrap's picture

United States is doom by paper shuffle known as "financial activity", even Soviet cannot is think of greater weapon to destroy enemy.

mayhem_korner's picture

even Soviet cannot is think of greater weapon to destroy enemy.


Along those lines, one would think Washington, D.C. is the safest haven of all from terrorist attacks.  Why would those bent on destroying the U.S. take out the prime engine of its demise?

TBT or not TBT's picture

Whom the gods would destroy they first render mad.

Boris Alatovkrap's picture

Prime engine is Wall Street, no?

kliguy38's picture

Pretend its never going to end and sprinkle pixie dust on your Alpo and call it steak.

TheCanadianAustrian's picture

It's like when you first start to heave, swallowing a mouthful of vomit and saying "Well, I'm glad that's over."

TBT or not TBT's picture

Soylent green is horses too now. We knew that was kinda plausible for alpo since Lorne Green times. First they did it to fido, and said nothing....

fudge's picture




Long rows of " Living Heads "




johngaltfla's picture

I heard the same "worst is over" bullshit in 1998 after LTCM.


Did everyone have a fun 2000-2001 in the NASDAQ?

mayhem_korner's picture



The most strident denials occur just before the reality sets in.  The unfettered coercion of printed bux into equities (and the corollary hammering of commodities, gold, and oil) are pretty good indicators that the CBs have deep nicotine stains in their boxers.  This smells like another "I did not have sex with that woman" moment to me.

falak pema's picture

cigars from Havana and girls from Savannah Georgia...don't smell the same; or do they? 

Is Savannah tobacco country?

Jacksonville NC Fine Cigars and Tobacco

I know Havana is on the pussy trail of every macho male. Havana - film 1990 - AlloCiné

Piranhanoia's picture

Might be appropriate comparing today with the dark ages.  We still have a pope, sort of.  We still haven't learned that much, mostly.  We still believe in boogey men, ghosts and gods.  But to compare it to the rennaisance is a bit premature, no?

RSBriggs's picture

Yes, those global warming worshipers, convinced that global warming causes EVERYTHING.  Tornados.  Not Tornados.  Snowstorms in winter.  Not snow storms in winter.  Too much rain.  Not enough rain.  Heat, cold, asteroids exploding over Russia.  Sunspots.  Boogey men, ghosts and gods, indeed.

francis_sawyer's picture

I'll start listening when they can give me the Kentucky Derby exacta box combo...


Until then ~ I'll go to Biff Tannen for my touts...

Piranhanoia's picture

And too much methane relased from what once was the permafrost.  

francis_sawyer's picture

Frozen methane... It's not called 'Planet URANUS' for nothing...

TBT or not TBT's picture

Ice ages are bad for humans and most life forms on the planet. If you are a chartist or technical analyst of climate, we are overdue for an ice age. We are living at the tail end of a brief interglacial period between much longer glaciation periods. I am praying, figuratively now, for global warming. Release the methane kraken if necessary.

Diogenes's picture

The answer is politicians are full of it.

TBT or not TBT's picture

Central bankers are too, superficially at least in a more principled way than politicians.

Silver Garbage Man's picture

If silver goes up 10 fold that would add a third of a trillion to GDP. Then everyone is happy!! Especially us crazy silver bugs!! This is going to be something to see!!

kentmills's picture

"As a tale told by an idiot, full of sound and fury, signifying nothing." Big shout out to McBeth.

dunce's picture

Your reference made me think that Hollywood is ripping of Shakespeare. Lots of movies have car chases ,shooting, fighting, and sex scenes but no plot or moral to the story.

falak pema's picture

She should have died hereafter;
There would have been a time for such a word.
Tomorrow, and tomorrow, and tomorrow,
Creeps in this petty pace from day to day,
To the last syllable of recorded time;
And all our yesterdays have lighted fools
The way to dusty death. Out, out, brief candle!
Life's but a walking shadow, a poor player
That struts and frets his hour upon the stage
And then is heard no more. It is a tale
Told by an idiot, full of sound and fury
Signifying nothing.

Awesome soliloquoy as a whole, all about can kicking and tomorrow! ...; And did he care for his Lady dead?  

Maybe, when she was magnificent in black ! 

Hollywood loves the black, ephemeral side of things  and then the superman Diehard plays; aka 'signifying nothing'', but not the shining light of truths gleaned...with the exception of a few renegades like Spielberg or Apocalypse Now! 

TBT or not TBT's picture

I love the smell of Schindler's List in the morning.

tony bonn's picture

the bildeberger nazis rule the world and have channeled goebbels - they know that they can repeat this lie ad infinitum and the fucktards will believe.....all the while, they are jumping out of paper into metal....

Westcoastliberal's picture

Anyone who thinks the "worst is over" is a fool.

TBT or not TBT's picture

On a long enough timeline....oh never mind.

NoDebt's picture

"We fully respect everyone who says financial markets are going higher due to money printing. However, those who are telling investors that markets are going higher because the economy is recovering and stocks are cheap will eventually have some serious explaining to do during client meetings."

Done and done.  My year-end recap was titled "Groundhog Day."  No joke.  That's literally what I titled it.

Anyone else in the biz feel like the money "invested" in the markets right now is like those old cartoons where the guy sticks a quarter in the soda machine with a string tied tied to it so he can get the soda and yank the coin back out?

It's permanence makes the lifespan of a fruit fly seem like an eternity.

I don't know anyone who isn't looking at the exits CONSTANTLY right now.  As long as the music plays, we dance.  But the instant it stops, we're GONE.


spinone's picture

who you going to sell to?  The other guys running for the exits, or the algos?

Dr. Engali's picture

The worst is over...yeah right. They haven't seen anything yet. The carnage this collapse, and the ensuing wars are going to be horrific.

Uber Vandal's picture

I have a feeling that horrific will be the picnic part.


TBT or not TBT's picture

It's not game over until the reckoning part you speak of is also done. Hang in there. Interesting times are usually just around the bend.

orangegeek's picture

Euphoria.  The best indication of a major top.  Much thanks to Icecap and their report for confirming that these markets are ready to tank.

ebworthen's picture

Psychiatrist:  "If you'll just swallow this capsule, I'm sure we'll get much faster results."


Bugs Bunny:  "My name is Elmer Fudd, I am a millionaire, I own a mansion and a yacht."

Mr. Magoo's picture

Master of puppets
I'm pulling your strings
Twisting your mind and smashing your dreams

Blinded by me
You can't see a thing
Just call my name 'cause I'll hear you scream

Taste me you will see
More is all you need
Dedicated to
How I'm killing you

Come crawling faster
Obey your master
Your life burns faster
Obey your master
Master Master
Master, master, master, master...

TahoeBilly2012's picture

The worst will be "over" when the guilliotines are finally brought back out...this time lubrication shouldn't be such a big issue, silicones and all...

MoneyThangs's picture

Next year's headline: Ice Cap Mgmt Files For Bankurptcy

Non Passaran's picture

Did you at all bother to read the fucking presentation?

q99x2's picture

Hey, what'd you do with Santa? After thinking about it, if the banksters and their hedge fund, pension fund, middle-man money changing friends are the only ones in the market then Bernanke can funnel everyone's money to them by conterfeiting and pumping the markets. Well, until inflation hits harder then all at once. Mayswell be 2008 forever. I'm going fishing.

GFORCE's picture

Stocks are fine but sovereign debt will get blown apart.

Europe and then Japan, within the next 1-2 years. Money will flee bonds into tangible assets and stocks.

Gold will hit new highs but not for a couple years also. 2500ish will be the max though. There will be no gold standard. Probably underground economies and a transitional bridge from the current system to a 'new world order' which will benefit the current monied and powerful interests. Probably SDRs for global transactions, with local currencies underneath that.

TBT or not TBT's picture

In short there will be tyranny then?

natronic's picture

I'm richer than bill gates.......... *checks bank account*      DAMNIT I'M STILL POOR!!!