Bernanke & Kuroda Capital LLC: Overweight S&P 500, 2013 Target 1950

Tyler Durden's picture


Given that the Fed and the BoJ has our back (and will add a further $1.75tn or so to their balance sheets by 2013 year-end), we should expect US equity prices to rise to infinity and beyond. As one smart chap on the television noted, "stocks won't go down again," but given expectations for earnings in 2013 (which include the remarkable hockey-stick in Q4 - which surely would only occur if things were strong enough to warrant the Fed pulling back in a reflexive vicious circle), the S&P 500 will trade at a rather expensive 19.5x P/E at end-2013 (which we are sure we will be told is still cheap).


If it was just up to the Fed, the 1950 is an obvious target - dump your bonds and get some...


but the Europeans are seeing LTRO-payback reducing the size of their balance sheet and the Chinese are 'anxious' so factoring in the BoJ riding to the rescue as well, it seems a much more conservative 1900 target for S&P 500 is warranted by year-end...


The question is - at what point is an equity market multiple representative of exuberance and what if the correlation breaks - what if the herd realizes that none of it is wealth until you take profits. And with that kind of 'wealth' creation, will inflation pop up its ugly head?

Given correlations, Gold would trade at $2200 by year-end (and WTI Oil over $140)...

Charts: Bloomberg

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Wed, 04/10/2013 - 18:40 | 3434106 Sudden Debt
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Apollo 3....

Wed, 04/10/2013 - 18:40 | 3434109 diogeneslaertius
diogeneslaertius's picture

this is relevant to my interests

Wed, 04/10/2013 - 18:45 | 3434124 Top_Kill
Top_Kill's picture

I caught Jim Cramer's Mad Money tonight for the first time in 2 years. The first 10 minutes is going to make an epic highlight film after the market crash. Cramer is a walking/talking contrarian highlight reel.

Wed, 04/10/2013 - 18:50 | 3434140 McMolotov
McMolotov's picture

While the average human body is 60-70% water, Jim Cramer is 60-70% cocaine. The remainder of his body is bullshit.

Wed, 04/10/2013 - 20:55 | 3434602 PC Load Letter
PC Load Letter's picture

It's only fitting this fund would be called BK LLC

Wed, 04/10/2013 - 18:49 | 3434141 zorba THE GREEK
zorba THE GREEK's picture

The markets have become like professional wrestling, everyone knows they are

fixed, but they are still fun to watch.

Wed, 04/10/2013 - 18:51 | 3434150 RockyRacoon
RockyRacoon's picture

What does that first graph remind me of?   ...Hmmm   Oh, yeah,  BITCOIN!

Wed, 04/10/2013 - 19:53 | 3434301 razorthin
razorthin's picture


Substitute Bernanke for McCauliffe.  The fucker.

Wed, 04/10/2013 - 18:41 | 3434112 TeamDepends
TeamDepends's picture

"Stocks won't go down again."  And you can take that to the bank...

Wed, 04/10/2013 - 19:28 | 3434235 Supernova Born
Supernova Born's picture

If stocks won't go down, the ground must be coming up.

"Terrain...pull up, pull up, pull up".

The Mountains of Debt are higher than the absolute ceiling of the world economy.

Wed, 04/10/2013 - 19:29 | 3434280 TeamDepends
TeamDepends's picture

We're on an express elevator to hell- goin' down!!!!

Wed, 04/10/2013 - 20:41 | 3434538 TeamDepends
TeamDepends's picture

Is this gonna be a standup fight, sir, or another bughunt?

Wed, 04/10/2013 - 19:24 | 3434243 Supernova Born
Supernova Born's picture


Wed, 04/10/2013 - 18:41 | 3434113 kevinearick
kevinearick's picture

like Japanese real estate...right?

Wed, 04/10/2013 - 18:44 | 3434118 thismarketisrigged
thismarketisrigged's picture

guys, im feeling a major pullback tomorrow before the next leg up.


i feel the dow may shave off 5 pts, s&p 0.50 pts, and nasdaq 2 pts. major pullback, get in when this happens, because its next dow 100,000 and s&p 5000.


dont worry though, once it hits those levels, it will pull back for a day to dow 99.990 before it goes to 1,000,000, etc.


of course it will have no value but who cares at this point, as long as the numbers are high, all i well in bernankes and obamas world

Wed, 04/10/2013 - 18:46 | 3434120 ekm
ekm's picture



You'll see millions and millions of trucks and cars abandoned and parked on highways.

Wed, 04/10/2013 - 18:47 | 3434133 McMolotov
McMolotov's picture

Bullish for towing companies. Or we can just leave them to serve as mini homeless shelters.

Wed, 04/10/2013 - 18:48 | 3434138 ekm
ekm's picture

I'm telling you. I can't stop laughing.

Wed, 04/10/2013 - 18:50 | 3434146 fomcy
fomcy's picture

"WTI at $140", perhaps, but then WHY GOLD should go down?

Basically Gold Miners should pay more for fuel and pay more for

workforce due to inflation and yet their output product should cost less????

Any f*cking sane Economists here? Guess not...

Wed, 04/10/2013 - 18:57 | 3434164 ekm
ekm's picture

You have to look at it 'in comparison with' what?


When the Fed stops QE (and they will) the major banks would default on their derivative losses and sell anything they have to pay. First thing they'd sell are the most liquid ones that would be sold at minimum loss: Gold and Treasuries.

Wed, 04/10/2013 - 19:05 | 3434192 fonzannoon
fonzannoon's picture

WTI won't hit 140. $95 seems like a good place to peg it. 1.30 on the euro. $1550 on gold. 1.75% on the ten year etc etc etc.

Those numbers will be nailed to the wall and the S&P will be the beneficiary of every loose dollar out there.

No one is buying it by the way. Nobody. Everyone knows what a total bag of shit this is.

Wed, 04/10/2013 - 19:14 | 3434205 ekm
ekm's picture

Wall Street and the City of London exist only and only and only due to VOLATILITY.

No volatility, they'd better go and find jobs at macdonald.


Whoever believes that bankers rule, should conclude that the market will collapse very soon so few primary dealers die and others survive to play the game.

It's been like this, it is like this and it will always be like this.






Conclusion: Wall street hates, literally hates QE, hence FT article from Blackrock guy yesterday.

Wed, 04/10/2013 - 19:17 | 3434227 fonzannoon
fonzannoon's picture

There was no volatility between 1980 and 2000. Yes there was a crash in 1987 but it recouped those losses soon after.

The banks are cutting staff through the bone into the muscle. They may have less profits but they ars passing it through less people so whoever is left is still doing fantastic.

QE allows the banks to privatize gains and socialize losses. I don't see why they would hate that.

Outside of QE they have every judge in their backpocket. laundering etc. etc etc.

They have bent the law so they have immunity to do whatever they want. That is better than QE.

Wed, 04/10/2013 - 19:18 | 3434232 ekm
ekm's picture

Nailing oil at $95 is a disaster, it's 100% overpriced.


Regardless of how much big banks may survive, now that the economy is literally dead, nobody survives.

Wed, 04/10/2013 - 19:21 | 3434240 fonzannoon
fonzannoon's picture

Agreed. A few PD's croaking and coughing up their inventory does not change anything with the economy or your conclusion.

Wed, 04/10/2013 - 19:22 | 3434254 ekm
ekm's picture

I have to thank you because you challenge my thoughts all the time and it makes think deeper.

Wed, 04/10/2013 - 19:24 | 3434263 fonzannoon
fonzannoon's picture

The irony of it all is that we may (or may not) take different routes but we keep ending up at the same conclusion. I wish we were debating the conclusion and not the route.

Wed, 04/10/2013 - 19:41 | 3434311 Hohum
Hohum's picture


Cannot junk you.  But is WTI were $47.50, oil production would plummet like a stone.  But I know you disagree.  I'd be glad to read your links on how cheap it is to produce new oil and how new wells are getting cheaper and cheaper to construct.

Wed, 04/10/2013 - 21:05 | 3434625 ekm
ekm's picture

1) Prove to me that costs are high

2) Define COST

3) How do you know books are not cooked to show high costs (I think they are)

4) If deflation as a cause of money destruction occurs, that everything will have lower price, that means that even the costs will go way lower due to shortage of money.

Thu, 04/11/2013 - 22:47 | 3439380 MeelionDollerBogus
MeelionDollerBogus's picture

"banks are cutting staff through the bone into the muscle."

winning - locusts have an exoskeleton, good of you to notice

Wed, 04/10/2013 - 18:58 | 3434166 swissaustrian
swissaustrian's picture

All-in costs for miners are already >$1200/oz with a CAGR of 8+%. If prices don't rise, they'll book losses soon.

More here:

Wed, 04/10/2013 - 19:01 | 3434178 ekm
ekm's picture

It is somehow difficult for people to discern between Inflation of Input Costs and Inflation of Finished Products.

Wed, 04/10/2013 - 19:09 | 3434199 swissaustrian
swissaustrian's picture

Especially for gold analysts, take a look at their lousy records:

At the same time they've been predicting ever rising oil prices. Try running a mine with 25% input cost running from energy with a falling price of your product.

Wed, 04/10/2013 - 19:13 | 3434216 ekm
ekm's picture

To tell you the truth, it took me some time to understand it, also.

Wed, 04/10/2013 - 19:18 | 3434229 fonzannoon
fonzannoon's picture

suspend operations. Remove supply from the market. Watch what happens.

The fact that they have not done so means they have already been nationalized.

Wed, 04/10/2013 - 19:22 | 3434242 ekm
ekm's picture

I've been telling everybody here on ZH and on other blogs that QE = Government ownership of goods and services, because the Fed is telling the banks to buy on behalf of the Gov.


We used to call that COMMUNISM in eastern europe.

Wed, 04/10/2013 - 19:21 | 3434251 fonzannoon
fonzannoon's picture

It's one thing to tell the banks to buy, it's another to force a company to operate under conditions that it would otherwise not operate. Both equal communism. It's already here.

Wed, 04/10/2013 - 19:24 | 3434257 ekm
ekm's picture

We are in violent agreement

Wed, 04/10/2013 - 19:30 | 3434282 nmewn
nmewn's picture

That makes a bunch of us...I enjoyed it you two ;-)

Wed, 04/10/2013 - 19:22 | 3434247 swissaustrian
swissaustrian's picture

Some majors have already axed future capex budgets. It's gonna be felt in supply

Wed, 04/10/2013 - 19:22 | 3434256 fonzannoon
fonzannoon's picture

I would love to see a supply shock hit the market. Love it.

Wed, 04/10/2013 - 19:24 | 3434260 ekm
ekm's picture

It is happening massively but....slowly.

Wed, 04/10/2013 - 19:30 | 3434279 swissaustrian
swissaustrian's picture

ABX is also not going to get Pascua Lama online next year, that alone is 24 tons less p.a.

Rumor is that they've already sold part of the anticipated PL production for 2014 forward.

Thu, 04/11/2013 - 04:37 | 3435482 e-recep
e-recep's picture

"You'll see millions and millions of trucks and cars abandoned and parked on highways."

they were overproduced and oversold anyway. thanks to credit created out of thin air....

Wed, 04/10/2013 - 18:46 | 3434123 Ham-bone
Ham-bone's picture

Seems tptb have resolved the "leakage" issues of hot money into PM's, energy, food bubbles...not sure how they are directing all the money but seems they have found some way to ensure only "good" and taxable assets are levetating...while bad 'assets" are "out of favor"...


Wed, 04/10/2013 - 18:53 | 3434152 nmewn
nmewn's picture

Well personally, the timing couldn't be better for me...I'm sittin on a pile of cash and I hate having it taxed twice ;-)

Wed, 04/10/2013 - 18:57 | 3434170 rhinoblitzing
rhinoblitzing's picture

You will be paying your fair share soon enough

Wed, 04/10/2013 - 19:04 | 3434189 nmewn
nmewn's picture

Only in what they know I make ;-)

Wed, 04/10/2013 - 19:25 | 3434266 Dr. Engali
Dr. Engali's picture

Hey nmewn, If you're sitting on a pile of cash thinking you'll scoop up some PMs if prices collapse, I would caution you against that. If asset prices deflate the paper price and the actual cost if physical may be two different stories. I think there are a lot of people waiting to make the same play. My guess is there won't be any physical to meet the demand. Hell it's hard enough to buy now. I just put an order in for 10 gold eagles and I have to wait until they get them in.

Wed, 04/10/2013 - 19:29 | 3434276 Pareto
Pareto's picture

two weeks for me.

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