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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
Sudden Debt's picture


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 rogeliokh
rogeliokh'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.

Wed, 04/10/2013 - 19:28 | 3434277 fonzannoon
fonzannoon's picture

I put an order in for a lot less than that recently and wiped the place out.

Wed, 04/10/2013 - 19:42 | 3434310 nmewn
nmewn's picture

I'm eye-ballin it Doc, still stackin silver though at this ratio.

Stopped by my dealer today and he's got plenty of fine maples on hand, always cash & carry, no reciepts ;-)

Wed, 04/10/2013 - 19:45 | 3434317 Dr. Engali
Dr. Engali's picture

Cash and carry, the best way to be. It's nothing but a currency swap the way I see it.

Wed, 04/10/2013 - 20:02 | 3434386 nmewn
nmewn's picture

Thats the way I look at it, I didn't make the rules, they did...sooo, I've been taxed once already at earnings and in any honest system I'm free to exchange one currency (fiat) for any another, even paying a premium to do so...the risk is mine and mine alone...afterall, we're told its ours after

When I decide to exchange the latter for goods & services I can't help it if it purchases more than the former. I didn't make the rules I just live under them the best way I can.

But its almost like playing with loaded dice sometimes, we know what paper values do ;-)

Wed, 04/10/2013 - 18:56 | 3434157 swissaustrian
swissaustrian's picture

Contrary to the last commodity boom in 2010/11, global economic indicators are pointing downwards and stimulus programs are only present in the form of central bank QE which goes directly to banks. In 2010/11 we had governments pumping money and credit into construction (China) and cars (US, Europe) and green (Obama, China). That spurred actual demand for commodities. Silver's mega run was underpinned by a 8 month backwardation, ie massive shortages. Oil was also supported by the Libya conflict which is over as far as production interruptions are concerned. Soft commodities were influenced by a drought in Russia and central Asia.

The stock market was way better valued years ago. Now everything is just totally out touch with fundamentals.

Thu, 04/11/2013 - 09:59 | 3436028 mammoth mo
mammoth mo's picture


Not so much solved the leakage issue but pretty much hid it from those that don't care to look behind the curtain.

You need to buy food and you know the cost is going up - but you look at your 401 k statement and say wow I'm rich.

You want to buy gold as a hedge on inflation but you will find yourself stuck at the 10% maximum level because the rate of return is nowhere near as good as the Casino (stock market) has put out in the last couple of years.  

They have inflated worthless assets and told people that the real assets inflation doesn't matter because of the rising value of the the worthless assets.

The stuff only hits the fan when the worthless assets can't be converted to real assets (see Cyprus).  That's when people realize they have been had.  Using Cyprus for example, you had people with cash money in the bank but it was worthless assets.  The banks took this money so that it could no longer be converted to real assets.  Meanwhile the value of physical assets is rising.  Gold vs the Euro or the Dollar is actually going up in value because the bank can't confiscate it as easily.  Meanwhile FIAT which the banks own and can confiscate easily is worth less and less.

Those who are investing in the physical are today's planners for a future that resets.  Those who are not are today's planners for a future that does not reset.  While the planners for the future that resets can live okay no matter what happens, those not planning for a reset will have a really hard time making it should a reset happen.

Wed, 04/10/2013 - 18:48 | 3434134 nmewn
nmewn's picture

Oh Buffy!....tell everyone to jump into the puuulllllle!

Wed, 04/10/2013 - 19:04 | 3434143 Dr. Engali
Dr. Engali's picture

That settles it I'm leveraging up, buying 3x bull Russell 2000 ( for a little extra beta) proshares, and going all in. I'll put a top in this fucker even if it breaks me.

Wed, 04/10/2013 - 18:49 | 3434144 Yen Cross
Yen Cross's picture

     'Bernanke, Kuroda & Draghi Ltd.'     

Wed, 04/10/2013 - 22:03 | 3434854 FieldingMellish
FieldingMellish's picture

They fired Draghi for being a pussy.

Wed, 04/10/2013 - 19:08 | 3434196 TumblingDice
TumblingDice's picture

Don't miss it, buy stocks at the great, cheap price of all time highs!

Wed, 04/10/2013 - 19:12 | 3434212 Cantankerous Canuck
Cantankerous Canuck's picture

I'm 100% PMs and mining shares and I don't know if I can afford to be 'right' much longer.

Wed, 04/10/2013 - 20:15 | 3434441 FieldingMellish
FieldingMellish's picture

You are not alone... but almost. The bearishness in PMs and miners is now at levels not seen since 2000 or maybe ever so we have that going for us.

Wed, 04/10/2013 - 19:11 | 3434213 Lady Heather...UNCLE
Lady Heather...UNCLE's picture


Assume a financial ecosystem where money supply is $100. 4 oranges represents total goods;ergo each orange =$25

Now, Banana Ben triples money supply to $300 but production is static;each orange is now worth $75 (inflation)

Now Assume a company produces those 4 oranges a year...will not its earnings increase 200% and thus its share price do the same.? (assuming P/E multiples constant)

In 2007 the market (equivalent of 4 oranges) was at 1580. With 3X as much cash in the system (via QE) should it not be at 4,740. Even if productivity/consumption has declined (say to 3 oranges), should it (the market) not be double where it is currently?



Wed, 04/10/2013 - 19:26 | 3434269 Pareto
Pareto's picture

Whose buying the oranges at $75?  speculators, probably, but, not orange eaters.

Wed, 04/10/2013 - 19:23 | 3434253 chump666
chump666's picture

Please.  They can't control chaos, nothing new here in the sense it's pure hysteria and madness that being a central banking cartel that is pumping the cash.  But the problem is they're causing governments to continue subsidizing ecomomies (offsetting inflation, operational costs, financing industries etc etc etc) i.e governments are going broke allover the place.  So, we are heading toward the biggest deflationary collapse in history.  If already governments globally are looking at pension funds for a tax tap and stealing from bank accounts etc

This is a rudderless titanic captained by three central bankers that should be on anti-psychotic drugs.

I ain't riding this.



Wed, 04/10/2013 - 19:36 | 3434290 orangegeek
orangegeek's picture

So here's an S&P500 weekly.


Another 350-400 points higher would give an annualized return of 33% - 37%.  Not a bad return for a global depression.


No doubt - Ben and Barry are out to collapse the entire system.


Wed, 04/10/2013 - 23:18 | 3435102 andrewp111
andrewp111's picture

Ben wants to stave off the collapse until after he leaves office - just like ole Bubbles Greenspan.

Wed, 04/10/2013 - 19:42 | 3434309 Quinvarius
Quinvarius's picture

Before Cyprus my target was 1800.  But we are sailing into a banking holocaust at the moment.  It appears to be on purpose.  So I don't think this will happen.  I think gold is going to get away from them instead.  They had a plan that would have failed later.  But the whole buy S&P short gold trade needs to way out now.

Wed, 04/10/2013 - 23:15 | 3435098 andrewp111
andrewp111's picture

Gold will get away from them in which direction?? Most people think Gold will soar to the moon, but what if the next big move is the other way? If there is a banking holocaust, we could have the first worldwide hyperdeflation in hstory.  All those people who have been stacking Au at high prices will be burned along with almost everyone else.

Thu, 04/11/2013 - 07:31 | 3435612 Quinvarius
Quinvarius's picture

Gold is low priced.  It is every bit as low priced as it was at $35 vs the paper money supply.  Deflation is impossible in debt based fiat.  Deflationist are always good for a laugh.  Deflation in debt based fiat immediately turns into hyperinflation.  You need to do some research on what happens to money, based on debt, when all that debt goes bad and no one needs money to pay debts anymore.  So they will print as they always do, just keep the debts barely alive.  And that takes trillions upon trillions.

Wed, 04/10/2013 - 19:47 | 3434326 Mr. Saxby
Mr. Saxby's picture

...what if the herd realizes that none of it is wealth until you take profits.

Much of the herd doesn't have the option of taking profits because they're clueless where their 401(k) contributions go.

Wed, 04/10/2013 - 19:58 | 3434366 CDNX fan
CDNX fan's picture

Why do I read day-after-day consistent bashing of one of the greatest bull market moves in history? - We all KNOW the Fed is in the market day-in, day-out and we all KNOW it's bullshit but the fact is that if everyone simply recognized that printing is BULLISH, they would simply hop on the Love Train and make a few bucks instead of trashing everyone that owns a few shares of NFLX or AAPL or JPM.

Don't fight the FED and don't fight the tape. - Martin Zweig (RIP)

Wed, 04/10/2013 - 23:13 | 3435086 andrewp111
andrewp111's picture

It will keep on going higher until it doesn't. The problem with the Bulls is that they can't tell me when the music will stop, and when it does stop, the next ride down will be like a falling knife headed for the event horizon of a supermassive black hole. The next downer could easily make 1932 look like a piker's picnic.

Wed, 04/10/2013 - 20:04 | 3434394 MyBrothersKeeper
MyBrothersKeeper's picture

If you believe those at PIMCO and other places that cyclically adjusted PE's all already in the 23-25 range it will take some major real GDP growth to justify the trajectory. Nothing wrong will being selectively long while preparing for the bad moon rising.  In my opinion, those who are only buying gold or volatility are in for a in Europe collapse the dollar will be driven up by stimulus here and in Japan. Gold becomes a safe haven play after that but I think it will take a major confidence shock.  The thing is, as Kyle Bass, states...we are in an environment where things can go from alright to majorly not alright quickly. The next great rotation will more likely be into bonds as there is no other safe haven asset before gold.  Bass says he thinks US Treas yields will go to zero...and I agree 100%. Once at zero I would think the gold and silver play see a major jump.  The question is:  will there be any physical gold available by then or will the central banks own it. And if there is, how long before the gov't confiscates it?

Wed, 04/10/2013 - 23:08 | 3435073 andrewp111
andrewp111's picture

What if the 30 y Treasury goes to 0% and gold goes down hard, instead of what you expect? Then it will be time to really get scared. I mean crap in your pants, pray to o-Jesus Christ kind of scared.

Wed, 04/10/2013 - 20:33 | 3434507 mendigo
mendigo's picture

Its not uncommon that when old guys die in thier sleep they die with a woodie and the damn thing sets permanent with rigamortis as I understand it. And so it is with the S&P500. They have to tape it down for burial.

Wed, 04/10/2013 - 20:45 | 3434554 mendigo
mendigo's picture

What with confiscation, medical costs, taxes, and asset inflation it seems they will pretty well soak up the residual wealth of the baby boomers and sky rocketing education costs will neutralize future generations. Bleak.

Wed, 04/10/2013 - 20:52 | 3434587 thismarketisrigged
thismarketisrigged's picture

so heres the thing.


if todays day was red instead of green, we know that tomorrow all of the losses would be wiped away at the beggining or shortly after, making it as if it did not happen.


now how long does it take to erase the gains from today, or do we not erase it for months because the market continues to go up

Wed, 04/10/2013 - 21:11 | 3434655 Billy Shears
Billy Shears's picture

What's taking so long?

Thu, 04/11/2013 - 06:06 | 3435527 CDNX fan
CDNX fan's picture

Why do I read day-after-day consistent bashing of one of the greatest bull market moves in history? - We all KNOW the Fed is in the market day-in, day-out and we all KNOW it's bullshit but the fact is that if everyone simply recognized that printing is BULLISH, they would simply hop on the Love Train and make a few bucks instead of trashing everyone that owns a few shares of NFLX or AAPL or JPM.

Don't fight the FED and don't fight the tape. - Martin Zweig (RIP)

Thu, 04/11/2013 - 07:45 | 3435614 MythicalFish
MythicalFish's picture

1950 makes sense, I am getting resistance for S&P at 1.81 Oz Gold, and Gold's 50% retracement is 1090(ish).


Give or take.


Gonna be painful to watch til we get there..

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