"The Only Thing We Have To Fear Is The Lack Of Fear Itself"

Tyler Durden's picture

With NYSE margin debt at extremes once again, complacency at all-time highs, valuations (across equity and credit) frothy, and the cacophony of bullish consensus momentum chasers, it seems the anti-thesis of FDR's speech appears quite appropriate...

Extreme Sentiment - check!


Extreme Leverage - check!


Extreme Complacency - check!


Extreme Valuations - check!



(h/t @Not_Jim_Cramer)

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DoChenRollingBearing's picture

The Bearing has been fearful since Jimmy Carter.  And is fearful still.

Looney's picture

I can’t wait to see all those sell-side bullshitters to start running towards the brightly lit sign “EXIT” up on the wall.

The thing is, THERE IS NO DOOR underneath the sign – just a brick wall.  ;-)


Silver Bug's picture

Sentiment is at all times low in the gold and at all times high in the stock market. Are you someone who likes to buy things on sale? Or are you someone who overpays for everything? If you like making money buy gold.



Whatta's picture

Bernanke puts for the US markets. Abenomics in japan.

Just throw money at that bitch and watch it GROW!!!...courtesy of PonziCorp and friends.

Tulpa's picture

'Twas QE that taught my heart to fear / And QE my fears reliev'd / How precious did that QE appear / The hour I first believ'd!

AldousHuxley's picture

Greed is just fear of missing out insane profits you think others are getting.

Then we all live in fear.

buzzsaw99's picture

I seem to recall that net margin was high in 1929 as well.

Jayda1850's picture

Anyone else waiting with popcorn for the cascade of margin calls?

TheGermanGuy's picture

Scramble for the exit to begin in 3... 2... 1...

But it ain´t just popcorn, I also go a nice stack of put options here on my coach. I give it three more months at best...

Element's picture

12 months and it's all in the gutter. The periphery euro-state banks are all developing gas-gangrene, Cyprus was just the first partial amputee. Plus the US non-budgeting debt-ceiling Cycle-'O-farce is going to projectile-vomit in its usual unedifying way into the spot light again soon. A "no-solutions" syndrome will then form the backdrop to a picturesque grave-yard spiral.

Bring yer 3D glasses!

debtor of last resort's picture

Tomorrow is my day. They will freeze me together with my silver and gold. In 2087 i will be put on the McFry, as written in my testimony, and i will be the new king of prosperity. And i will reduce the grams of silver in the coins until i am rich. RICH!!

Cognitive Dissonance's picture

Shelter in place bitches. The storm is coming.

ZerOhead's picture

A hard rain is indeed going to fall... which reminds me... it's time to plant some of those everbearing raspberries this year.


css1971's picture

Why is it that people think standing on top of a tightrope thousands of metres above an abyss is a safer place to be than practicing centimetres from the ground?

ekm's picture

The balloon has left Bernanke's hands.

He can't stick a needle into it now.


The gov will have to hire sharp shooters or send F16s

OpTwoMistic's picture

I suspect high margin players did not experience 87, 03 and 08  or they are not playing with their own money.

Or they are deluded.

Keynesian Mess's picture

No, I heard it on good authority that it's different this time.

They wouldn't lie, would they?

Sudden Debt's picture


Sudden Debt's picture

actually, with the fed pumps running, there another long way up.
the fed pump is a totally safe risk controller and I for one don't believe they'll ever end the music because they can't afford a 70% drop.

anonnn's picture

Lack of fear is simply immunity from prosecution.

Got brother-in-law in high places?

Got leverage?

Got blackmail?

Got national-security cover?

Got your own goon squad?

Got drones?

Got the idea?


Pooper Popper's picture

The Title of this article is Awesome!!!!

francis_sawyer's picture

The only thing we have to fear are veiled or otherwise falsely attributed 'racism' & 'religious' thoughts & sentiments themselves... [well ~ that & 'CENSORSHIP', of course]...

Well... Actually TRUTH BE TOLD... We need not FEAR even those... They're, in fact, impotent & useless threats & tools deployed by COWARDS...

Element's picture

I'm beginning to get the impression you don't cope well with changes? This may help:

1. Change Changes Us
The scary thing about change is that it will inevitably not only change your situation but will also change you. It's scary to think about changing when you are comfortable with who you are. But think about this: have you not changed and evolved to become the wonderful person you are today? Change helps us evolve, grow, and become fully ourselves.

2. Change Is Unknown
It's scary to have to stride into changes in your life. The unknown is terrifying because, well, it's unknown. Not knowing where this new change may take you is a scary thought, but is it not scarier to never take any risks? Without risk there is no reward. So let's greet the unknown as a wonderful adventure that will lead us to where we are meant to be!

3. Change Is Change
But I like my life as it is! As humans, we grow comfortable with routine, with the comfort of our home, our city, and our circumstance. We love knowing what is where, who is who, and when to do what. Change shifts all of that. It shakes us out of our comfort zone and drops us into the scary world of discomfort. But if we never leave our comfort zone, we will never learn more, and we will remain stuck. We are all brave enough to stride into the unknown with a brave heart. We all have the confidence within us to know that change is constant, and so is our faith.

Mind Body Green: By Jo Beth Richards


Hope that helped, we'll all be here for ya mate. We can try some yoga if this does not do the trick. :D

DoChenRollingBearing's picture

Tai Chi might even be better.  Once you get good at it, you get healthier.  Also it can hlep you kick the snot out of someone who may threaten you.



O/T: I saw this little emoticon earlier today that someone claims to have just invented:


you, Bernanke!

Element's picture

That's the spirit Brother Bearing, we're all going through this difficult period of transition together, and smacking the snot out of Bernanke's 'eff-igy may be quite raucous therapeutic fun to lighten Brother francis's disposition. 

francis_sawyer's picture

I wholeheartedly agree...


The proper way to implement CHANGE in the world is to go outside, start pointing fingers around at people, & telling THEM how & why they need to change to make YOU a happier person...

Element's picture

Exactly! You're taking this much better today, cheers Bro!

Abi Normal's picture

Indeed bearing, I've been using that motocon for quite some time, you left off a dot, unless you are digitally challenged ;)


There, fixed it for ya!

Yen Cross's picture

      If you don't know where to start, take a long walk...  

      The outcome of fear is far worse than it's intended result...

Dr. Venkman's picture

OT: I still laugh when I see the valuations leading up to 2000. Geez.

venturen's picture

I am all in on Fear!

balz's picture

I believe the US market will go higher, still. This is not about the bubble been sustainable, its about big money lacking options to park money in Europe, China or Japan. This is why both the Dow Jones and the US dollar will rise. But — big but — it will end badly as the flight to safety will be revealed as to what it really is: a mirage. Then, and only then, will the market crash and gold rise exponentially. IMO, that can be in 2015-2016.

polo007's picture

According to Bank of America Merrill Lynch:


Easy Fed policy: too much of a good thing?

The costs of easy Fed policy

Fed policy is aimed at stimulating economic activity, which involves incentivizing households, businesses and investors to take more risk. Investors have obliged, resulting in low rates, tight credit and mortgage spreads, and new all-time highs for major stock indices. But some worry the Fed is causing a dangerous search for yield that could lead to new asset bubbles and financial instability. Our assessment is that Fed policy has not led to an increase in systemic risk.

Risk-taking is good; systemic risk is bad

This piece provides a guide for monitoring financial stability and the linkages between asset markets, financial institutions and the real economy. We believe the ultimate question is whether the Fed’s policies have increased systemic risk.

This depends on the following, which we address in the note:

- Do market valuations appear overstretched and are there signs of asset
bubbles forming?

- Is there an increase in leverage in the market or an overreliance on short term funding? Would systemically important institutions be at risk of failure?

- How are the beneficiaries of easy credit using the proceeds? Are they using debt to fund risky investments, buy homes they can't afford or go on a consumption spree? Or is issuance going toward improving their balance sheets and lowering their vulnerably to the eventual rise in interest rates?

Risk transfer underway, but systemic concerns muted

We argue that Fed policies have encouraged a transfer of risk from borrowers (indebted households and corporations) to creditors (investors) who are willing to accept lower risk premiums. Increased real money participation in credit markets mitigates the systemic implications of this risk transfer. Corporate and household balance sheets are healthier, thanks in part to easy Fed policy, but signs of increased appetite for leverage in the corporate sector bear close monitoring.

Fed to stay the course

Our survey of financial conditions and systemic risk supports our base case that the Fed will maintain its asset purchase program at the current pace of $85bn/month through March 2014, followed by a 6-8 month tapering period.

QE will limit the upside in yields

The potential for a sizable rise in yields will be limited if the Fed maintains QE well into next year as we expect. We forecast a gradual rise in 10y rates by year-end.

James's picture

According to Bank of America Merrill Lynch:Risk-taking is good; systemic risk is bad


Now that's funny. As BAC currently offers nothing more than Systemic Risk to the whole system as a TBTF they feel free to Risk other peoples money (bailouts) in their quest for yield.

Heads up BAC. You are not a financial genius when you have to be financialy propped up by Ben month after month and then pass what should be YOUR LOSSES onto the hapless taxpayers. You cannot survive on your own. That makes you nothing more than a thief. What a Maroon!

isudas's picture

One should be more careful when spelling moron.  One of those words you don't want to misspell.   

James's picture

Jon, that is precisely what I was doing.............................

And you Isudas - What a maroon!


Keynesian Mess's picture

One should check the Warner Bros dictionary before being such a condescending jerk. What a buffoon.

Tombstone's picture

Hearing the experts on CNBC, we are at the bottom.  Buy all the way up to DOW 66,000 or when QE hits $25 trillion; whichever comes first.  Then sell.

Abi Normal's picture

LOL, at such time we will all be toast, or powder, or some such odd thing!

pemdas's picture

i see the brokerage ads to put up $200k and get $1 million margin at 2%.  Screen for stocks with 5% dividends and make a fortune on the leverage.

That's not picking up nickels in front of the steamroller, more like looking for sea shells before the tsunami hits.

Joe A's picture

FDR was faced with a fascist take over of America wasn't he? That failed because one Marine General didn't play along and blew the whistle. Now they took a bit more time and devotion to prepare it seems.

polo007's picture

According to Deutsche Bank:

The lack of confidence in final demand that seems to justify corporate reticence has a mirror image in the financial sector’s liquidity trap – the fact that corporates prefer to save and not to leverage and invest. And it seems reasonable to justify the lack of confidence in the context of ongoing and unresolved fiscal tightening; household savings rates that are “naturally” capped not to go to zero or below this time; and a global sector that seems decidedly weaker. In other words, of all the Keynesian circular flow of income external drivers there are none doing any driving except corporate investment. But the Catch 22 is that corporate investment itself is restrained by the fear for the lack of the other drivers! The answer might be waiting for a pick up in the external sector; it might be seeing through the fiscal austerity and or at least suspending or reversing some of it; or it might be further improvement in the household balance sheets via housing. However all of these likely need time.

In this context we can then handicap central bank reaction functions. While we wait for something to give positively in favor of a stronger recovery, policy stays unusually easy. This then creates the dichotomy of buying more time in the near term through easier policy to deliver a proper recovery whilst potentially running the risk longer term of too much inflation the other side. The pent up monetary stimulus that exaggerates a liquidity trap now becomes a challenge to control on the other side. This schizophrenia has been played out numerous times since 2008. And it defines the unusual dislocation between ultra low real yields and high inflation expectations (inflation risk premia) that is also known as financial repression. Financial repression being one of the metrics that is supposed to encourage more risky lending and to break the liquidity trap.

The consensus of course is that after a certain amount of financial repression, the world will sufficiently improve and central banks have the tools to contain inflation so that the bulk of financial repression is contained to ultra low real yields rather than ultra high (realized) inflation. In this spirit Bernanke and now Kuroda are extremely confident. However we would actually go one stage forward. In the current low growth equilibrium there is a good chance that there is jolt to higher growth because the fiscal dynamics can never be resolved. This is particularly true for peripheral Europe and Japan; less true for the US but then partly depends on the willingness to address structural contingent liabilities. Absent that, the US might well be in the same boat as the others. In this case, the only solution is for the central banks to end up holding the majority of government claims and to consolidate their balance sheets with the government. In one fell swoop, cumulated deficits that may stretch back several years are ex post deficit financed. This would almost certainly break the liquidity trap in that it would represent a massive relief to expected fiscal tightening for the private sector. The central banks would quickly need to use their “tools” to contain a splurge in lending and control inflation. Ex post however there is no reason why inflation would materially rise, as long as liquidity was tightened commensurately with the debt relief implied by consolidated balance sheets of the central banks and the government. Moreover if G3+ acted synchronously, at least for the currency majors there may be little fall out.

So the interesting question is why not? Is there any cost of consolidation when we are otherwise in an eternal liquidity trap? The answer is, unfortunately yes. This would have to be a one shot game. Going forward governments’ would unlikely be able to borrow from the private sector for a long long time precisely because it threatened financial repression, even if only in the kind of negative real rates ex ante rather than even more negative ex post. Instead, government would be obliged to run balanced budgets. These authors don’t think this is necessarily a bad outcome. However it does mean that if and when consolidation comes, as much as possible needs to be consolidated otherwise fiscal policy would be on a perpetual tightening path to run the extant liabilities down. If you are going to consolidate, do it big because you are likely to have only one chance. It may seem extraordinary to think about consolidated balance sheets but there are plenty of examples in history, particularly during wars, of deficit financing. And however outlandish and non consensus it is, remember that a few years ago we talked about QE never ending, which at the time was also outlandish. Consolidation sounds an anathema to consensus but it is a logical conclusion to the liquidity trap and the probability rises each day that growth disappoints.

orangegeek's picture

There's nothing to fear - just crank open the window and jump.  It's easy and there's nothing to fear.