What The Bulls Must Believe

Tyler Durden's picture

Via Sean Corrigan of Diapason Commodities' Tangible Ideas,

Even if the monetary fuel for this whirl of self-reinforcement is not lacking, the market still needs a narrative around which it can cluster psychologically. It needs a canon of shared myth about which the bard can weave a reassuringly familiar refrain so as to reinforce the sense of community when the members of the clan gather to listen to his warblings amid the flickering fires and guttering torchlight of the Great Hall at night.

If, in contrast to the slow?evolving customs of traditional society, the tribe we personify as the Market is a promiscuous sort, ever ready to cast off one cycle of songs for another, it nevertheless becomes fiercely, if fleetingly, fanatical about the one which happens to take its fancy at any given time. We may have traded Homer for Hendrix, Mallory for Metallica, and Snorri Sturulson for Seasick Steve, but we are still all suckers for a good saga.

As far as your author can see, the one presently enjoying the greatest vogue contains several key themes, among them:?

(a) the belief that China will successfully re?organize itself without enduring a wrenching and potentially disastrous financial dislocation and that it will turn from a hotbed of smokestack centralism and price?insensitive cronyism into a gleaming wonderland of happy, freemarket consumers without its published growth rate ever dipping much below 7% per annum;


(b) the even more fervent hope that ?Abenomics? is working: that a materially well?endowed bastion of greying penny?pinchers will be so spell?bound at the artificially?induced jump in its stock markets and so bamboozled by the thought of having prices go up, instead of down, that its garrison will instantly rush to the nearest Mall and liquidate its surplus savings in an orgy of long?suppressed self?indulgence – all without threatening the ability of the world?s second largest debtor government to continue to sell enough bonds to make up the ~50% shortfall it suffers between revenue and outlay or without pushing up the interest rate payable thereon beyond the hefty 25% of taxes it currently absorbs;


(c) the lazy assumption that, post?Cyprus, nothing significant can now go wrong in Europe, that debt spreads will continue to shrink, and that outbreaks of both social unrest and secessionism can readily be quelled by the mere hypnotic suggestion of that latter day Mandrake the Magician who heads the increasingly fractious governing council of the region?s central bank. And, if that were somehow not enough, we can rest assured that ?austerity? is behind us and a restorative shot of crude Keynesianism lies only an X on a German ballot?paper away;


(d) and finally, the spreading confidence that the Goldilocks Republic has again entered the broad uplands of that Panglossian La?La land where all evidence of economic strength is a heartening testimony to the ongoing US recovery but where, miraculously, any contrary signs simply ensure that the nation?s tutelary deities at the Fed will redouble their efforts at stimulus, especially once that curmudgeonly old tightwad, Ben Bernanke (“I have the best inflation record of any post?war Chairman”), yields his staff of office to a real interventionist.

What could possibly go wrong?

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Arrowflinger's picture

Bogus Beliefs Belie Badly

kliguy38's picture

They have to believe that inspite of incessant lying in 2007 and early2008 that NO bubble existed and that all was contained that Bernanke NOW is not either ignorant or LYING to you by telling you the same CON. GOOD LUCK!! You can lie and lie and lie......but eventually even the dumbest of the dumb start to figure it out.

Fredo Corleone's picture

Recommended background track while reading, "What The Bulls Must Believe:"


alphamentalist's picture

never carefully listened to the lyrics of that till now. +1, sir.

Imminent Crucible's picture

"dumbest of the dumb"

Well, yeah. But fund managers and bond traders are not in these markets because they're stupid or even bullish. It's like Crooked Chuck Prince said: "As long as the music's playing, we have to dance."

I'm acquainted with a bond trader who knows perfectly well that all this is unsustainable. He knows "it will keep working until something blows up". In the meantime, he keeps buying and selling bonds because that's his job. Fund managers and asset managers don't necessarily believe in this market; they're paid to generate alpha and they know it's easier to do that by front-running the Fed than by fighting the Fed.

The markets are crazy, but not because the fundies and hedgies are crazy; It's because the Fed has adopted a crazy strategy, one that will certainly end in a financial disaster larger than any we've seen yet. Why is the Fed so crazy? The Fed only looks crazy until you understand that the Fed is just a mask that the TBTF banks wear. They are the owners of Fed stock and the deciders of Fed policy and the planners of Treasury auctions, through the TBAC.

Once you understand that the Fed IS the banks, and the banks are the Fed, it all makes perfect sense. All the insane things the Fed (and other central banks) is doing are aimed at ensuring the survival of the banks, and the redistribution of wealth from everyone else to the money center banks.

It will fail for the exact same reason that no one ever builds a tower of alphabet blocks to the clouds. All we have to worry about is how long the Fed can keep stacking debt higher and higher before confidence erodes.

illyia's picture

Which thing goes wrong is of less interest to me than what happens after it does. The Aftersport.

Which brings me to a crash in the markets (from whatever level) and the flood of increasingly worthless dollars (yen, etc, globally) leaving over-valued equities and looking for safety first with a possible return.

Hence, hyperinflation of physical assets (yes, including gold).

Back to the basics.

I would like to see more written on what those investments look like and what the world looks like in that situation. This casts a whole new light on banksters holding Real Estate, among other things. What are those other things and how does that effect society. Is Weimar really the paradigm or are there specific differences, and what are they.

Tylers! Specificly the Tyler (whose writing brought me here to begin with).



max2205's picture

Dumb made 100 to 1000%   he can leave any time.   

Arrowflinger's picture

Perhaps a butterfly can also fly 50 miles through a Category 5 hurricane and light, unscathed, on an intact rose.

Perhaps Bernanke's Bullshit can permanently lift all markets to prosperity.

I prefer to believe that the light at the end of the tunnel of delusion is the glint of gold.


Monedas's picture

Here's a Canon:  The Feds are buying 90% of the gov bonds .... all they have to do is buy 90% of all the stocks .... and instant socialism .... we own everything .... and we owe ourselves all the national debt !   snark:  ON/off

NoDebt's picture

Give it time.  They're working on it.

AlaricBalth's picture

The Bank of Japan plans to double it allocation in ETF's from $18 Billion to $36 Billion by 2014. The Swiss National Bank's stock portfolio had increased to 15% of assets this quarter. The Bank of Israel intends on increasing its equity portfolio to $4.5 Billion soon.

Due to worldwide money printing, foreign exchange reserves are increasing at an unprecedented rate and are now around $11Trillion. The pressure to diversify is becoming more profound as more reserves are created. The global quest for yield is spilling over into central bank portfolio management decisions and the unintended consequences are yet to be revealed. When central banks start acting like the greater fool, the outcome will not be pleasant.

Divided States of America's picture

While equities prices keep soaring and gold prices keeps dropping....as we get closer to the end game, investors or the Central banks will be dumping their higher price stocks to pick up gold for the cheap....that was their intentions all along...to get as much gold into their filthy greedy hands before the casino is shuttered with permanently.

Monedas's picture

They could bail out pension funds .... so they can buy, buy, buy !    I'se a neva gonna be nakid agin ... cuz I gots my Gol' !   Monedas   1929     Comedy Jihad  Ebonix humour protected political speech and comic arts and crucifixes in mayonaise jars of urine World Tour

NipponMarketBlog's picture



The third arrow in Shinzo Abe's quiver had better be a good one, although I strongly suspect it wont be enough. Historically, policy intitiatives in Japan have proven ineffective in dealing with the persistent sub-par growth and deflation issues. The reason for this is simple. Most of the issues that would need to change in order to make Japan more efficient and competitive reside in the corporate sector, and there is precious little the government can do to legislate their way to meaningful change there.

There has to first be a round of creative destruction, where weak zombie-companies are allowed to go to the wall, so that their place can be taken by stronger, leaner, and better managed companies. Until that happens, no amount of fiscal or monetary stimulus will make any real long term difference to Japan's problems.

Of course, no government that wants to be re-elected, will allow such an unplesant shock to the system to happen, least of all in Japan where change is seen as undesirable at the best of times.



FreedomGuy's picture

Current events and the charts on a dozen other ZH articles proves beyond the shadow of a doubt what I and others have been asserting for a long time. The entire world economy is a political economy, which is to say a managed economy. It is not as much about P/E's or the latest quarterly report. Have Chairman Ben make one pronouncement, good or bad about QE and markets will tank or rise accordingly. What the PM in Japan says, Draghi in Europe or a dozen other leaders say about their "free" market intervention will do more to the economy than Apple's next phone or a new line of cars from Toyota. It affects every investment category, bonds, stocks, commodities, etc. So, it is more important to follow the news and pronouncements of political leaders than the ticker tape. Welcome to the brave new world.

FreedomGuy's picture

I would ask my friends here at ZH, does anyone see the profound and deep dangers in this kind of world? For those who value liberty, not to mention rational investing do you see the dangers?

Antifederalist's picture

That question is rhetorical ?

This will end very badly. I feel like I felt in 1987, 1999-2000, 2007-2008.

Fasten your seatbelt. Turbulence ahead.

prains's picture

rational investing is gone for good until a reset, but in order to reset,  the two largest and most powerful entities > Wall Street > US Congress have to be completely torn down and rebuilt from scratch without intervention by the MIC. So you see, the order of magnitude is far beyond the scope of the ordinary american, compounded by the fact that to accomplish such a monumental task a team concept of equal magnitude would have to be incorporated by a population so wary of any such idea that it seems ridiculous to even say > team concept<.


my prognosis.....y.o.u.r.e.f.u.c.k.e.d

FreedomGuy's picture

Well said. However, in a politically controlled economy it is more important to influence the politics, have connections to government power and buy favors than it is to actually run a good company. These are the seeds of a pseudo-fascist economy where protection, favorable tax codes, protection from competitors and even outright fraud (a.k.a. Solyndra) are the norm. All those banker and corporate conspiracies become true and even normal...although I will argue with a different cause than the conspiracy theorists would posit. It is the path to true oppression as well as a steady downgrade in our standard of living. None of those systems can last over time and none of them come with any great degree of liberty.

FreedomGuy's picture

As further evidence from elsewhere today in ZH


I am thankful for the generally contrarian stance of ZH. I would also add that I am often entertained by the clever comments and even informed and educated by others.

StarTedStackin&#039;'s picture

It's recovery summer 4 all over again!



Hoax and Chains

EmmittFitzhume's picture

Movie title should be "Deus ex machina"

observer007's picture

Zulauf: Bubble Will Burst In Two Years


  • There simply is no free lunch, even though our alchemists at central banks may make some believe it. In some cases, debt restructuring will be inevitable.
  • I hear all strategists singing the same song and also many investors: “We buy equities with decent dividends and solid business models because it is better than bonds or cash.” It is not untrue and does make sense – until it doesn’t anymore. The legendary market strategist Bob Farrell once said “when all the experts agree, something else is going to happen.” The question here is WHEN?
  • Once equity markets discover the emperor has no clothes, they could face a quick and painful adjustment"



FreedomGuy's picture

I love that term and use it frequently, "economic alchemists". It fits wonderfully. What central bankers and mostly stupid political leaders assert is that through the magic of monetary policy and market interventions they can turn economic lead into economic gold. They will get the same results as the alchemists of old. The one difference is that we will all be destroyed by their experimentation.


max2205's picture

We may see down 20% but the fed will never let the market crash agai.   They have been given permission to print until banks are healthy.  

q99x2's picture

You already showed that with mild POMO Tuesdays the FED can always ramp the market so I don't buy what this article says. If the FED is jacked in then it is simply a matter of the moving the joy stick to a higher rate of purchases.

ABG LINE's picture

Always love your  style of writing, Sean.

robnume's picture

The ChairSatan has a Staff? How big is it? I didn't think he even had any balls, let alone a Staff.  Whatcha talkin' 'bout? Why,  this is the best of all possible worlds!!!

Monedas's picture

Who ate more ?    UP ARROW    1.  Anthony Boudain ate a dandruff sized piece of Baloot with Pierced Organ ?      DOWN ARROW:  2. YouTube video of Syrian Rebel cutting out and nibbling on an enemy soldier's warm heart ?       Monedas    1929     Comedy Jihad World Tour

FranSix's picture

Today's word is:  'Paradigm'

Arrowflinger's picture

Some paradigms leave one with less than a pair of dimes.

criticalreason's picture

all the bulls need to beleive is that the central banks both can and will keep pumping money.

Lordflin's picture

The belief is that those masses throughout the world who are wallowing in poverty can continue to be suppressed while the few with access to printed money continue to suck the life out of them... Sadly, those same masses, whose rage continues to mount, lack a clear target against which to vent... meaning all of us will get caught in the crossfire. Perhaps it is nothing more than we deserve, having sat on the sidelines for so long and simply watched... all the while thinking that just maybe there was something in it for us...

Perhaps I shouldn't post today, my thoughts seem to be waxing morbid...

all-priced-in's picture

IMHO - many think that "they" will be able to pull out of the market just before it explodes. 










Whatta's picture

Tepper says we are in Goldilocks II.

Just BTFD, STFU and enjoy.


Nue's picture

All the fairy tails used to be much much darker. In the Orginal Goldilocks story the bears come in and eat poor Goldilocks alive at the end.

The Heart's picture

You gotta admire the ability to believe in anything, much less an economic recovery. As long as the push to start the third world war is in full effect, there is nothing in the future to believe in, or be bullish about. What fool thinks they would escape the effects of even ONE nuklear blast ANYWHERE on the planet?

Here is a funny video. The combined efforts of the Syrians and Russians is a new front of intelligent warfare that has not been seen on the battle front. So far, it had been wickedly armed bullies marauding all over the ME killing and murdering innocent unarmed people for the banksters glory, and NOTHING else. So many military men and women went to their deaths for these evil babylonian banksters that sacrificed them for the great moneterial profits. Remember, the agenda was to get rid of the mighty American Army and to deplete the entire military structure for easier conquering later. Job done well after 12 years of ceaseless endless useless war mongering for the innocent countries resources. Who profits in war? Now we see that the forces and arms the bullies face are indeed razored for the cut if these bullies try to bomb innocent Syria again. These guys are funny as they dance to this ca-hooney tune.


max2205's picture

Believe this.  The shit must be really bad if they are still printing 4 ysars later.  Ride it while it lasts

Cycling Fish's picture

The floggings will continue until morale improves.

Disenchanted's picture

Bulls must believe that bullshit smells good.