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Feeling Confident? Just Two Charts
History may not repeat but it certainly rhymes and when it comes to the animal spirits of human fear and greed, nowhere is that more evident than the 'surveys' of confidence that US citizens have undertaken for thelast 30 years. As the following two charts show, while many are exuberant at the rise in confidence of late, it is a pattern we have seen play out twice before - and both previous times - it did not end well...
via Citi FX Technicals (charts recreated via Bloomberg),
The consumer confidence chart may remain an important factor in this equation
Chart of consumer confidence remains amazingly cyclical
Very clear trend so far of lower highs and lower lows. Since the all-time high in May 2000 at 144.70 we have been in a clear downtrend
Data on this indicator only goes back to Feb 1967 and prior to the all-time high in 2000 the peak had been 142.30 in October 1968 (right at the start of the lost 16 year period from 1966-1982)
LET US BE CLEAR there is no certainty at this point that a high has been posted in this move...but there are good reasons to suspect that it may have been (or at least that we are very close to that dynamic). If the chart above is consistent then the peak may well come from either the May or the June number.
The top of this channel comes in at 76.30 with the May number coming in at 76.20.
As can be seen above there has been a very close correlation in time frame in the 1998-2000; 2005-2007 and 2011-2013 moves. That would suggest that the peak in this number would likely be somewhere around present levels and in the May-July period (June would be an exact equal timeframe, to the other two moves)
Why might this be important???
One of the things that has performed better now than the 1970’s period and the early 1990’s period is the equity market. Or has it?
The post housing collapse rally in the equity market did not quite regain the 1973 high before a renewed 18 month fall of 27% whereas this market did regain the high. However it took twice as long (4 years instead of 2) as well as QE 1, 2 and 3 with massive fiscal stimulus to achieve those heady heights. Is that really a better performance???
By February 1994 when Greenspan tightened the S&P 500 had overcome the July 1990 peak by 79%. Admittedly this was after a much shallower fall of around 10 %, but from a wealth effect perspective provided a far bigger relative new high than today.
In addition when we look at the chart below we cannot help be a little cautious (Albeit recognizing that this is an environment where you have to be a skeptical participant on the move to new highs)
We are getting “relative triple divergence” between consumer confidence and the equity market. As the S&P has hit a high, higher high and now 3rd higher high consumer confidence has hit a high, lower high and lower high again. This suggests a larger disconnect between the level of “feel good” at the consumer level and the elevated level of the Equity market in an economy that is about 70% consumer driven.
Charts: Bloomberg
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Ohh No! There goes Tokyo...
JENGA!
Please Obiwan Kevinhenry, you're our only hope.
Go Go Godzilla !!!'
Hi, my name is Tyler, I'm a sell-side hypocrite. I dog you until you post something I interpret as supporting my macro-view, you know then I post you.
I'm sorry I thought I was reading Dealbreaker
Yeah you're Tyler
Kind of like the US is sending Patriot missiles and F-16s to Jordan now.
Same thing that happened right before Operation Iraqi Freedom, complete to "military excercises"....
The Iraqis wuz freed?
Golleeeeey.
W oughta be put up on Mt Rushmore with Lincoln!
Why? Lincoln didn't free anybody.
as an outsider/alien/foreigner I thought that Lincoln is depicted there as the president that preserved national unity
as far as I understand this is factual and has nothing to do with how you feel about the unity of the US nation
.
I always preferred Operation Iraqi Liberation.
The acronym was short sweet and on point.
Go to debka-dot-com.
A USMC MEU began landing to day at Aqaba.
its too funny listening to these talking heads on cnbc, bloomberg, fox business, etc, saying how they are loving this sell off and its healthy for the market. these are the same guys who were saying that we go up from here and have lots of room to run.
it amazes me that these people get paid to talk about the markets daily, yet they dont even understand how this is not a fucking correction.
see, corrections happen in healthy markets, not markets ran up artificially. when this thing starts to come down (which maybe this is the beginning) it wont correct, it will crash, which will technically be the correction to fair value without qe, which imo will indicate depression like numbers because all bubbles will burst.
whoever is confident in this economy, i would love to have what they are smoking.
Good point! Seems like msm is desperate to have people hold their positions. "Its ok, its healthy, buy the dip"
"Nobody saw this coming! We had Nobel Prize winning economist Paul Krugman and bank analyst extroidinaire Dick Bove on just last week they said ..........."
But did they have Peter Schiff on last week? Well, seriously; sort of, confidence is always very high when a bubble bursts; it's kind of part of the definition of what a bubble is; and then we get all the "who could have seen this coming? BS".
they get paid for their real skill: the ability to react instantly to any act or action in a suitable fashion. Soothe when it goes down, cheerlead when it goes up. Everybody feels great! Unless you're one of those goldbugs, then shame on you.
Every time I read this "check out the chart" bullshit I can only think of the countless times the Fed has fucked up this collapse. I don't want anyone to suffer but I would like a collapse so we can get to some resolve soon. At least before football season.
Rip-your-face-off time starts with summer practice. The main season will be "I can't believe it keeps dropping", ending with a "I'm too broke to go to the Super Bowl" bottom. IMHO
LOL. well, I wouldn't complain, I hope you're right.
The JGB (2-7) market is melting down. I took the loss on 1/2 of my trade. I hedged the gbp/ against it. (2 days ago)
YES this is what takes that bitch down IMHO. That Kuroda speech on sustainable 3% yields was from another dimension.
Yen where are the yields?
If the bonds blow up it's game over.
And on the other side of that trade is "the entire country of Japan" and who knows who else. you in it to win it?
Fonz. Yields have compressed. Now they're going super-nova.
Kito asked a great question earlier.pertaining to your question. I was long usd/jpy and T/P for 43 pips.
I opened a nwe trade @ .74 , and let 1/2 the trade stop out. ( I never lie) I had a hedge from Sunday, GBP/JPY.
You are one of the few around here that put out there for everyone to see. Never doubted you.
As far as Kito asking a great question on the other hand...I'd have to see that to believe it. Can you point me in that direction?
Nevermind, found it. Great comment
"Central banks are losing control, and it has very little to do with Fed. tapering. I'm not sure if you're familiar with past BoJ (currency)interventions, and how they worked out ? The possibility of Japan blowing up is very real."
kito
Vote up!3
Vote down!
0yen, do you see your namesake hyperinflating? can they print to the point there is no longer any confidence in the yen? its very hard to see that happening........
- reply
Wed, 06/05/2013 - 17:09 | 3627609 Yen CrossVote up!
2Vote down!
0Kito, that was a great question. I'm looking at the DXY/AJX charts as we speak. I'm seeing the beginnings, of a complete yen breakdown.
It appears that the usd is actually starting to strengthen against the yen in a 'risk off' trade profile. To answer your question, yes & yes.
Central banks are losing control, and it has very little to do with Fed. tapering. I'm not sure if you're familiar with past BoJ (currency)interventions, and how they worked out ? The possibility of Japan blowing up is very real.
- reply
Wed, 06/05/2013 - 17:32 | 3627677 kito Vote up!2
Vote down!
0is there a "no confidence"number for the yen when, if breached, there is no turning back--certain destruction is priced in???
- reply
Wed, 06/05/2013 - 17:50 | 3627729 Yen CrossVote up!
2Vote down!
0Kito I would say> 97.03 and (just below) the 61.8% retrace of (103.724- 92.561) is probably a heavily guarded area.
I'm actually long usd/jpy with a 'trailing stop'. If it blows up, I'll take a minimal hit if it stops out. If it retraces I'll make a nice profit.
"I took the loss on half my trade" why? what makes probabilities different for the second half. I realize that "professionals' have been feeding you this shit for twenty years, but just sit back and think about it; if the probabilities are not in your favour; none of your money belongs there; because there's someplace else it belongs where the probabilities are more in your favor; logic.
In other news... the game is about to begin...
http://edition.cnn.com/2013/06/05/world/meast/syria-russia-shipments/
Pentagon official: Russian warships may be carrying weapons to SyriaCNN has learned that U.S. intelligence agencies have identified three Russian amphibious warships in the eastern Mediterranean that are believed to be carrying weapons shipments that might be used to resupply the Syrian regime, according to a Pentagon official.
The United States has been tracking the ships since they left Russian ports several days ago. U.S. satellites were able to see some indications of containers being loaded onto the ships. Although it's not confirmed, it's believed the ships may be carrying some components of the controversial Russian S-300 air defense missile system and other weapons for the regime.
Note to all fucktards and dickwads....
Military amphibious ships generally do carry weapons....
For the Love of Christ, please.....
I agree, but it is to their advantage to try and disguise the shipments. The system uses mobile vehicles, so they could possible drive them off, but it would make more sense to use a proper cargo ship or that huge aircraft they were leasing to us (for MRAPS) to deliver the system. I used to see that plane 2X/week. (Antonov 124 and Antonov 225).
... and Russian naval vessels are often equipped with S-300F-series missiles, ready to fire, no buyer training or assembly needed (but a less desirable option since there wouldn't be a foreign buyer paying for the expended munitions).
... sort of like US naval vessels w/ Patriot missiles (and Israeli or Turkish customers).
Anybody know the aproximate transit time for three hypothetical amphibious warships? Just curious, I'm sure it's not important. LOL
Well they are already in the eastern mediterranean... so in a day they could be there... if they are not already.
Some mutt on CNBS today asked "Where is the euphoria? I don't see no euphoria! We need euphoria before a top is in!" Well the Citibank Panic/Euphoria Model last Saturday morning is firmly in the EUPHORIA range so what fucking planet is this clown from?
http://online.barrons.com/public/page/9_0210-investorsentimentreadings.html
These Wall Street shills are complete idiots.
These fuckers doth protesteth too much, methinks
-apologies to Bill Shakespeare
They sure are taking pains defending this solid bull market aren't they?
I hear Bill is making fishing equipment these days.
Kalamazoo, Michigan!
Ugly Stik!
I don't understand why, a.) anybody watches these shows, (I don't have a television connection), and b.) why they express surprise or upset at the nonsense they spout. They are simply employees of the system. They're cheerleaders, that's their job. You expected what? somekind of analysis? that would not serve their owners interests; somebody pays them every two weeks, you know, and they don't plan on them doing anything but cheerleading. that's not that complicated.
The comodity currencies have an unorthodox bid under them. I'm steering clear of aud. I like the (gbp) ponzi trade.
i really hope my fellow zerohedgers are not dumb enough to buy this dip.
this is the end. we may have a bit of green days here and there, but i think we are 11,000 dow by september and 1400 on s&p by then and that wont even be the bottom.
I saw a 30 year DJIA chart and if one draws the channel, it looks like 16k would hit the resistance line. So there might be one last thrust here as perhaps underperforming portfolio mgrs. look to get in on the dip, but that could be the blow off top.
But yes, the top could have been that key reversal few weeks ago, and either way upside very limited for these stocks that have been levitated on hopium fumes.
Five years of ever increasing regulations and taxes, endless programs to encourage
dependency, Obamacare, Gestapo IRS actions and the FED Balloon is bursting.
You can only keep a hot air balloon in the air so long. Thanks Ben and O.
And Obamacare hasn't even fully kicked in yet.
That;s right; and well worth remembering.
In 2008, I thought the end game was close. It didn't happen
In 2010, I was preparing for the end, cashed out, bought PMs; nothing changed.
In 2012, I finally realized that the extend and pretend game might go on forever.
In 2013, however, the dots are finally lined up to be connected. It may not be a very Merry Christmas this year.
Been chasing the end almost as long as you - down 90%,
de·cou·ple?
tr.v. de·cou·pled, de·cou·pling, de·cou·ples1. Electronics To reduce or eliminate the coupling of (one circuit or part to another). 2. Physics To decrease or eliminate airborne shock waves from (an explosion) by having it take place underground. 3. To separate or detach *cough*
4. De people whats moved in next door.
They will keep the markets green to sooth the sheeple concept of wealth. For ever 10% the S&P goes up, the USD will retreat twice as fast. Eventually they will compare the worthless dollar to a simple stock split. It's not worth less, you have twice as much now.
What does generation milenium have to say about OtOOL care?
Considering that Gen-X (my gen) roundly sees it as rape across party lines. I think Millenials see it as gang rape or they aren't aware of what's coming. It's just so horribly wrong I don't know where to begin.
To be clear this isn't partisan, it's all part of a long term oligarchical cosolidation phase that both parties are fully behind, which began in earnest with JFK getting several in the head, the groundwork for which was laid in 1913.
I respect your thoughts!
i cant wait for these days again.
http://www.youtube.com/watch?v=8Sp5lM4ES_I
http://www.youtube.com/watch?v=I-1g0OZJIdk
usd/jpy is going up.
These charts track perfectly with some things Martin Armstrong's models have been predicting.
Something BIG (but in a negative direction) is expected to happen this month.
Jim Sinclair is bellowing at the top of his lungs to exit the system and fast.
I'm sure this is all simply coincidence. You go ahead and keep buying while I watch from a safe distance. Just in case.
http://danielamerman.com/articles/2013/ContagionsB.html
The core issue is that like so much of modern economics and financial theory, globalization isn't so much based on human history as it is on simplifying assumptions about human behavior. Specifically, it is assumed that nations will behave in a highly rational manner that is driven by the free markets and that they won't "cheat".
Of course real human history demonstrates that many nations cheat for competitive advantage pretty much every time they think they can get away with it, and you could say that is the subtext to most financial headlines about the globe today.
The way you cheat with globalization is to use politics to twist your financial system for economic advantage, and take advantage of the cost /currency value loophole. Over most of the last 15 years, the Chinese have been the masters of this, manipulating the value of their currency to keep it artificially low, and enjoying the highest sustained growth rate that any major nation has ever seen as the direct result. Until the defensive measures started being taken.
Now all the major powers are going after the value of their currencies while cheating long-term domestic investors in the process, which then spreads the contagion throughout the world.
The simplifying assumption, the naïve theory that was used to sell globalization, is that market forces would rule, and the benefits would go to whatever nation produced the best goods and services at the cheapest prices. Thereby forcing other nations to make their own economies better and more efficient in response, as wealth increased around the entire world.
However, financial competition in terms of politics setting up financial systems for competitive advantage is the exact opposite.
What has emerged around the world is that direct monetization on a massive scale is used by a nation to attack its own currency and try to induce inflation. This is done in combination with artificial controls on interest rates to take money both from savers and investors, in order to be able to afford the massive debt levels, as well as to compete with other nations. So for a saver or investor, the way that your nation is likely competing with others right now is to try to cheat you out of market returns, which of course then results in a redistribution of wealth within your own society.
This creates a highly ironic position for investors around the world. Modern Portfolio Theory and its derivatives in areas like conventional financial planning and retirement planning are theoretically based on a market economy.
The reality is that in a competitive contagion that is continuing to grow around the world, politics is superceding market systems, and as a direct result thereof, retirees and investors around the world find themselves unable to enjoy the benefits upon which their financial plans are built. That is, decades of financial planning have been rendered obsolete because of political changes, but political changes are not allowed for in the financial models, and people are not prepared to respond to them.
This creates a thoroughly dysfunctional system, in which the only chance an investor has is to understand what is actually happening.
My neighbor runs a local department store....says sales are in the Toilet despite double coupns on top of 60% discount already. "No ones buying clothes," he opined...almost cried.
He is very worried they will shut the store down. I notice online shops are also offering sellers all sorts of incentives to list more items and push sales and try to shake consumers free of their few remaining dollars.
With unemployment [in the private sector] soaring, they are getting desperate looks like.