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What Is The Fed's Updated Year End S&P500 Price Target?
We predicted (correctly) over a year ago that the Fed's balance sheet would reach the $4 trillion mark by the end of 2013. It took the world a few months to totally buy into the fact that all that matters is the flow from the Fed's POMO but, as the chart below so humbly suggests, with a 0.95 correlation (if its not causation, we're at least on the right path) in proclaiming that for every $3.25 billion printed by the Fed the S&P 500 index will rise by 1 point. Last week, we noted the 'dip' from Fed-based "fair-value" that the debt-ceiling debacle had driven in stocks and in just a few days, that 'pent-up-demand' has all but equalized stocks to the only valuation metric that matters - the S&P 500's Fed Level-Adjusted-Balance Sheet-Indicator-Aggregate...
It seems, if our extrapolation of the Fed's balance sheet is correct - i.e. no Taper - that the S&P 500 Fed L-A-B-I-A should be around 1800 by year-end.
(h/t @Not_Jim_Cramer)
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End of Q1 target should be just shy of $777 trillion.
Martin Armstrong agrees with this analysis. He sees stocks going up relentlessly as the Fed balance sheet expands. He doesn't think gold will benefit.
Gold price will only go up if one idiot sells and one of the smartest bloggers buys.
I guess buy and hold is alive and well.
Is there a simpler way of stating this metric than the point per month on the s&p / $3.25 billion?
It will be a little hard to tell which printing session the money is coming from this way.
Index of S&P500 is simple measure of monetary expansion. Increase in price of Gold is similar of demonstrative effect of Quantitative Easy. To quote Buzz Lightyear, "For infinite beyond"!
i remember the good old days when gold used to run up with the balance sheet expansion. before they shut it off.
These good old days will come back, practically overnight.
The problem, my Oracle friend, is the waiting part. Rev 3:3 or 2 Pet 3:10 is all good if you're in the prophesy business like yourself, but I keep wondering if I am going to be cold clay when the Lord/Gold comes to cleanse us and smite the sinners.
Feel that wealth effect! And if it feels suspiciously like someone taking a shit on your head, you must be doing it wrong!
Get out your umbrella so it won't trickle down your neck !
The coffee from Sam’s that I like was shrunk from 3 lbs to 2.5 lbs at the beginning of the year (same price).
It just shot up $2.00 (14.5%) even though I’ve read about a good crop for the year.
My profits from being all in the Benny Buck Bazaar (bizarre?) should cover it, though …..NOT.
http://www.businessweek.com/articles/2013-08-27/bad-java-poor-coffee-crop-adds-to-indonesias-woes
The wealth effect is real (and feels good). Too bad all you doomer douche bags missed it, hahahahahaha...
Your an Idiot! Nothing lasts forever. Look ... your Unicorn is getting away.
The most troublesome part of the current world we live in is that access to high quality information or insights no longer equals trading profits.
Being informed used to equal profits. Now it equals frustration.
I applaud the insights ZH provides, but the utility of the information has dropped to zero. The casino is broken, the ability to count cards doesn't matter, for now....
ASSHOLES!
Not asshole, labia... didn't you read the post?
There is most assuredly going to be a citizen revolt on the other side of this mountain. Should we survive, let us remind them of the real culprits before they point to a president or congressman!
We will survive. We need to continue spreading knowledge to those who have been endoctrinated by organizations like the communist pushing Imagining America.
To not speak is to speak !
Well, while "people" might revolt, slaves operating under the label of "citizens" have no clue where to even begin, as their whole self image is a party to the crime in progress.
That's a hellava limb to step out on.
OK. I'll play.
But "what's in the basket Tyler! what's in the basket?!"
Over.
BTFBR = Buy The Fucking Birinyi's Ruler
Price target? TTMFM: To the Mother F_cking Moon.
This has gotta be the biggest bubble in the history of mandkind.
lets forget stocks like fb, amzn, nflx, lnkd, goog, etc that are extremely inflated, looking at stocks like a best buy for example. i remember it was only a few years ago that the talk on this company was how it would be out of business soon, etc, stock was trading in the teens or around there i believe as recently as a year ago or so, and now this fucking thing is at 43 fucking dollars.
sbux is another example. stock had consistently been trading in a range of 40-50 for years, now its fucking near 80.
its not at 80 because there sales are at an all time high, this shit is just insane when you look into it.
let the assholes enjoy now, let them swim in there money, because very soon, it can be next week, next month, next year, 2 years, i dont have a fucking clue on the exact timing, but when this ends, every single person for the most part is fucked.
even the rich. yes the rich may be less fucked, but in the end, the entire country is going to suffer for this and riots will be everywhere.
and for the s&p target for years end, why cant it be at 2000? we are seeing daily jumps of 10-12 pts, lets say there are around 50 trading days rest of the year ( maybe a bit more or less did not do exact math) if we avg a bit less than 6 pts per day on the assumption that there are around 50 trading days left in the year, the s&p would easily surpass 2000, and i know it sounds crazy, but every fucking day the s&p is being pumped up like there is no tomm, why the fuck will they stop.
larger than Kardashians ass?
lol, alright fine maybe not the biggest, but pretty close too it.
Zimbabwe and our Zimbabwe stock market. I said Obama was Mugabe 2 in 2008. I was hoping I was going to be wrong.
This is exactly why the Fed continues QE - our economy is highly leveraged to the stock market. Pension funds, university endowments, charitable foundations, etc all adjust their spending depending on their invested asset levels. And not just the big, national/state funds you think of. The swimming pool foundation in Anytown USA, the museum trust in the town next door, etc - all are affected by the wealth effect.
Of course, the wisdom of relying on unsustainable asset prices as the foundation of your economy is highly questionable. But for Bernanke it is all about can-kicking, and always will be.
Reason #2 to keep printing is, of course, that is the only way the government can afford to continue operating. If we had to pay third parties the interest on our debt (and not the Fed where it is remitted back to the govt), we couldn't even afford the suppressed interest rates we are paying today - the deficit would be at least $100B higher in this FY, and of course that compounds.
And so far, besides the growing wealth inequality, there are no downsides to printing.
I expect QE to be increased sometime in 2014.
That is all true, but I'd like to have a better understanding of the transmission mechanism. How exactly does QE end up in the stock market? QE substitutes bank deposits for T-bonds. How do those bank deposits end up goosing the market? it is important to understand the exact transmission mechanism if you want to look for clues that the whole scheme will break before it actually does.
There are a lot of downsides. Exporting inflation to poorer countries causing their food prices to skyrocket. Sucking up lots of productive capital that creates jobs. And eventually it will pop or implode. It is unsustainable - it will keep working until it doesn't. One thing we found out in the shutdown - is federal govt workers are largely unneeded.
I'm imagining this like some sort of bankers' prisoner's dilemma. The first one to take profits will start the cascade that screws over everyone else.
Allow me to try to help you see the big picture.
S5 Goals
http://www.imf.org/external/mmedia/view.aspx?vid=2579051368001
‘The term global liquidity is used here to mean [subsidizing] the ease of financing in global financial markets.’
http://www.bis.org/statistics/gli.htm
Has any one of the nitwits posting on ZH ever sat down in the banking lobby to read the brochures? The Basel III Accord regulations has been plastered from front cover to back for some 1+ years. I can only imagine that you’re racing from the parking lot towards bank queue to avoid bouncing your account.
You need to talk to Obama about raising your debt limit so you can sit in the bank lobby and read up on the Basel III Accord compliance rules.
Just trying to help you understand.. No harm or fowl.
When they say it has resulted in 'stability', what they mean is the S&P stayed green. If you sweep some dog shit under a rug it doesnt go away. Structural flaws still remain, and are made worse, by printing fiat. You cant delay the day of reckoning and call that progress.
i know its early, but it looks like the shitshow will continue tomm.
i guess ''investors'' never want to take money off the table. maybe they dont realize that they have not made a penny until they actually push the sell button?
http://www.sgxniftydowfutureslive.com/index_files/DOWFUTURES.htm
people have spent 5 years hitting the sell button. the only thing that happens after that is they sit in cash with no better options for a while. then chase the market higher again. easier to just stay in it.
it maybe easier to stay in, but what happens when it isnt?
experience is something you don't get until just after you need it.
- stephen wright
Fonz is just pointing out that institutions and others are looking for any investment to keep up with the money printing inflation. The bond market is much bigger than stocks and the Chinese, Russians and others are dumping Treasuries.
You still have that Freedie Mac and GM stock? Were you bailed out?
Aren't you just a wordsmith there fonz... doomer douche explaing investing, LMFAO
Should the L-A-B-I-A not continue, would we be dealing with a Taper Within A Tempest?
According to Deutsche Bank:
https://app.box.com/s/otdvclw8ijxzflhkhem6
October 8, 2013
Bretton Woods III and the Global Savings Glut
Summary
History suggests that periods of global economic expansion are characterized by symbiotic imbalances rather than balanced arrangements that satisfy theoretical ideals. Therefore, it is important to understand the factors that drive the imbalances in each period as well as the resulting distortions. In our view, demographics will have a significant impact on the future trajectory of the world economy. In this report we specifically focus on the implications on savings and current accounts.
Population trends imply that we are entering a phase where rapid aging will cause many countries to generate persistent current account surpluses. This raises the question – who will generate the world’s deficits?
World demographics is not neatly spaced out such that some countries generate surplus savings exactly when others need to fund deficits. Moreover, there are many factors that may prevent surplus countries from funding deficit countries. Thus, we have a situation where countries like India, Brazil and Indonesia may attempt to tame their deficits before old countries like Japan and Germany enter their dissaving phase. The resulting savings glut could be further exacerbated by a likely increase in China’s current account surplus.
Thus, the emerging international economic system, dubbed by us as Bretton Woods III, will yet again depend on the United States to act as the demand source of last resort. Meanwhile, demographics will hold down the real cost of international capital whether or not the US decides to absorb part of it. In turn, the ability of world’s financial system to allocate excess savings will be tested again. Young emerging markets with the ability to sensibly deploy cheap capital could benefit disproportionately from this environment.
not labia
beef curtains
As the Bear ... I should just go and hibernate until Spring?
Drink every time your favorite cnbc
Anchor says says 'risk on'..