This page has been archived and commenting is disabled.
The Last Time "This" Happened, Stocks Fell 15%
As we head into the vinegar strokes of 2013 with the world awash with liquidity and ever ready to BTFATH, we note that the last time the S&P 500 saw two consecutive years when the index did not go negative year-to-date was 1975-1976. As Bloomberg notes, just as in 2012 and 2013, we have not seen one day close below the previous year's closing level but as Marketfield's Michael Shaoul comments "eventually circumstances will change sufficiently to make the equity market a treacherous place," and if history is any guide, just as 1977 saw stocks drop 15%, then 2014 may reacquant investorsd with what "risk" and "volatility" means in US equities.
Of course, a 15% drop in today's environment would be crushing... with margin at record levels and the world rehypothecated to the nth extreme...
Source: Bloomberg
»
- 16436 reads
- Printer-friendly version
- Send to friend
- advertisements -
Jimmeh Carta!
MOAR Leverage, BernYellen!
I spent all of 2013 shorting the S&P and I was wrong about 99% of the time. Caracas stock market is where we are headed. I don't believe we will have a crash.
SPY will be up 100% next year and 500% the year after that, and 25,000% the year after that and 3,425,999,999,999,999,999,999,999% the year after that, and then they will invent a new numbering system, probably "base thousand" (instead of base ten) to contain the digits.
https://en.wikipedia.org/wiki/Zero_stroke
Scientific notation should work.
billion = 109
trillion = 1012
quadrillion = 1015
quintillion = 1018
etc.
For total precision when storing dollar amounts, you would store them as an integer number of pennies. By the time 64 bits aren't enough, 128 bit integers may be common. And if they weren't we could drop cents to gain a little more time.
Billy Beer!
The market has lust in its heart.
More like increasing greed...rips coming? Sell the rips
where is Jimma when you need him to protect us against those killer rabbits
Yeah yeah.
I've given up on waiting for a pullback. Shit just isn't going to happen & now we have MOAR QE?
How many similar posts have we seen like this over the past year +?
the reality is that this time really IS different. we all agree it is going to end badly, but I agree with you Bosch...QE is the main thin that makes this different. and it isn't exactly a small thing. If we've had similar results over a 2yr peiord w/o QE, then we have a lot longer to go before ponzi is understood by all.
Stocks love Totalitarinism and that's a sad fact
Stocks only love it b/c they love the cronyism associated with it.
Where do they come up with all these crazy quilt correlations? This guy Shaoul should be out tracking deer or panning for gold; he needs to build some callouses.
this must be god's work, according to the NSA after listening in to lord blankfein's last call to his preacher man. BTFATH - boooyah jim cramer!
"eventually circumstances will change sufficiently to make the equity market a treacherous place"
This kind of ambiguity that I see everywhere is pissing me off!
What will the change the circumstances!? - The only really important question on my mind right now.
As long as the market believes the FED will be there to inject liquidity it will only go higher. It's all up to the FED when the correction will happen. It will take years and years for them to crash the dollar, so don't wait for that. There is a US Gov't guarantee on the market.
I missed this rally, havent been in equities since December 2012 and I'm real sorry about that. I never expected the market to get behind the Fed the way it did, especially after the last crash. Now I'm stuck with cash, gold miner stock and the like. I've been seriously considering putting some moey into T, XOM and IBM. They have gone no-where in the rally and probably have the most upside.
Another told ya so article plant just in case
Of course, the difference between now and then is that now, unlike then, any dip in the market will be met with a double barreled fed buying onslaught.
Until the law of diminishing returns decides to pay the Fed a visit.
I disagree completely in nominal terms; proceeding with continued/increased QE is the singular available option, and a down market is essentially impossible when you're pumping $1 trillion+ per year directly into it. The stock market has been increasing about 40% slower than the Fed's adjusted reserve base since the March 2009 low, so from a real standpoint, we've just been in one long, continuous market crash. That's their big fucking miracle.
Also, answering a few people that have asked that I never got around to responding to, it's hard to see, but my avatar is:
1. A wookie standing on a baseball mound.
2. Holding a stack of pancakes.
3. About to pitch said pancake stack.
Because it makes approximately as much sense as continuing to apply paper bandages to a cancerous tumor, and proclaiming yourself "Man of the Year".
Didn't have POMO, ZIRP, QEternity in the '70s, Bernanke, Yellen, gazillions in debt. Don't hold your breath.
sunny
You are mistaken. We had Economic Stimulus Spending. Interest Rates were held artificially low. WE had Paper Gold. We had all of what has been repeated today...except that the LABELING IS DIFFERENT.
Do you think that Bernanke ever had an original idea? Hell Operation Twist was performed in the 1960s.
It is like Coca-Cola and Pepsi Cola. There might be a minor difference in taste (Pepsi is sweeter) the result is that you are buying a Caramel Soft Drink.
While History does not repeat it most certainly rhymes.
When the Federal Reserve and Wall Street packages up the same scams, labels them something "different" and sells them then you can expect that the End Results are going to be similar.
Well I know what happened in 1979-1980 after all of the Bullshit scams. BUY GOLD AND SILVER BITCHEZ.
Polaroid was a great stock back then
Engulf and Western. Ect
I think there is a little more to it than that. Everyone knows that Coke makes a much better mixer with rum than Pepsi.
Michael Shaoul didn't get the memo. When its QE to infinity, the old rules don't apply.
Impossible. In the 1970s interest rates weren't 0.000000000000000000000000000000% for six, yes SIX, years in a row.
you missed a digit there...
The numerical amount is not what matters when it comes down to forecasting future events. It is the OVERLYING POLICIES that sets the Trends.
In the 1970s they ARTIFICIALLY SUPRESSED INTEREST RATES. Guess what? They are doing that today.
It was bad then. It will be an even worse result tommorow when the Economy blows up. That is where the Magnitude of the supression comes into play. It forecasts the Magnitude of the Destruction.
First we will be destroyed. Then, in the aftermath of the 1970s, we lived through it. This time it will be an absolute devastation.
Don't you feel better now? You should as these ARE THE GOOD OLD DAYS compared to what is coming our way.
Are we going to be stupid enough to repeat it again? Probably not. Most likely 95% of you reading this will be dead.
unfortunately Keynes WAS right about one thing " Markets can remain irrational longer than you can remain solvent "
I would think that must apply to almost everyone here who has been trying to short this insanity fro the last few years, ...as we go out on another high, even with the big losses in China and japan this week having ZERO influence on this American Thelma and Louise cliff ending
it's not just equities that have soared...but treasuries as well. the latter implies ZERO inflation going forward. the only reason yields have been crushed this year is because the Fed threatened taper actually. this caused commodity producing and debt oriented economies to get crushed. sure the USA has a lot of debt...incredible amounts actually...but the focus in the USA is and always is "equity based." that's what make the interest rate "thingy" so odd to me. How can interest rates be this low and equities so high? this is especially true given how totally weak the dollar is as well. The answer appears to be a real crummy recovery actually..."but not so bad it doesn't cause a surge in the dollar." that's the one asset that look ridiculously underpriced to me.
lets be real.
there will never be a real correction.
once things get out of control, its fucking over.
10 percent correction would turn into a 40 percent correction.
so its either no correction or the 10 percent correction that turns into a 40 plus percent correction,
We're at about the 40% correction level in real terms since March 2009. Just bump up S&P gains vs. Fed adjusted reserves. Still continuing downward. The rate of monetary dilution is much faster than the rate of S&P increase.
When is the dollar's purchasing power going to take a corresponding hit? Has it already and nobody noticed? When does 3rd world USA officially begin?
The real point of this analysis is to gather more muppets to slay.
http://www.marketfield.com/mktfldbio.htm
http://investing.businessweek.com/research/stocks/private/person.asp?personId=79709638&privcapId=2504175
Board member of Tel Aviv University.
http://www.zoominfo.com/p/Michael-Shaoul/9138206
Just sayin.
Who gives a shit about the economy im playing dr meth. http://drmeth.com/
According to Macquarie Research:
https://app.box.com/s/pzbyrvapbxjs27ql0lnw
Banking on Unconventional Monetary Policy
Event
- We analyse the implications of maintaining current unconventional monetary policy (UMP) mechanisms in the major developed economies for some time into 2014.
Impact
- Financial markets are now expecting the US Federal Reserve to maintain its current program of QE bond purchases until at least March 2014. At the same time, several other major central banks have recently signalled an intention to maintain highly accommodative monetary policy settings for the foreseeable future. Consequently, the medium-term outlook for global liquidity has shifted and should be seen as supporting the strengthening cyclical upturn in the developed economies.
Outlook
- Recent actions and comments from the major central banks indicate that unconventional monetary policy (UMP) can be expected to remain a key feature of the global landscape well into 2014. This reflects a combination of factors, many of which have both domestic and global economic dimensions.
- Notwithstanding concerns in some quarters of financial markets that UMP is an unsustainable policy approach, central banks appear to assess the near-term risks of macroeconomic instability as being better managed through the protracted use of extraordinary policy measures.
- Moreover, the complicated nature of exit strategies for the major central banks, including the likelihood of further unsettling capital outflows from some emerging market economies, is leading to an acceptance that UMP will be sustained for longer than originally anticipated.
- We noted previously that the market consensus in respect to the US Fed’s commencement of a wind back in its quantitative easing (QE) asset purchase program has shifted into 2014. Indeed, market expectations have now aligned with our base case of Fed QE tapering commencing at the 18-19 March 2014 FOMC meeting – although the risks are still skewed to an even later date.
- Given the ‘general equilibrium’ spill-over effects of any shift in the stance of US monetary policy, it is not surprising that most of the other major central banks have acquiesced with the financial markets expectation for a protracted deployment of UMP.
- In our view, there are three key macro implications for global investment markets in the extended use of UMP, namely:
- ongoing elevation of investor risk appetite and a focus on ‘capital growth’ driven assets;
- near-term abatement of ‘capital account’ pressures in several key emerging market economies; and
- persistent concerns about competitive exchange rate devaluations and asset price bubbles.
Gross said till 2016....retired people have to miss the 5% they planned on living on
And what happened the last time the FED did QE-infinity? Oh yeah, right, they've never done that before. No doubt we'll see new "generational lows" in the indices, but it probbaly won't be predicted by some chart and many of us could very well be dead from old age.
a quick glance at the ramp in the close of stawks and smack down in PM's in the last seconds...there is no doubt who runs bartertown.
Calling Janet the QE Yellen for more juice.
It's all over but the Yellin!
Yeah, man, it's like, you know, really different this time. Groovy!
Bring on the circuit breakers!
I spent all 2010 trying to short SP based on bearish porn blogs like this one. Only later, when I ran out of cash, I realized that these bear porn blogs just feed the shorts to send the MKT higher. The irony is don't participate if you want a MKT crash.
bahaha i was just thinking about that. - TPTB don't mind ZH just because of that, feeding in interest on top of a rising market for the bankers and brokers. Otherwise, Tyler would be Jason Bourne right now.
Watch yourself there TD, maybe this (possible) crash would bring unwanted attention to you.
yeah sure. and how did all these "Last time "This" Happpened..." turn out
Similar Articles You Might Enjoy:
What Happened The Last 2 Times IPOs Were Outperforming The Market By This Much?
What Happened The Last Time IBEX Jumped This Much?
What Happened The Last Time We Saw Gold Drop Like This?
What Happened The Last 2 Times Mortgage Rates Spiked Like This?
"This" Has Never Happened Outside Of A Recession
move on
you know this is quite mathematical. Credit growth is flat, and fed balance sheet growth is playing out as stcock market growth. Something important IS happening though, velocityof money is coming in for a landing at the zero boundary and there is a binary choice that must be made, allow credit to grow and spark inflation, which increases input costs and kills margins in a zero wage growth world, or either do nothing or taper, which gives you debt deflation, and a collapsing stock market.
Yellen already told us what she is willing to do, and that plays well with those who own physical assets, fixed debt, and moat businesses. Everyone else adios.
At the rate of decline it is a 2014 problem.
Brutal. Those periods aren't even close to be similar. When are we going to see the gold vs S&P year to date....when....?
Tyler, didn't you learn you lesson with the series of 1987 crash comparisons that came to naught.
A lot of things are different compared to the 70's or any other time. The government was not near as big as it is now, unfunded liabilities, government super computers, mega surveillance...
And a dildo is, nominally, a hard-on.
Well last time CAT flopped like it currently is there was a 25% collapse in global trade for 6 months.
As I posted in my blog August 1 2013 "The S&P will go sideways from now until very late this year or early next between 1600 and possibly 1750-1800 in a treacherous sideways movement. (I trade Futures) There willl then be a sharp decline to possibly 1200 caused by global consummerism's tightening.