Bank Of America: "It's Getting Frothy, Man"

Tyler Durden's picture


When even Bank of America's Michael Hartnett has a note titled "It's getting frothy, man", and joins such other bubble-warners as JPM, Bill Gross, Larry Fink, and David Einhorn, one can be absolutely positive that the Fed will do... absolutely nothing.

From Bank of America:

It's Getting Frothy, Man!


Equity funds: 3rd straight week of big inflows ($12.4bn); YTD, equities have seen $231bn inflows versus a mere $16bn inflows to bond funds (Chart 1)



Global Flow Trading Rule: another $8-9bn of inflows to long-only equity funds over next 2 weeks would trigger a contrarian “sell” signal (Chart 2). Bullish investor flows dovetails with our Bull & Bear Index, which is on course to trigger a cautionary riskoff signal in mid-November



Crowded trades: this week investors continue to funnel money into Europe, Japan, HY and Floating-rate debt

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Fri, 11/01/2013 - 12:11 | 4112052 King_of_simpletons
King_of_simpletons's picture

We have a bottom.

Fri, 11/01/2013 - 12:13 | 4112061 Headbanger
Headbanger's picture

We have "The Silence of the Muppets"

Fri, 11/01/2013 - 12:19 | 4112076 redpill
redpill's picture

Dude where's my beta

Fri, 11/01/2013 - 14:14 | 4112577 MarsInScorpio
MarsInScorpio's picture

Dude, where's my Schedule II's . . . ?


Fri, 11/01/2013 - 14:14 | 4112583 dontgoforit
dontgoforit's picture

We have Daniel Ivandjiiski?

Fri, 11/01/2013 - 12:18 | 4112073 disabledvet
disabledvet's picture

yeah we are slightly above the 666 low all of a sudden.

Fri, 11/01/2013 - 12:20 | 4112074 Running On Bing...
Running On Bingo Fuel's picture


Fri, 11/01/2013 - 12:19 | 4112077 LawsofPhysics
LawsofPhysics's picture

Quick you muppets, get to the other side of the boat!!!

Fri, 11/01/2013 - 12:20 | 4112078 Dr. Engali
Dr. Engali's picture

The raping is almost complete. All they need is the catalyst.

Fri, 11/01/2013 - 12:20 | 4112080 maskone909
maskone909's picture

frothy?  wtf?  80% of the volume is HFT!!  the fed is buying 85 billion per month!!!  and they decide that, now, its frothy!?!?  after 6 years of this shit....

Fri, 11/01/2013 - 13:34 | 4112399 dontgoforit
dontgoforit's picture

My thoughts exactly.

Fri, 11/01/2013 - 12:19 | 4112082 ArkansasAngie
ArkansasAngie's picture

It isn't an economic problem -- it;s a political problem

Fri, 11/01/2013 - 12:49 | 4112190 NOTaREALmerican
NOTaREALmerican's picture

Re:  it;s a political problem

It is said the politics is sports for geeks.   But, economics is politics for the semi-autistic.

Fri, 11/01/2013 - 12:59 | 4112233 HardlyZero
HardlyZero's picture

Its a faith based problem.

Fri, 11/01/2013 - 12:24 | 4112098 steveo77
steveo77's picture

SPX futures pinging off the Bernoulli 133 channel line 
When the chart "pings" off an important channel line, that gives a lot of credibility to the channel. Futures ES is shown here, with a perfect ping off the Bernoulli 133 channel line extension.  
Bernoulli channels (my creation) are like Fibonacci, but they take into account uptrends and downtrends, i.e. headwinds and tailwinds, organic buying and selling amidst the trading moves. 
As predicted a few days ago, I expect a move to 1700 to the Bernoulli mid channel line, the B50. bernoulli-133.html

Fri, 11/01/2013 - 12:29 | 4112123 maskone909
maskone909's picture

interesting.  you could also look at a simple daily chart of the SPX to see this too.  for the last 5 years, any time the SPX climbs above the 50DMA to a certain point, it retraces back down.  essentially you can trade off of the 50DMA

Fri, 11/01/2013 - 13:04 | 4112264 Dr. Venkman
Dr. Venkman's picture

Gave you a plus one solely due to the GSD on your homepage. Good luck with your channels.

Fri, 11/01/2013 - 12:26 | 4112110 DOGGONE
DOGGONE's picture

Here's the definitive track records.
And don't miss the table at the end.

Fri, 11/01/2013 - 12:30 | 4112125 Mark123
Mark123's picture

Three big things happened since 2008 financial crisis:

1. Western governments assumed risks on a massive scale to protect asset values (stealing from the future).

2. Central banks issued 0% debt to fund massive fiscal defecits (humorously called "expanding their balance sheets"!!)

3. Accounting rules were changed to avoid bad optics.

The above analysis is worthless, since how can you say there is a "buy territory" when all the rules have changed and now enable a small group of players to manage the "markets" without any restraints?

Fri, 11/01/2013 - 12:37 | 4112146 NOTaREALmerican
NOTaREALmerican's picture

You can't deflate a bubble with talk; primarily because you can't "deflate" the prostate gland with talk.

The bubble must inflate and then pop when the dumbass optimism is shown to be (yet another) illusion.

Fri, 11/01/2013 - 12:43 | 4112161 LawsofPhysics
LawsofPhysics's picture

Unfortunately, these purchases are no illusion...


Fri, 11/01/2013 - 12:39 | 4112148 q99x2
q99x2's picture

BTF BitCoin

Fri, 11/01/2013 - 12:42 | 4112156 adr
adr's picture

I might be calling a top since I'm starting to see mainstream ads on Zero Hedge.

Maytag appliances at Lowe's

Under Armour at Dick's

Not the usual SnorgTees and Indonesian singles ads.


If advertisers are seeing big money for advertising publicly traded companies on a site that pretty much says the market is insanely overvalued, they must be getting desperate.

Fri, 11/01/2013 - 12:54 | 4112210 buzzsaw99
buzzsaw99's picture

clear your browser history

Fri, 11/01/2013 - 13:38 | 4112423 Carl Popper
Carl Popper's picture

This tells us more about you than zero hedge. You wouldnt believe the perverted filth that pops up for me. I have no idea why lol

Fri, 11/01/2013 - 17:21 | 4113440 paradox
paradox's picture

What ads? mwhaha sheep.

Fri, 11/01/2013 - 12:42 | 4112162 moneybots
moneybots's picture

 "Michael Hartnett has a note titled "It's getting frothy, man", and joins such other bubble-warners as JPM, Bill Gross, Larry Fink, and David Einhorn"


Yet Greenspan says it isn't bubbly.

Fri, 11/01/2013 - 13:06 | 4112284 alangreedspank
alangreedspank's picture

When a (ex) central banker says there's no bubble, you know there is one.

Fri, 11/01/2013 - 14:23 | 4112621 bagehot99
bagehot99's picture

Especially one who also says "but if I'm wrong, fuck it, I was only throwing out my opinion and I'm not apologizing".



Fri, 11/01/2013 - 12:52 | 4112194 falak pema
falak pema's picture

It would be interesting to know what the break down of liquid money in WS S&P assets is today amongst the following :

1° Pension and mutual funds

2° Private equity funds

3° PDs and HFs

4° General public

5° Other investors 

Fri, 11/01/2013 - 12:56 | 4112215 buzzsaw99
buzzsaw99's picture

might be significant if we had a real market just like bac's stock price might have some fundamental meaning if it had any relevance to their actual books.

Fri, 11/01/2013 - 13:31 | 4112394 Carl Popper
Carl Popper's picture

Bill gross is not known for his top calling accuracy either. Wonder if he is some kind of top calling troll lol

Fri, 11/01/2013 - 13:15 | 4112323 SheepDog-One
SheepDog-One's picture

Geting hard for banks to make anything even when books are cooked however they feel like and they're handed stacks for free.

Fri, 11/01/2013 - 13:32 | 4112381 Carl Popper
Carl Popper's picture

Hmmm. A frothy consensus.
Anybody feeling any contrarian twitches? Could Goldilocks be ready to pay us a visit?

Fri, 11/01/2013 - 13:44 | 4112453 Seal
Seal's picture

Fed do nothing - what about INCREASING  QE. It cud happen

Fri, 11/01/2013 - 14:14 | 4112579 syntaxterror
syntaxterror's picture

<-- Moar QE is needed ("We're gonna need a bigger bubble")

<-- Time to stop the insanity and increase rates and decrease QE in a gradual, measured manner


Cast your vote!

Fri, 11/01/2013 - 14:16 | 4112586 MarsInScorpio
MarsInScorpio's picture

Many of you are very well connected - so I'm posting this idea on here in case you know some talent who can help stop Hillary with ridicule:


Hillary - the Orwellian Joker-noire


The Hillary face on the button entitled "Ready" that her PAC is selling is almost a caricature of the Joker. Some minor touching up, and you'd have it.

In addition, the lack of background makes it perfect to use in the 1984 scene from the Apple Super Bowl commercial with the face up on the screen.

Creative idea: I don't do this professionally, or I would: 1) Crate the Joker take-off on her face; 2) Do a merge of the Obama Joker face merging into hers, communicating that this is really just one Joker followed by another; 3) Place her face on the screen that everyone is looking at in the "1984" Apple Super Bowl commercial;

If you are good at video, then 4) Create a YouTube video of the transforming Obama to Hillary Joker face in motion; 5) Take that segment of the "1984" Apple Super Bowl commercial with all the people walking in, and put her up as the face on the screen - of course, post it to YouTube.

Now, send the links to either the art or the video, or both to every on-line news outlet you can think of - might as well start here, or with The Hill, since they are the ones who posted the t-shirt that will be the jump-off point for this idea.

If you are a graphics, or video artist, never forget the great publicity those who did up the Joker of Obama received - it is still viral to this day.

And don't forget the impact your art and video will make in putting Hillary into her proper perspective - an Orwellian Joker-noire.

If you don't do this type of art work yourself, please copy and paste this in an email to everyone you know who does do it.

To find the picture I referenced, go to readyforhillary followed by dot com / shop now / scroll down to the bottom of the page.

Please help us find someone to do the artwork - ridicule is amazingly effective.

Please take this creative suggestion seriously, and start Hillary’s campaign off as the Orwellian Joker-noire that it really is.

Fri, 11/01/2013 - 14:44 | 4112705 devo
devo's picture

Castles in the sky

Fri, 11/01/2013 - 15:21 | 4112907 jpc578
jpc578's picture

The Fed will do something. QE5, here we come!!!

Fri, 11/01/2013 - 15:38 | 4113011 polo007
polo007's picture

The QE money "printed" by the Fed has no credit multiplier. It is designed to be captured by the Federal Reserve Bank of New York via interest on excess reserves, which is higher than fed funds rate for a reason.

If the QE money is not lent in the inter-bank fed-funds market, as excess reserves used to be lent before there was interest paid on such balances, it does not multiply in a factional reserve banking system.

Both monetary velocity and the credit multiplier have been intentionally lowered by the very mechanics of QE. They will not rebound on their own. Simply put, both the credit multiplier and the velocity of money are a function of QE. The more the Fed does QE, the more they go down. (For more details on the mechanics of QE, see this missive.)

QE is a game of interest rates, not the quantity of money. It is a bit surreal to watch the mechanics of the U.S. Treasury borrowing excessively in order to keep the economy afloat; the Fed dominating the Treasury auctions in order to keep long-term interest rates subdued, after which, the Fed pays 25 basis points for its QE excess-reserve funding, only to take in the remaining coupon interest from its giant fixed-income portfolio, aka the Fed's balance sheet, and remit it back to the U.S. Treasury in the form of an $88.4 billion profit for 2012.

QE is the largest carry trade in the history of finance, the success of which will be known after it is completely unwound, which will not happen for a few years after Chairman Bernanke leaves. I believe that with QE, Chairman Bernanke tried to get the U.S. economy to re-leverage, or at least stop if from de-leveraging. Regrettably, I have to report I do not believe he has succeeded on that front.

The total leverage in the U.S. economy has begun to fall again, coming in at 345.5% at last count. Total leverage in the economy is simply the sum of all credit market instruments in the U.S., total debt if you will, divided by GDP. The total leverage in the economy doubled in the past 30 years and peaked at the onset of the financial crisis, after which we began a process of de-leveraging, or falling total leverage. The U.S. economy registered rising leverage in Q3 and Q4 of 2012 but has again begun to de-leverage in 2013.

In the grand scheme of things, this renewed de-leveraging may seem like a blip on a long-term chart, but I believe it is what keeps Ben Bernanke up at night, for if it continues, it will likely prove that QE under his tenure was a failure.

Another way to think of this rising-leverage ratio is that it takes ever-increasing amounts of debt to produce the same unit of GDP, where the level of total debt in the economy goes to the stratosphere, while GDP is subdued. That rising differential between total debt and GDP has been a source of prosperity for much of the past 30 years, and QE is a maneuver to get it to move in the "right" direction.

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