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Albert Edwards: The "Freddie Kruger-Like Nightmare" For Stocks Is Coming
The punchline from Albert Edwards latest note:
Tapering is tightening, which inevitably ends in recession, bailout and tears
Our warnings throughout last year that an unravelling of emerging markets (EM) was the final tweet of the canary in the coal mine have still not been taken on board. The ongoing EM debacle will be less contained than sub-prime ultimately proved to be. The simple fact is that US and global profits growth has now reached a tipping point and the unfolding EM crisis will push global profits and thereafter the global economy back into deep recession. Our thesis on how EM would be pushed to crisis was simple, especially as we saw close parallels with the 1997 Emerging Asia currency crisis. We saw yen weakness further undermining an already weak balance of payments situation in the emerging world as a direct replay of 1997. A strong dollar/weak yen environment is typically an incendiary combination for EM, and so it has proved once again. Having reached tipping point the yen will often rally strongly as it has now and as it did in May 1997. This may or may not delay the impending EM implosion for a few weeks. Indeed the Thai Baht, the first domino to fall in the Asian crisis, briefly rallied strongly (vs the US$) in early June 1997, reassuring investors just ahead of its ultimate collapse.
There has never been any shadow of doubt in my mind that tapering = tightening, and I marvel that the Fed convinced anyone otherwise. A Fed tightening cycle inevitably plays a key role in triggering the next crisis (see below). Plus ca change, hey?
- 1970 Recession/Penn Central Railroad
- 1974 Recession/Franklin National Bank
- 1980 Recession/First Penn/Latin America
- 1984 Continental Illinois Bank
- 1987 Black Monday
- 1990 Recession/S&L and banking crisis
- 1997 Asian currency collapse/Russian default/LTCM
- 2007 The Great Recession/Collapse of almost the entire global financial system
- 2014 Emerging Market collapse/deflation/recession/another banking collapse etc., etc.?
Additionaly, we have now made it all too clear that there is no such thing as a market anymore - there is a carry trade, manifsted typically by the level of the USDJPY - which is the ultimate driver of all risk. It is this trade that Edwards warns will no longer work as it results directly in EM collapse, as can be seen most recently as the source of the EM crisis of 1997.
And while the bulk of the note focuses on Edwards' take of Andrew Lapthorne's comments which we summarized before (see Refuting The Biggest "Recovery" Lies In Four Simple Charts), his conclusion is worth highlighting as well:
But the inevitable has occurred and fundamentals have caught up with the markets as they always eventually do. The recent slide in US equity prices has been entirely consistent with the profits outlook Andrew has been flagging for some months (see chart below).
The market has at last awoken from the dream it hoped would last forever ? you must have had one of those dreams which you hope you can get back to if you fall asleep again quickly. The pungent smell of coffee has now overwhelmed the hallucinatory vapours contained in QE. Commodities snapped out of their trance some two years ago and could not find their way back into that same dream-like state. Now it is equities turn.
The dire profits situation will only get worse as EM implodes and waves of deflation flow from Asia to overwhelm the fragile situation in the US and Europe.
... the slump in the recent ISM data may be the ?straw in the wind? of what is to come. Certainly the three-month change of the leading indicator has now turned down sharply ? even before the recent ISM data has been incorporated. We watch the unfolding EM crisis with increasing trepidation because we know how this story ends. We have been here before.
And even if the Fed resumes massive QE at some point as the world melts down, and markets desperately attempt their return to the dream trance, they will instead find themselves locked into a Freddie Kruger-like nightmare in which phase 3 of this secular bear market takes equity valuations down to levels not seen for a generation.
Pure poetry.
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"40% Overpriced"
The pic looks like Ted Nugget at his draft interview circa 1970
Wang Dang Sweet Poontang
No man, Stranglehold.
Interesting that they are only going back to 1970. This can be 1897, 1907, 1913, 1919. Even if the FED was not active, it's owner's always were.
One way or the other, so many shades of 1929 it is not funny. The most re-peaty rhyming in history it feels like.
China is germany, Japan is England, the US is of course still the US, NK is Italy?....axes are allied....
Incidentally, Mercury is retrograde, trade lightly, everything is likely to be mis-understood.
ori
http://aadivaahan.wordpress.com/2010/09/02/retrograde-mercury-pearls-of-...
Despite Opposition, John 'Old Yellow Stain' Boehner Continues Treasonous Acts
http://americandictators.blogspot.com/2014/02/despite-opposition-john-ol...
Leaders to consult in Iroquois Nation Tribal Counsel:
http://americandictators.blogspot.com/2014/02/despite-opposition-john-ol...
It really makes one wonder what we did wrong in our past life, to be dropped off on this planet under these conditions...
thank krugman hes been picken a fite with yall since his trillion$ coin didnt fly
Blotto, I like to look at this as a unique opportunity to fix some mistakes we've made in the last couple hundred years. Lets round up some banksters and a few political hacks............
Who brought the ropes?
Ted and the Mighty 10.
Have you ever actually listened to the lyrics of any of his songs? He's about as bright as my poodle. No, that slights my poodle.
He's no Anthrax, that's for certain. Follow me or die, bitchez!
Some people you just wonder how they can talk
"Freddie Kruger-Like Nightmare"
This market is the offspring of a corrupt mixture of blended Ben/Allen DNA spewed into a whore of a banking system!
And this is how it will be policed when the sheeple wake up to the fact they have been hoodwinked.
SkyNet is well on its way to becoming fully self-aware...
http://www.youtube.com/watch?v=krkJ6jcqBB4
DaddyO
Now that they have this technology worked out they can begin the depopulation operations. They don't even need aggressive, low IQ thugs anymore to carry out their debauchery.
I think we will be cared for at some level of comfort while we slowly die off.
Care to elaborate?
DaddyO
Other than the physical "labor" that can't be automated or virtualized (decreasing all the time), those people existing outside the "knowledge economy" are superfluous. Consequently, the superfluous are placated with all kinds of bestowed benefits. To a great extent, I believe the motivation to do this comes from the potential consequences of not doing it. I also believe that our masters are not, in fact, entirely monstrous, and they do not wish to see unnecessary suffering, even from a purely moral standpoint. However, I also believe that our masters are willing to allow "natural" scourges such as disease and war to run their courses, if necessary.
I acknowledge that there are many (perhaps most, 'round these parts) who would argue that automation does not reduce the need for labor. My only response to that contention is that I don't believe the evidence supports it.
I also do not believe that the future I describe is inevitable, but rather that it will exist through the actions, and perhaps more importantly, the in-actions of all of us.
Finally, I'm not convinced that the energy exists to support this future.
At this point, I think most who are awake want a reset.
As to the automation aspect of things, wasn't it to make our lives easier? Has it accomplished that end? I think not.
I made a handsome living in the factory automation business for a number of years. It does automate many menial jobs.
I contend that as long as the FED has the power of the press, they will continue to print to solemnify the masses.
This is the reason that the POTUS has pushed .gov benefits like he has. It serves two purposes, to grow his power and to placate the ensnared.
DaddyO
what kind of a world values a gravel company at 100x forward earns???????????
that was supposed to have a chart of VMC
#the same world that values a company with loses that are double it's revenue. or is the ratio 4:1?
This is all anyone needs to know to understand what is happening in the REAL economy. Velocity of M2 Money Stock (M2V) Bupkis.
Long cat food........
I am scared. I need Simon Black to tell me where its safe to live this month.
Cue to bitcoin bull rant
cue fonestar to give us daily updates about all the "MONEY ON THE SIDELINES" just waiting, WAITING to jump into a crypto currency, of unknown origin, with any number of competitors that may come along, that evades the IRS, whereby all your transactions are logged ~ FOREVER, and that requires more 'energy' to mine a unit of the currency than it takes to mine & process a bar of gold.
Definitely among a bunch of strangers with whom you have no cultural ties, thats for sure!
Funny you mention cat food as I also had to eat some Fancy Feast tuna puree for breakfast this morning. Since I just purchased my 1-series with fixed payments for 120 months as well as my shares of TWTR and GRPN underperforming recently I've had to tighten my belt somewhat. Good thing I've got stable part time employment at my local Wal-Mart to help me weather this happy confluence of events.
Did someone say "bailout"? Where is old Hank "tanks in the streets" Paulson these days anyway? Swinging from a lamppost I hope. Just trying to stay optimistic.
us tanks are being moved to europe .just a fyi , if that shows any light on things
From where to where? They are all over Germany anyways. Do you have a source/link?
Thanks.
just go to martin armstrong site , link wont paste here
Here is the link, http://armstrongeconomics.com/2014/02/03/american-tanks-returning-to-europe/
DaddyO
Thank you....
http://armstrongeconomics.com/2014/02/05/ukraine-becoming-the-real-focal...
The part about the US shipping oil to the EU is also interesting. I know the US is heavily involved with transferring fracking technology to Europe, as well.
OK, who is Archduke Franz Ferdinand? The lady with the weaved bread hair or the other local thug oligarch?
Yep, better get ahead of the curve this time around. Looks like Europe will be target central for WW3 starting in Ukraine this time around instead of Poland for WW2 and the Balkans for WW1.
Too much predicting of gloom and doom. Those who control price do not manage the market to follow the narrative. There seems to be a pretty good case for a market fall, the the question is will it precede (contributing to) or follow (being caused by) the "crisis". The way those managing the markets typically like to do it is to have the crisis precede the market collapse. That way they can "claim" that it was unforeseen and there was nothing that they could do ... all along knowing full well that they control price and not a free market.
Yes.
Nervous-making, it is...
Bullish? Robust? Twerkish?
Dow up more than 100 points....
trade deficit increases....
GM aint selling shit....
earnings misses everywhere....
320k more mother fuckers hit the unemploment roll and about to be getting foodstamps...
AND THE MOTHER FUCKING DOW IS UP 1OO FUCKING POINTS...
fucking bullshit......
All that freshly printed QE money has to go somewhere before its inflationary effects hit the rest of us plebs. The stock market is the natural magnet for it. Don't bend your brains about the illogic of the ups & downs. Just remember the end result which is coming. A greater and greater loss of purchasing power of the world's fiat currencies. Hold onto your physical assets and be patient. End of sermon.
"Hold onto your physical assets and be patient."
And try to focus the mind on pursuits that can produce a state of wonder and serenity.
http://www.youtube.com/watch?v=-IeD0xW9404
"I think that if I were required to spend the rest of my life on a desert island, and to listen to or play the music of any one composer during all that time, that composer would almost certainly be Bach. I really can't think of any other music which is so all-encompassing, which moves me so deeply and so consistently, and which, to use a rather imprecise word, is valuable beyond all of its skill and brilliance for something more meaningful than that -- its humanity." --Glenn Gould
Just wait until they forceably make you associate it with ultraviolence, my droog.
that was Beethoven, wendy (i mean carlos)
Fuck patience, I want to mine donor organs.
BTFD
/s
No free market. There, makes sense now?
Front run the Muppets is the ONLY game.
AND THE MOTHER FUCKING DOW IS UP 1OO FUCKING POINTS...
That's how it goes in the land of insanity.
Drop out of the system and pull your brain out of its pollution.
> Drop out of the system and pull your brain out of its pollution.
The only solution to the pollution. Personal general strike for as long as it takes. No excuses.
Yes, I am doing this. No, it's not easy. Nothing of any value is.
I've been waiting for the perfect time to enter the market, and I think this is it. I'm re-mortgaging the house, maxing out my credit cards, borrowing from my IRA, and I'm going all in to buy triple X-ETF call options on margin and bet that this thing goes up foreva!!!!
To someone's moon!!!!
The fed trading desk is working hard to make your smoke and mirrors function correctly.
Yes, DOW is up again, and so the wheel of corruption turneth. If I hadn't paid so much attention to ZH apocalyptic prognostications for the past two years, my portfolio would be up more than 20% right now. I'm a big loser for having believed that the world was on the verge of collapsing. But it hasn't... and it's not likely to happen any time soon.
ZH'ers need to come to grips with the fact that TPTB know that the entire system CANNOT be allowed to collapse because it's TBTF. Period. Why? Because those who have money will keep on making more money. This is why the markets are rigged. Those who have money, but are not yet convinced that they CANNOT lose on these rigged markets, well... tough luck, you lose. Keep on comforting yourselves and feeding yourselves the illusion that you will EVENTUALLY be right some day.
I've finally reached the conclusion that this bullshit can go on for a long, long time, so I've decided to ride the wave, as I should have if I hadn't fallen into this bullshit trap of constant doom and gloom. If and when the shit hits the fan, it won't matter anyway: we will all be screwed. In the meantime, why not be part of the winners instead of the whiners? The world as we know it could end tomorrow, or maybe not... maybe in ten, twenty years... or maybe not.
Does anyone else find it odd and twisted that all of the indicators of how the economy, global or otherwise, is measured by how much blood can be sucked out before it dies?
"It didn't die today. Bullish!"
Yup... It's a WORLD OF DEBT... and eventually it all needs to be cleared... period.
See Video Below "WORLD OF DEBT":
http://www.youtube.com/watch?v=99xsqxzJnXs
I like gloom, doom, and Freddy Krueger as much as the next guy, but I'm not buying it. In '97 much more of the EM debt was denominated in dollars, compared to today, when a lot of it is in local currency. History might rhyme, but it doesn't repeat.
Take a look of this. I think the BIS are suggesting EM foreign denominated debt surged in recent years.
http://www.telegraph.co.uk/finance/financialcrisis/10618015/Emerging-mar...
And to the extent it is LC debt that has been issued, isn't it the western hedge and pension funds that will be stuffed as EM currencies slump?
CNBC: Thomas Demark Calls For Risk of 60% Crash In S&P 500
Thomas Demark is calling that the next two - three days will be critical and if the markets go down they can unravel very quickly. If today's weak ADP report can be taken as any guidance the coming up Jobs Report can be weak as well. We think that his call is very extreme, but Taper Pause is becoming the reality with every sell off in the market. Thanks to Bernanke, Janet Yellen has her FED Chair Crisis right at the start of her reign. Gold is fighting the gravity and market manipulators at the $1270 level and once it will close above it the mother of short squeeze in Gold will arrive. http://sufiy.blogspot.co.uk/2014/02/cnbc-thomas-demark-calls-for-risk-of...
nobody wakes up from the matrix and there are no markets there is only old yeller
Well shit.
I wake up and see the DOW up +127 and happy talk about Coke "revolutionizing the beverage industry". WTF?
This whole damn thing is a big lie, but its got nine lives and a glossy coat.
What I want, is a gigantic tube snaking from Central Coke Headquarters to my McMansion, so that I can attach the tube to a special dispensary unit next to my bed, network-enabled, installed by the properly trained, licensed, and insured corporate service task forces, so that I get the freshest and downright ice-coldest possible product at the most opportune moment, which is during commercial breaks as I watch my favorite shows on my 50-inch TV, which is of course opposite my bed, and which I watch until my restless leg syndrome dies down and allows me to sleep around 12:30pm, usually after I've consumed huge amounts of prescription drugs, so that I can wake up and roll into the ensuite shower stall and douse myself with body wash, never taking my eyes off the TV, while fresh product gurgles at the ready in the manifolds of my beloved dispensary unit, to which I've magnetically affixed a picture of the Holy Mother.
+1. Reads like a mixture of Consumer Reports and Penthouse Forum.
Hahahahaha.
Coke. Now we're talkin productivity to drive the Chinese crazy baby.
Maybe he'll be right this time. He's been blabbering this for years.
Pat's or Geno's?
They both suck. Tourist traps. I would recommend Tony Luke's or any corner pizza place before them.
Altucher 20,000!
Gonna go buy more shiny archaic trinkets today
The ZH driven sentiment is so bearish again - that it's time for new ATHs. Either in February or in March.
And new lows in Gold and Silver entually too. Or at least test of the last lows.
AG, this is the "all is OK rebound". Wait until about the end of Feb. That is when things will get interesting. Wall Street taking care of the Muppets.
I think the employment number tomorrow is going to be bad...I think Obamacare is kicking in...and the retail crash is happening...could be scary..but they will blame it all on the weather...
Have no fear, no matter what happens TPTB have a full-proof plan to shift any and all blame and responsibility.
Which previous generation is he referring to? The worst crash in decades was 2000 only 13 years ago
fuck these markets!
These are NOT markets.
"""""And even if the Fed resumes massive QE at some point as the world melts down, and markets desperately attempt their return to the dream trance, they will instead find themselves locked into a Freddie Kruger-like nightmare in which phase 3 of this secular bear market takes equity valuations down to levels not seen for a generation."""""
WHY has nobody mentioned that the reduction in QE is absolutely meaningless, even if it was/is a truthful statement. EXAMPLE:
All the Big Banks have to do is "Invest" at 30 per 1, instead of 20 per 1, so the actual Invested amount might be more, at least the same ... excluding Jawbones
Lying is a habit now so the market will be artificially supported from somewhere. Count on it.
Cue WB7 for a Freddie Krugman caricature....
Let's blow this thing wide open.
Reality is a bitch.
Make it happen, already!
After the Federal Reserve failed to end bad mortgage lending, the nation suffered the economic crisis of 2008/09. Now, as the nation’s debt load grows, the Fed is pursuing policies that devalue your existing dollars in part by printing vast quantities of new dollars. In sum, it failed in its regulatory job and is now penalizing your dollars. Americans, on the hook for each dollar printed, have taken to ‘circulating’ the handouts below as a way to focus attention on the devaluation and the debt. ( See: The Financial Crisis Inquiry Report issued in 2011.)
http://thingstothinkby.com/wwu-2/
Favorability Ratings - Freddie Krueger 38%, US Congress 19%...
http://www.gordontlong.com/Macro_Analytics.htm
Utter twaddle.
Great word, twaddle. Right up there with Foppish...
This would require on to believe they are actually putting less money into the system instead of more. I think we all really know it is more, and will be more...forevermore.
The markets continue to rise till all short positions in the market are covered and the majority of traders move to the long side. Once this is done the market falls till all long positions are closed and short positions undertaken. Then rinse and repeat. The price mechanism has little to do with the actual demand, supply, fundamentals or state of the economy.
The stock, bond, commodity and currency exchanges have been reduced to gambling dens whereby the more powerful traders with deep pockets move the markets to maximize their own profits at the expense of the remaining not so powerful players. The big boys have enormous money power to move the markets in the direction which results in maximum profits for themselves. They effectively use the media to lure the other players in the market to a position where they would incur maximum loss.
www.marketoracle.co.uk/Article40231.html
So 'gambling dens' or 'markets' ...... can't be both.
What was that 1% mini-flash-crash I just saw in SPY? Stop hunt or bad quote?
3 year decline for the S&P down to 450.
Followed by 30 years of deflation, just like Japan.
Got your MyRA yet?
Read James Rickards The Currency Wars, last night. Excellent book
Reading Talebs Antifragile: Things that gain from disorder, today.
Have the US mint in Denver strike platinum/paladium 1 trillion dollar coins, 100 of them, have 100 trillion dollars, deposit them into the US Treasury, pay the 18 trillion in debt, pay the toobigtofail banks the interest owed on the debt, have about 69 trillion dollar coins to pay any future fiduciary obligations.
It can work.
I found a 1911 penny with a D on it for the Denver mint. The first year the mint struck coins.
It is my favorite penny.
Does old yellen get shot in the end?
Oh the market is going to crash. I can see why this wwarning is different from every single other warning for the last 5 years.