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What If?

Tyler Durden's picture




 

The current rally off the 2009 lows is echoing rather strongly the surge off the 1982 lows and lining up uncomfortably close to the Black Monday Crash that took the S&P 500 down over 20% in 1987. Of course, it's always different this time; but the market's confidence that the Fed has your back and that computers are there to help not hinder leaves us with an uncomfortable feeling of deja vu all over again.

 

Away from the pure chart analog of human emotion, as the fed notes,

The macroeconomic outlook during the months leading up to the crash had become somewhat less certain.

 

Interest rates were rising globally.

 

A growing U.S. trade de?cit and decline in the value of the dollar were leading to concerns about in?ation and..

 

the need for higher interest rates in the U.S. as well.

 

Alan Greenspan assumed the role of Federal Reserve Chairman in August 1987, just a few months before the crash. (new Fed heads are always tested early)

Check, check, check (today), check, and check.

As Time summed up so well the 'coincidences'...

...all panics are essentially made of the same stuff. No matter how much the Street changes, there will always be a tug of war between overconfident traders armed with new hedging mechanisms and the regulators tasked with keeping them in check. Increasingly, humans will struggle with how to deploy computers to make markets more efficient without having those computers hijack the process. And central banks will walk a tightrope between protecting the public from economic calamity and distorting natural market mechanisms.

 

Sure, nobody will ever accuse Wall Street of being overly poetic, but even this industry full of hard-nosed capitalist does, on occasion, rhyme.

 

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Fri, 04/04/2014 - 10:10 | 4624707 JJSF
Fri, 04/04/2014 - 10:12 | 4624715 dow jones 20000
dow jones 20000's picture

dude linking to your blog gets real old real quick

Fri, 04/04/2014 - 10:13 | 4624716 Badabing
Badabing's picture

That can’t happen anymore they got the numbers fudged.

Soon we’ll be eating simulated food!

Fri, 04/04/2014 - 10:15 | 4624724 derek_vineyard
derek_vineyard's picture

black monday was an awesome BTFD dip day

Fri, 04/04/2014 - 11:07 | 4624886 eclectic syncretist
eclectic syncretist's picture

Yessir!  Tell you what, there's an awful lot of churn going on right now, and the timing makes it more interesting than usual.  I'm wondering if I shouldn't be thinking about putting out a short on the SPY shortly.

Fri, 04/04/2014 - 11:21 | 4624933 Muddy1
Muddy1's picture

Yeah, BS on this article.  There was a lot of Hoopla about how the market was lining up with 1929, and Jan. 14, or around then the market was going to collapse.  IT DIDN'T.  Here we go again.

Fri, 04/04/2014 - 13:57 | 4625548 Say What Again
Say What Again's picture

Do I need to wait until Oct to go short?

Fri, 04/04/2014 - 11:40 | 4625003 Angelo Misterioso
Angelo Misterioso's picture

i bought some Digital Equipment on that crash - remember that firm? everyone loved it & the ceo was a genius..hahah....think i held it for a week...that was a high frequency trade back then!!

Fri, 04/04/2014 - 10:15 | 4624725 VD
VD's picture

Tylerz back then the markets were nowhere as rigged as today....as such 20% is simply not even a true correction here........with the S&P500 way over 2x fundamentals (sans QE).....

Fri, 04/04/2014 - 11:00 | 4624864 moneybots
moneybots's picture

".as such 20% is simply not even a true correction here......"

 

In 1987 the market crashed 22% in one day.  That does not include the previuous decline from the 1987 peak.

The Venezuelan market was up some 300% last year.  What would be a true correction of that market?  If they keep hyperinflating, it will be up what, another 300% this year?

Fri, 04/04/2014 - 11:03 | 4624870 VD
VD's picture

price discovery is no longer....

Fri, 04/04/2014 - 12:29 | 4625207 RaceToTheBottom
RaceToTheBottom's picture

Debased Accounting is doing its part, too.

Reality is for people who cannot handle the stockmarket.

Fri, 04/04/2014 - 10:16 | 4624727 zerozulu
zerozulu's picture

This time it will be different.

Fri, 04/04/2014 - 10:18 | 4624731 zerozulu
zerozulu's picture

China and Russia, never been like this before, ever.

Fri, 04/04/2014 - 10:39 | 4624767 Dr. Engali
Dr. Engali's picture

dupe

Fri, 04/04/2014 - 10:38 | 4624787 Dr. Engali
Dr. Engali's picture

Uhmm.. I'm pretty sure that stuff on the store shelves is already simulated food.

Fri, 04/04/2014 - 10:38 | 4624789 wallstreetapost...
wallstreetaposteriori's picture

Never going to happen.... we 3D print S&P points today.... manufactured!

Fri, 04/04/2014 - 14:47 | 4625783 Iam_Silverman
Iam_Silverman's picture

"we 3D print S&P points today.... manufactured!"

Woo Hoo!  Big print for the manufacturing ISM numbers next week.  Bullish!

Fri, 04/04/2014 - 10:15 | 4624723 Two-bits
Two-bits's picture

This blog pimp is working overtime.

Fri, 04/04/2014 - 10:30 | 4624762 Dr. Engali
Dr. Engali's picture

This account is almost four years old with it's first comment this March. This spammer needs to hit the road.

 

http://www.zerohedge.com/search/user_comments?name=jjsf

Fri, 04/04/2014 - 11:04 | 4624872 Van Halen
Van Halen's picture

There'll be no crash of any kind until the Democrats are either safely in office for the 2014 Fall elections OR they have lost huge and figure a crash then won't matter because the American people will forget by 2016.

Fri, 04/04/2014 - 10:11 | 4624714 Seasmoke
Seasmoke's picture

Not If. But When !!

Fri, 04/04/2014 - 10:14 | 4624720 HRamos_3
HRamos_3's picture

Bahbullish, because weather.

Fri, 04/04/2014 - 10:14 | 4624721 spastic_colon
spastic_colon's picture

maybe someone with the tools should do an investigation as to why the indexes are actually up today with several weighted componenets down heavily......that is where the HFT game is being played...arbing the index weights

Fri, 04/04/2014 - 10:59 | 4624846 eclectic syncretist
eclectic syncretist's picture

back in 1987 "program trading" was the scapegoat for the crash.  Maybe this time around the HFTs will take er' down before they turn out the lights and leave the building.

But in 1987 there was another catalyst for the steep sell-off.  Over the weekend prior James Baker, who I believe was then the Sec. of the Treasury, went on TV playing tough guy and saying he was prepared to "let the dollar go" or drop in value precipitously.  I don't remember how much the dollar dropped, but the market dropped like there was no bottom in sight.

Fri, 04/04/2014 - 10:15 | 4624722 Dr. Venkman
Dr. Venkman's picture

Just an analouge boy in a digital world.

Fri, 04/04/2014 - 10:16 | 4624726 101 years and c...
101 years and counting's picture

wow...how many of these analogs have we seen over the years?????

Fri, 04/04/2014 - 10:19 | 4624735 fonzannoon
fonzannoon's picture

I don't know why i even bother with this anymore but ZH has got to be at a crossroads right now as the "it's flow, not stock" theory seems to be shown to be the reverse a little moar each day. 

Fri, 04/04/2014 - 10:57 | 4624850 tarsubil
tarsubil's picture

This cannot continue as is. It is like a cocaine addict that has been up for 3 days straight. Sooner or later all the blow in the world won't keep him going.

Fri, 04/04/2014 - 10:59 | 4624861 fonzannoon
fonzannoon's picture

That comment has been said once a week on here for 5 years running

Fri, 04/04/2014 - 11:12 | 4624904 Van Halen
Van Halen's picture

"That comment has been said once a week on here for 5 years running"

Agreed. But we're seeing a mass lie on how good things are being perpetuated by a media, banking, entertainment, and political alliance the likes of which we have never seen. I believe that in the past, at least one of those groups would stand up and tell the truth, leading to a harsh dose of sudden reality. But now they're all in on it together. They can keep this thing going a while longer. But when it does crash, it may be the worst ever.

Fri, 04/04/2014 - 14:17 | 4625623 tarsubil
tarsubil's picture

Yeap. It probably will be when we start saying that the market is permanently fixed by the Fed that it will implode. All we have to do is buy the all time high and it is sure to implode.

Fri, 04/04/2014 - 11:10 | 4624896 Spastica Rex
Spastica Rex's picture

I don't think the cocaine analogy fits.

The makets are abstractions, models whose meanings are evolving (devolving) all the time. The abstractions no longer represent the economic "health" of the greater social body - maybe they never did.

Fri, 04/04/2014 - 14:22 | 4625641 tarsubil
tarsubil's picture

Yeah. The market may simply not be in any form real like a coke head's body is real. Perhaps your comment below better defines the reality. I dunno. I just think a credit collapse has to happen but maybe not.

Fri, 04/04/2014 - 10:22 | 4624740 Dr. Engali
Dr. Engali's picture

"And central banks will walk a tightrope between protecting the public from economic calamity and distorting market mechanisms?"

 

WTF? These markets are so distorted that there is no going back without economic calamity. Need I remind you that the Spanish bonds are trading at par with U.S treasuries? It doesn't get much more distorted than that.

Fri, 04/04/2014 - 12:46 | 4625279 RaceToTheBottom
RaceToTheBottom's picture

When the markets correct and the crash occurs, there will be an overshoot, especially since the "market growth" has been so concentrated among a relatively few players.

The only remaining question is "can a stock market go negative"?

Fri, 04/04/2014 - 14:53 | 4625819 Iam_Silverman
Iam_Silverman's picture

"The only remaining question is "can a stock market go negative"?"

Hmmmm, interesting question.  How about if it were re-worded as such?:

"Can a stock market denominated in $US go negative in comparison to another currency, or a commodity (such as PM's) not priced in $US?"

In that case, I would say definitely maybe, sorta.  How quickly would the other indexes decouple then?

Fri, 04/04/2014 - 10:25 | 4624743 Milton Waddams
Milton Waddams's picture

https://www.youtube.com/watch?v=XFn1G2goDQw

 

Fast forward to 3:33 -- https://www.youtube.com/watch?v=Lm_4j-_Dnwc

"Steve you mention that Wall Streets tolerance was not unlimited in these economic areas. The old story is with a mule you start hitting him with a two by four to get his attention. Do we have the government's attention?"

 

 

Fri, 04/04/2014 - 10:23 | 4624749 Spastica Rex
Spastica Rex's picture

The markets will go up indefinitely.

My living standards will go down indefinitely.

I've come to terms with this.

Fri, 04/04/2014 - 10:27 | 4624754 madbraz
madbraz's picture

Finally a chart used to compare across different times that actually has changes in the vertical axis that have similar degrees of acceleration.

Fri, 04/04/2014 - 10:29 | 4624760 soopy
soopy's picture

Keep trying.

Fri, 04/04/2014 - 10:29 | 4624761 buzzsaw99
buzzsaw99's picture

if the market was down 20% yellen herself would be down in the pits buying twitter

Fri, 04/04/2014 - 10:30 | 4624764 LostPolarBear
LostPolarBear's picture

After the circuit breakers kicked in several days in a row, they would just shut down the markets for a few weeks.

 

Fri, 04/04/2014 - 10:33 | 4624770 adr
adr's picture

The correlation is still 1929 with 1999 being the peak. The US entered a depression after the dotcom crash and is still falling deeper into the crack. Over $1 trillion per year in funny money since 1999 has been able to keep the party going, but only for fewer people each year.

In 1999 the average starting salary in my profession with a degree from the school I went to was $65k, now it is $28k. In 1999 I could buy a home in the neighborhood I grew up in fro $200k. Now the homes are $375k even after the 2008 property crash, was over $450k in 2006. Gas was $1.15, milk was $1.75, ground beef was rarely over $2.75lb. The base charge for natural gas was $5 a month, now it is $30. Everything was cheaper, even high speed internet. I paid $25 a month for 1.5mb DSL. Now it is $45 a month for 4MB cable that ha slower average speeds than my old DSL from 1999, thanks Netflix.

$65k in 1999 was a lot of money, and that was just the starting salary. $28k today is living in poverty, you can make double that just going on welfare. If you want a family you can barely make it on $65k.

That is the definition of a depression. Even working you might not be able to make ends meet. The stock market might be a a record high, but if you can't even make your base bill payments, how are you supposed to enjoy it?

Fri, 04/04/2014 - 10:54 | 4624840 WSP
WSP's picture

That is "Why" the stock market is at record highs----because via the printing press the criminal off-shore banks have "paid" corporations to screw the middle class by raising prices and reducing wages.

This is all an end game by the criminal off-shore banks that run the world to improverish what little was left of free choice.  Once everyone in Amerika is improverished all we will have left is a global elite---it will be our job to slave away to build their elysium and life extension technologies.  Those of us that get out of line will be terminated.

Welcome to hell!

Fri, 04/04/2014 - 17:55 | 4626576 trader1
trader1's picture

that scenario doesn't sound too bad for employment prospects...who would say no to constructing interstellar aircraft and parallel worlds? 

Fri, 04/04/2014 - 11:17 | 4624920 BandGap
BandGap's picture

Tell you what, too. It was right about the 1999-2000 era that we were sold big time that the stock market was a reflection of the economic times. It was an all-out, fast talking blitz that had everyone all in. The residual of all these bubbles is that people bought into the casinos idea of "winning", even when the games kept taking.

I believe beasts like Fartomolo and Cramer were born from this era. Add in Kudlow and the srest of that gang. The finance channels became entertainment. We placed our bets and watched the outcomes. All telling us that no matter what, if the stock market is doing well things are fine.

Now back to Dancing With the Stars.

Fri, 04/04/2014 - 10:35 | 4624776 WSP
WSP's picture

The markets will NEVER go down again.    Our great masters, the criminal off-shore banks that run the world, along with our Kleptocratic criminal friends in government will make sure that the market only goes up, because we like it when the market "goes up".  We don't care why it "goes up", we just want it to "go up".  Why?  Cuz we like it when it "goes up".  Are we stupid, ignorant fools?  Yes.  Are we dumbed down sheeple incapable of reading a balance sheet and financial statement?  Yes.   Does any of it matter?  No. 

The funniest part in all of this is that the dumb people---the ones that do not understand finance and economics get rewareded while those of us who can read a balance sheet and financial statement get punished.  We get punished by being intelligent by understanding the criminal system.  Those who skipped Economics 101 or were sleeping in Finance 101 are laughing all the way to the bank.  IN the "New America" it pays to be dumb---to be a sheeple.  As long as you worship the criminal off-shore banks and their kleptocratic enforcers in government you are rewarded.  Ask no questions, just BUY worthless pieces of stock that is manipulated by all sorts of criminals with fiat pieces of paper that is printed out of thin air. 

You cannot make this shit up---Amerika truly is a dystopian nightmare----extend and pretend and everything will be just fine...any and all problems can be solved with fiat paper and propaganda!

 

Fri, 04/04/2014 - 18:00 | 4626592 trader1
trader1's picture

stop complaining and join the "i'm with stupid" party. 

Fri, 04/04/2014 - 10:38 | 4624788 PlusTic
PlusTic's picture

Dude, STOP IT!  It's a MANIPULATION with infinte amounts fo FIAT behind it...it's NEVER gunna stop

Fri, 04/04/2014 - 11:19 | 4624928 BandGap
BandGap's picture

WRONG. THE FIAT MANTLE WILL BE PASSED ON.

Keep in mind that what helps us "win" means someone else on the planet "loses". This cannot go on forever. I suspect the game has already started, maybe the second half.

Fri, 04/04/2014 - 12:25 | 4625175 thecoloredsky
thecoloredsky's picture

Did somebody say halftime?

 

It's halftime in America, too. People are out of work and they're hurting. And they're all wondering what they're going to do to make a comeback. And we're all scared, because this isn't a game.

The people of Detroit know a little something about this. They almost lost everything. But we all pulled together, now Motor City is fighting again.

I've seen a lot of tough eras, a lot of downturns in my life. And, times when we didn't understand each other. It seems like we've lost our heart at times. When the fog of division, discord, and blame made it hard to see what lies ahead.

But after those trials, we all rallied around what was right, and acted as one. Because that's what we do. We find a way through tough times, and if we can't find a way, then we'll make one.

All that matters now is what's ahead. How do we come from behind? How do we come together? And, how do we win?

Detroit's showing us it can be done. And, what's true about them is true about all of us.

This country can't be knocked out with one punch. We get right back up again and when we do the world is going to hear the roar of our engines.

 

Yeah, it's halftime America. And, our second half is about to begin.

-Clint Eastwood

Fri, 04/04/2014 - 10:42 | 4624800 Bearwagon
Bearwagon's picture

What if?! Good things will happen! Many, many very good things!

Fri, 04/04/2014 - 10:44 | 4624806 El Hosel
El Hosel's picture

.... Yeah, Butt, were stocks "cheap" back then too? 

Fri, 04/04/2014 - 10:47 | 4624808 drinkin koolaid
drinkin koolaid's picture

WTF. There is absolutely no comparison. MAYBE this fall, but no way is the market ready for a massive selloff now. Having said that, yes, the leaders off of the Oct. 2011 low are technically broken. Those are the beginnings. Major tops are PROCESSES. They take time. Be patient. Just as is this major bottom in gold going to also take many more months of rallies and reaction before the blast off.

Fri, 04/04/2014 - 10:46 | 4624815 Global Hunter
Global Hunter's picture

No I don't think so. Now illegal for stock markets to go down.

Fri, 04/04/2014 - 10:52 | 4624822 CaptainSpaulding
CaptainSpaulding's picture

If.. Pink Floyd

If I were a swan, I'd be gone.
If I were a train, I'd be late.
And if I were a good man, I'd talk with you more often than I do.
If I were to sleep, I could dream.
If I were afraid, I could hide.
If I go insane, please don't put your wires in my brain.
If I were the moon, I'd be cool.
If I were a rule, I would bend.
If I were a good man, I'd understand the spaces between friends.
If I were alone, I would cry.
And if I were with you, I'd be home and dry.
And if I go insane, will you still let me join in with the game?
If I were a swan, I'd be gone.
If I were a train, I'd be late again.
If I were a good man, I'd talk to you more often than I do.   
Fri, 04/04/2014 - 11:01 | 4624866 drinkin koolaid
drinkin koolaid's picture

Roger Waters is awesome, but what's your point?

Fri, 04/04/2014 - 11:18 | 4624925 Ban KKiller
Ban KKiller's picture

Headphones, weed and PF. How to deal with it all...

Fri, 04/04/2014 - 13:29 | 4625419 elwind45
elwind45's picture

And nobody hurts the children anymore

Fri, 04/04/2014 - 10:49 | 4624827 Ban KKiller
Ban KKiller's picture

History is for suckers? 

Printing more paper seems like a great idea.

Thanks, and hold the facts to yourselves!

Idiot signing out...

Fri, 04/04/2014 - 10:56 | 4624841 drinkin koolaid
drinkin koolaid's picture

Grub Hub - GRUB. Another IPO to make the Nazcrap even crappier. This country is so fucked up.

Fri, 04/04/2014 - 11:04 | 4624873 anefarious1
anefarious1's picture

Seems to me the 1995 - 2000 market rally is also very similiar. The S&P500 tripled during that time. It lasted about 5 years and 3 months (not more) so I believe, based on that, we can rally to 2,000 on the S&P500 until early June. At that point it will look exactly like the year 2000 bust.

Fri, 04/04/2014 - 11:06 | 4624885 mattgallis
mattgallis's picture

This is the dumbest chart overlay i've seen zerohedge post in awhile.

Fri, 04/04/2014 - 11:12 | 4624906 El Hosel
El Hosel's picture

Don't look now but there is some serious selling of the latest ATH.

Fri, 04/04/2014 - 11:12 | 4624908 GrinandBearit
GrinandBearit's picture

I'm banking on SPX 1929 (year of the great crash) as the top-tick high, just like 666 was the low.

TPTB love to play games like that.

Fri, 04/04/2014 - 11:14 | 4624914 Yen Cross
Yen Cross's picture

       It looks like Nasdark is covering longs before earnings start next week, and we get to see all the baffle with B.S. revisions.

  Nasdark 100    3,590.90    3,637.58    3,663.70    3,589.40    -46.68    -1.28%   

Fri, 04/04/2014 - 12:08 | 4625106 belgtrader
belgtrader's picture

Not to whine here but didn't you say the same about the 1929 crash which should've happened.... months ago now? There will always be some historical chart which "kind of" looks similar but honestly how can you compare the s&p from decades ago to the s&p today? And yes in the end you will be correct but that's just because you can keep making up new dates and new comparisons, just doesn't look too professional honestly...

I totally agree with the fact that current valuations are a pure joke but posting some graph every few months acting like Nostradamus really won't give you any credit if you get it right the 37th time you try.

Fri, 04/04/2014 - 14:46 | 4625772 pn17
pn17's picture

edit: sorry double post.

Fri, 04/04/2014 - 14:45 | 4625774 pn17
pn17's picture

I think a crash (if it could even happen) today would be much more devastating. Are algos even programmed to deal with the market down more than a few percent? Who knows what they would do.

Fri, 04/04/2014 - 16:43 | 4626371 AdvancingTime
AdvancingTime's picture

The biggest problem I see is it would collapse a slew of derivatives it now appears the main goal of QE may have been to hold up the underlying value of assets that feed into and support the massive derivative market more than to help the economy. QE has up to now stopped an implosion of derivatives and the resulting contagion and shock that would have spread throughout the financial system.

Paul Wilmott from Oxford University estimates the derivatives market at $1.2 quadrillion, to put that in perspective it is about 20 times the size of the world economy. The point of the article below is to call attention to the insanity of derivatives as an instrument or tool to add stability to our financial system. By stacking risk upon risk and transferring it off to another party who may not be able to preform you do not increase stability.

http://brucewilds.blogspot.com/2014/03/derivatives-house-of-cards.html

Fri, 04/04/2014 - 16:36 | 4626348 AdvancingTime
AdvancingTime's picture

I have been trying to develop a scenario for a market crash that would be different than anything most traders expect including a reasonable map to such a situation. I contend we have never recovered from the Great Recession. By printing money, imploding interest rates, and exploding the Federal Governments deficit we have only masked and delayed the "big one".

Most investors think that even if things go downhill fast that they will get out of the markets. But what if it hits like the flash crash on steroids? We know that can't happen because circuit breakers have been put in place to arrest panic style moves, but imagine a market that falls, trade is halted, and the market simply does not reopen for days, or even weeks. More on why it may be different this time in the article below,

http://brucewilds.blogspot.com/2013/01/flash-crash-on-steroids.html

Fri, 04/04/2014 - 16:50 | 4626391 geminiRX
geminiRX's picture

Impossible 'cause M.A. says the highs will be next summer and we can now expect a round of corporate share buybacks. And also gold will see continued new lows cause last week failed to hold 1307.

Fri, 04/04/2014 - 17:56 | 4626549 Emergency Ward
Emergency Ward's picture

I can't find the rhyme in all my reason
Lost sense of time and all seasons
Feel I've been beaten down
By the words of men who have no grounds
Can't sleep beneath the trees of wisdom
When your ax has cut the roots that feed them
Forked tongues in bitter mouths
Can drive a man to bleed from inside out

What if you did?
What if you lied?
What if I avenge?
What if eye for an eye?

-- Creed, "What If" from Human Clay album

.....best enjoyed at level 11 on a heavy-duty, crony-capitalist-grade hi-fi system.....vinyl disc if you are lucky enough to have it......

Do NOT follow this link or you will be banned from the site!