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Do You Believe In 'Margin' Miracles?

Tyler Durden's picture




 

"Priced for perfection" would seem an understatement after one glance at the astounding hockey-stick in margin-expansion expectations 'priced-into' the top 1500 US equities. One can't help but wonder, with a stagnating macro-economy and tapering Fed, just how bad the labor force participation rate will become as costs are cut to the bone marrow to enable this margin miracle to come true... and imagine what happens if the summer is hot and winter cold once again?!

 

 

Source: Morgan Stanley

 

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Sun, 05/11/2014 - 14:58 | 4748510 James_Cole
James_Cole's picture

 

if the summer is hot and winter cold once again?!

Consult your meteorologist, but first buy buy buy!

 

Sun, 05/11/2014 - 15:24 | 4748570 I am more equal...
I am more equal than others's picture

 

 

 

Glowbull market warming.....money heats up forming inflation. 

Fed made-up money heats way up forming hyper-inflation. 

Sun, 05/11/2014 - 17:13 | 4748854 Bear
Bear's picture

Who cares what the weather is ... Tuesday is coming

Sun, 05/11/2014 - 14:59 | 4748513 Schmuck Raker
Schmuck Raker's picture

"E", as in "no clue"?

Sun, 05/11/2014 - 15:03 | 4748520 Cognitive Dissonance
Cognitive Dissonance's picture

So what would the chart look like if it wasn't 'ex-financials'?

Sun, 05/11/2014 - 15:18 | 4748547 slightlyskeptical
slightlyskeptical's picture

Nice catch. i'm pretty sure it would be closer to historical norms.

Sun, 05/11/2014 - 15:29 | 4748583 disabledvet
disabledvet's picture

I'm tired if being Full Retard myself as well.

"We are what we read" and all I see is crap as far as "facts" vis a vis "news" anymore.

Apologize for my strident views but repeat the lie long enough on the internet and the only dope is the hapless reader.

Obviously don't even get me started on newspapers. Joseph Pulitzer is rolling over in his grave.

Talk about a waste of a tree...let alone paper.

Now pardon me while I go back to selling t-shirts.

Sun, 05/11/2014 - 15:57 | 4748651 Cognitive Dissonance
Cognitive Dissonance's picture

"I waited five years for the collapse and all I got was this stupid t-shirt."

Sun, 05/11/2014 - 17:50 | 4748912 rocker
rocker's picture

Being that this statement is about a different kind of margins, I should explain. This too should apply to stocks also.

I asked my advisor about real growth versus stock buy backs and companies squeezing what they can from wherever.

I also asked my tax man about the high margin players in stocks. This is not the first site to report it and stock margins.

But, the fact of the matter is, he said it's not valid on stock margins. At least with his clients. He sees hardly any on margin.

So, this "begs" for "two questions".  If margin players are that high, "who" are they and what are they buying or shorting.

It would seem to me that, if this group exist, they are not normal mainstreet players.

Which could explain why many stocks are either overvalued or undervalued. These extremes are real..........

Sun, 05/11/2014 - 15:28 | 4748576 orangegeek
orangegeek's picture

ctrl-alt-del

Sun, 05/11/2014 - 15:53 | 4748641 smoothie
smoothie's picture

OK guys, I'm new here, I have no idea what the rules are, I am a UK student, but I'm 37,

only recently I opened my eyes (metaphorically), and I saw some shit, that had never been apparent to me before, im working towards a masters in engineering right now, I have zero debt except my student loan, which I worry about, since the rules seem to change regularly, I know what you are gonna say, but hell wtf else am I gonna do to try and improve my "poor" ish, life.

i have the lion share of my money in ISA's 30k, which I honestly think is ripe for being raided at some point, especially since they lifted the amount by to a "much" higher £15,000, which again I think is pretty transparent to get people who have squirreled cash away, like I did, to say what the hell fire it in there, right before they confiscate it.!

I have 2 grand in physical gold, and about 1 grand in bit coin (I mined a fair bit of it a few years back but I threw in £700 @ 500 and down to current prices the average price was about 400), I bought the royal mail shit for 750, sure I made a buck, but I figure it might crash, but be ripe for a bail out at some point, so not all bad.

I've seen this pre NHS and cancer drug shit with astrazwnica and phizer, about to go down, and I'm thinking, should I pull the trigger on a buy for a piece of that then sell when its at the top of the !merger, or should I increase in gold and bitcoin, and let's be honest bitcoin volumes are down ready for an orchestrated crash to lower the price, then its gonna go ballistic.

So from a poor guys (wishing he wisney Scottish because of tptb in London who shit on us up here regularly) perspective, what the fuck do I do, I have about 1 grand left to move with to add to my disaster hedge against the cash in the isa's.

Oh yeah your probably gonna hate me, but I gave up my rented flat, to live with my grandmother who is 94, so I could !make it through uni rent free, and keep !y debt under control, she owns the house. I suppose I fit right into your model of the kids that are mooching or some shit, but I'm really trying to do the right thing by my family, and to try and save everyone's life savings to fight another day here, I'm not an economist or shit, I've done the 101 economics at uni, bit that is it folks.!

Help me out guys, its grim up here.!

Sun, 05/11/2014 - 17:25 | 4748884 Arthur Schopenhauer
Arthur Schopenhauer's picture

Smoothie, Read between the lines: The more you strive to educate yourself, the more you will realize how ignorant you have been.
The older you get, the more you will see others and offer them your advice, based on all the screw-ups you've experienced and learned from.
But just know this:they (others) will never listen.

Sun, 05/11/2014 - 17:56 | 4748952 jbvtme
jbvtme's picture

amen

Sun, 05/11/2014 - 18:15 | 4749007 Seer
Seer's picture

"But just know this:they (others) will never listen."

Sure seems that way... However, as a "convert" (Red Pill taker) I can say that I didn't get to be this way all by myself. It's really an issues of how much energy/effort you want to put into others' education. And, eventually one learns that DOING is the ultimate goal, so one ends up talking less and doing more. Maturation, path to wisdom: think; listen; speak out; DO.

Emphasis is on DO/DOING, as nothing speaks louder than setting an example.

The visible tree was once unseen as a mere seed.

To answer the [new] poster's question about what to do: There is NO single answer; BUT, base everything on the true fundamentals -Food, Shelter and Water- and the answers will be a lot easier to spot.

Sun, 05/11/2014 - 17:59 | 4748965 jbvtme
jbvtme's picture

if granny can still cook and do the laundry, i'd say you're on to something

Sun, 05/11/2014 - 21:54 | 4749600 Seer
Seer's picture

But will anyone hire her?  And when those jobs are paying $15/hr?

Sun, 05/11/2014 - 23:30 | 4749778 smoothie
smoothie's picture

Its me that does the fucking cooking, and it's me that has to deal with this shit while every cunt else on the house is watching xfactor, and doesn't want to even consider that it might be true, because their whole fucking reality might come crashing down at their feet.

You yourself must realise that the burden of (albeit limited)knowledge is daunting for some people, 

Sorry I don't mean to shout or shit, but please don't patronise me!

We were all members of the same species inhabiting the same planet, with no way off out or under that I am aware of, and if its real for me then its real for you too, in fact its also real for all the people who don't think its real! 

I once saw an interview on TV with a guy who went to the moon, can't mind who, probs Mr A. He said he wishes he could take the presidents of all the major countries up there, just to make them look amd realise, that's it, its beautiful from here, everything that ever happened since before you were even thought of happened there for Christ sake. Just look you fucking maniac. Its all we've got.!

Sun, 05/11/2014 - 23:53 | 4749823 smoothie
smoothie's picture

Shit man, I'm sorry.

Sun, 05/11/2014 - 18:02 | 4748971 JerseyJoe
JerseyJoe's picture

Hey Smoothie - I don't know what to tell you.  I read this stuff to see the bathing suit ads.  Click once and there they are...excellent for the libdo and the heart too they say.  Every time I wander by - there they are.  LOL.  

(Really though, I have lost faith here in the States when they elected the commie for a second term. I mean for Christ sakes - one term should have been enough to wake the jackasses the F up.    Maybe Australia?   Good Luck - I am at a loss myself.  All the major Central banks are printing...buy gold and silver on the dips. Silver is about or below the cost of production...they are giving it away.)  

BTW I bet Draghi gets backed into QE by July.  

Sun, 05/11/2014 - 21:01 | 4749455 smoothie
smoothie's picture

I am on the gold site as we speak lads, I have some paper on it, it's 250quid I'm gonna convert it tonight, the £800 goes on a Britannia and the 200 on silvshock, i'm gonna actually fire more into silver.

I didn't catch the pearl about the account raids coming, i figure that WILL be a run to gold for the rich! which is total bullshit I just locked up five grand for three years on penalty, I was about to do the same tomorrow on 15! It will be instant access now, I'm not gonna mention that I haven't locked it down for two years in a, "no access" but if the shit hits the fan, and I really feel it is gonna right after the independence vote or after the 2015 general, possibly before that when the Germans get euro out the way, which is right found the corner, I spotted the printing, which is bad for its value against gold and btc right! I have to trade euro for btc so I'm gonna increase that before they print, three day lag on the transfer, international, and six fucking quid for the privilege of being asked all about what it's for, I kinda noticed "they always ask"!

I've been studying for my advanced control maths exam in the library with all the old LSD books, if I'm honest I think that was what opened my eyes, when your a reader, you read! I have a long story of ups and downs! I appreciate the advice,

I have a hell of a time with my family, its all game shows, and .gov newspapers, buttering them up for the latest shock, that's not really a shock, sarc.

I mean seriously guys I'm working on some serious shit, and I felt like yeah man I'm getting somewhere, cash was looking good, I now see tho "I have lots of the stuff"! I'm thinking good career, 31,000 quid loan at the end of it BTW! Oh and BTW we might want to CONFISCATE that cash you saved because you are endebted to us you see, and "you have to pay your debts, just like everyone else," we meant it when we said "we are all in it together" which is now an embedded suggestion, backed by heard psychology...

I have a bag guys, now you say gns, there are things that don't run out of bllts! Although the point is well taken.

I'm sorry if etiquette is out the window with me, I'm new, and with what I've been seeing in the dark corners, I am actually a little worried! There is some major shit going down not too far away just now, and its not really making it past xfactor and Eurovision. For most people. My ex ex was on the phone last night talking about that bearded bloke, I'm like yeah sure Eurovision.

But my ex who was Romanian she could see the shit, the conversations were always a bit, different! I haven't spoken to her for a month now, we fell out "ironically" over some Nigerians who are in my uni class. I mean what the absolute fuck, you could not make this shit up!

The worst thing about all this shit is, it is all SO true, its not even fucking funny!

Sun, 05/11/2014 - 15:54 | 4748642 sidiji
sidiji's picture

Eh? what's with the dotted line? and the 'E'? Looks like margins have collapsed 50% since 2012 or am I missing something?

Sun, 05/11/2014 - 16:04 | 4748674 Seer
Seer's picture

"Eh? what's with the dotted line?"

Unicorn turds.

Sun, 05/11/2014 - 16:02 | 4748667 AccreditedEYE
AccreditedEYE's picture

Where's the long-term VIX chart?

Sun, 05/11/2014 - 16:04 | 4748676 Seer
Seer's picture

I've been warning about margin compression for years now ("ecnomies of scale in reverse").  Looks like I've been wrong. </sarc>

Sun, 05/11/2014 - 16:07 | 4748683 Milton Waddams
Milton Waddams's picture

little known fact; part of the MS trainee program includes a heavy intake of LSD. Right, Phil?

Sun, 05/11/2014 - 16:36 | 4748749 db51
db51's picture

Hot Summer, Cold Winter?   I can tell you exactly the outcome of that fucking scenario.  Stocks go instant moonshoot and the talking heads start their pent up demand mantra....time to buy buy buy.    The labor participation rate will be about 9 of ten people on Disability or Welfare....the one in ten will include the .01% ers....which means that  .99 of us will be taxed at a rate of 100% of our income, and the balance of the shortfall will be made up by Yellin cranking hard....stroking the printing presses like a nymphomaniac whore that hasn't turned a trick in 6 months.....now that will be some pumping, let me tell you.   In the end, it's all good, the ponzi goes on forever and the music never stops.

Sun, 05/11/2014 - 21:35 | 4749117 dragoneyes74
dragoneyes74's picture

The only thing I got right last week was shrinking my time frame down to day trading mode and keeping it light. I hit a bunch of singles, gave back most of my open profits in bonds, and avoided trouble in gold and the dollar. I'm pretty lost and confused at the moment, so I'll stick with keeping it light and hitting for singles until a fat pitch comes down the middle.

I was unavailable to trade Thursday morning, but that Euro stop run reversal is a textbook example of my favorite trade. If all you did was trade those the ten or so times they happen every year, you could make a living just doing that b/c you can get so aggressive without much risk since you shouldn't see a tick of red. The problem is you have to be available when it happens. Because I missed it on Thursday, I kept it light and grabbed a slice on Friday but got out b/c it's oversold and sitting on a trendline. Since there was follow through on Friday and high volume on Thursday, I'm inclined to think it might see 1.34 or even 1.3250, but I need to see a good bounce, or wait for it to close below last week's low, and I'm likely to just look for singles and hope one turns into extra bases.

All the hope I had in gold kinda got crushed on Wed. It looks heavy now and seems to be consolidating near the lows of that down move, which typically means more to come. But I have no confidence in this either, so I'll be looking for short-term trades. If gold loses the $1265 low, it's probably in big trouble again. If the long side doesn't take it over $1314 soon, why should I think they'll have the strength to renew a charge from the low $1200s as the short side gains momentum? It's make or break time. I'm not interested in the long side unless it breaks and holds $1331.

The Euro stop run reversal is exactly what I'm hoping for in the ES and YM. It should be noted that the Large Specs in the ES went net short the previous week and are now net short -61K contracts, which means as a trader group they are more positioned to profit from the downside. Unfortunately, that doesn't guarantee anything or I'd be all-in short and just wait it out. But it is promising and shows a significant number of large traders are quietly shorting this market. This narrow range trading might be a setup to get weak hands short to build the stops above the highs. It also increases weak hands long, which will cause an avalanche of selling if price breaks thru this narrow range to the downside. The big money can move the market at will, so their absence is notable. The question was are they accumulating a long position or a short position. The COT report clearly shows as a group they are going short. Is there enough commitment on the long side to overcome that and hold new highs? The odds are tilting toward no, but as any trader knows, anything can happen at any moment, so it's not like it's impossible. I'm hitting for singles and waiting for the reversal.

Bonds took most of my open profits, which isn't much fun. How did the gold algo get in the bond market? I'm willing to miss out on this unless it comes back to around 134. In regards to a stock market reversal, it's not helpful that bonds slowed down, and the VIX isn't scared, but both of these should catch a strong bid if it happens. I don't think they have to lead to the point that it's telegraphed completely. We're not too far away from an answer, but without many news events coming up, I wonder how long we can go sideways.

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