Deutsche Warns Markets Have Left The "Complacency" Phase, Have Entered Full Blown "Mania"

Tyler Durden's picture


With a closing P/E ratio over 17 and a VIX under 11, Deutsche Bank's David Bianco is sticking with his cautious call for the summer. Their preferred measure of equity market emotions is the price-to-earnings ratio divided by the VIX. As of Friday's close, this sentiment measure has never been higher and is in extreme "Mania" phase. Deutsche's advice to all the summertime-'chasers' - "wait for a better entry."

Via Deutsche Bank,

We find the current PEs demanding.


S&P median PE at 18.9, non-financial PE at 18.1 and trailing PE at 17.5 are all elevated vs. history.


And the P/E to VIX ratio suggests we have shifted from compacency into mania...


Don't Chase...

Since 1960, there have been 10 years when S&P materially advanced to new highs during the summer, but only 2 years (1964 and 1995) when it was not a post recession/bear market rebound and the market retained the summer gains until year end.


1968 and 1980 summer highs were post bear markets; 1985, 1989, 1997, 1999 summer high followed by a late summer/fall correction; 1987 and 1998 suffered a bear market (“1987 crash” and “1998 Russian default).

But what about all the money on the sidelines?... and the great rotation...

Source: Deutsche Bank

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Mon, 06/09/2014 - 09:35 | 4836743 GetZeeGold
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What's the problem? We can just print to eternity!

Mon, 06/09/2014 - 09:42 | 4836769 smlbizman
smlbizman's picture

and beyond.....

Mon, 06/09/2014 - 09:54 | 4836815 Aknownymouse
Aknownymouse's picture

The US market will NEVER EVER GO DOWN again. Just sell VIX. There is ZERO RISK.

Mon, 06/09/2014 - 09:56 | 4836823 flacon
flacon's picture

We'll get a shooting star today. Guaranteed.

Mon, 06/09/2014 - 09:58 | 4836831 Aknownymouse
Aknownymouse's picture

Sell your home. Sell your wife. Sell you kids. Max your visa and mastercards. Short UVXY. BUY STOAKES

Mon, 06/09/2014 - 09:59 | 4836834 flacon
flacon's picture

Take a look at UO and RSI:

Mon, 06/09/2014 - 10:17 | 4836903 saveUSsavers
saveUSsavers's picture

yep- see 1-yr mania


Mon, 06/09/2014 - 10:35 | 4836968 I am more equal...
I am more equal than others's picture




When was the last time it achieved 'mania' status?

Is this new? Have we ever been in this status before?

Mon, 06/09/2014 - 11:03 | 4837066 Rainman
Rainman's picture

The average human memory is erased every 14 years.

See NASDAQ bubble top 1999.

Mon, 06/09/2014 - 12:06 | 4837269 KnuckleDragger-X
KnuckleDragger-X's picture

But,but,but This time it's different.

Tue, 06/10/2014 - 19:15 | 4842333 MeelionDollerBogus
MeelionDollerBogus's picture

And moar differenter than last time!

Tue, 06/10/2014 - 19:16 | 4842336 MeelionDollerBogus
MeelionDollerBogus's picture

Years? Try months! For day-traders it's 14 hours.

Mon, 06/09/2014 - 11:30 | 4837140 slaughterer
slaughterer's picture

Nope, not guaranteed.  

Mon, 06/09/2014 - 11:03 | 4837064 Whootie_who
Whootie_who's picture

But this time it is different

Mon, 06/09/2014 - 09:48 | 4836793 TheRideNeverEnds
TheRideNeverEnds's picture

exactly, I just sold some 1950s so the ES is about to break out higher and never again trade below 1950.

Mon, 06/09/2014 - 09:51 | 4836808 dontgoforit
dontgoforit's picture

I know that transaction: story of my financial life.  I could make you cry with some tales of mine. 

Mon, 06/09/2014 - 10:48 | 4837010 silentboom
silentboom's picture

Gold is a barbarous relic!   Have any to sell me?

Mon, 06/09/2014 - 11:29 | 4837137 slaughterer
slaughterer's picture

Looks like ES 1980 before any reversal at this point.  We might reach a mania blow-off of ES 2200 if the Fed does not talk down the market.  UAE money is pouring out of UAE markets and into US equity markets this week.  There is no incentive to interrupt the Euro carry trades, and China/Japan are Goldilocks performers for the MSM.  Everything bad will not be reported as the world gets distracted by World Cup.

Mon, 06/09/2014 - 13:44 | 4837616 moneybots
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"Looks like ES 1980 before any reversal at this point.  We might reach a mania blow-off of ES 2200 if the Fed does not talk down the market."


It isn't about talk, it is about action.


Bernanke pulled the slosh during the TARP debate and crashed the market.

Mon, 06/09/2014 - 09:34 | 4836745 pods
pods's picture

Fucking bankers. I'll show you a better entry alright.


Mon, 06/09/2014 - 09:38 | 4836755 DaddyO
DaddyO's picture

Easy there Big Boy, wouldn't want anyone getting hurt.

Ever hear of a Broke Dick Stallion?


Mon, 06/09/2014 - 10:08 | 4836868 PeeramidIdeologies
PeeramidIdeologies's picture

Who coined the term " Entry point " anyways? Durty bastard!!

Mon, 06/09/2014 - 09:37 | 4836752 dontgoforit
dontgoforit's picture

Infinity and beyond; why not?  It's only monoply money anyway.

Mon, 06/09/2014 - 09:39 | 4836759 Al Huxley
Al Huxley's picture

Pussies - they're just trying to look responsible after getting caught so offside on the derivatives issue and having to get out of the gold-rigging business.

Mon, 06/09/2014 - 09:39 | 4836761 Central Wanker
Central Wanker's picture

Buy gold, dammit!

Mon, 06/09/2014 - 09:41 | 4836768 NEOSERF
NEOSERF's picture

I dunno, looks like we got 500 more points on the Dow before we get to mania, that and the fact that truly it is different this time with Fed backstopping (even when they stop buying, the markets know no bank will ever be allowed to fail again), this can go another 2K or so before it runs out of gas.  ECB and more Chinese QE will be the tinder.

Mon, 06/09/2014 - 09:43 | 4836778 NotAMathWhiz
NotAMathWhiz's picture

Pfft... It's not even in the red yet.

Mon, 06/09/2014 - 09:54 | 4836818 what's that smell
what's that smell's picture

"slaying the muppets." Deutsche Bank

Mon, 06/09/2014 - 09:43 | 4836779 B2u
B2u's picture

I want FREE money!!!

Mon, 06/09/2014 - 09:50 | 4836802 GetZeeGold
Mon, 06/09/2014 - 09:48 | 4836794 ebworthen
ebworthen's picture

The entire Bailout/FED-QE fueled ramp from 2009 to the present is mania, maniacal mania.

Mon, 06/09/2014 - 09:53 | 4836812 dontgoforit
dontgoforit's picture

I don't understand how obama got the Fed to go along with the destruction of America.  If Cloward-Piven doesn't fit all that they (obama & the Fed) have done, then maybe I misunderstand the strategy.

Mon, 06/09/2014 - 10:08 | 4836866 Spastica Rex
Spastica Rex's picture

Maybe you have it backwards.

Tue, 06/10/2014 - 19:47 | 4842429 MeelionDollerBogus
MeelionDollerBogus's picture

You don't understand because your premises are wrong.
#1 Obama doesn't tell the Fed what to do. It's the other way around.
#2 Cloward-Piven fits NONE of what's happening now. To be that would require none of the banks and all of the people draining the government of money. Instead the opposite is happening: the government is flush with new money from the central bank & the minion banks are making profit off of every deal imaginable, including illegal ones.
This is FASCISM, entirely unrelated to Cloward-Piven.

Mon, 06/09/2014 - 09:49 | 4836798 NoWayJose
NoWayJose's picture

The probelm with their Mania calculation is that both the top and bottom numbers are being simulataneously manipulated.

Mon, 06/09/2014 - 09:58 | 4836830 disabledvet
disabledvet's picture

The problem with a mania is that it works until it doesn't.

If you're working the street you have to "pay to play" and the bottom line is you've hot to be long and strong here.

The good news (so far) is that risk management is working so professionally speaking "you're within the law" by having a conservative 70/30 split equity to debt.

If we're talking euro debt you've had a big time currency boost as well.

The problem of course is that we still have no recovery in the USA and Europe is now entering an outright deflation of some that will make Japan's look minor in my view.

Mon, 06/09/2014 - 09:54 | 4836816 T-NUTZ
T-NUTZ's picture

S&P 500: the biggest subsidy in Amerikan history

straight flush again!  read em and weep BITCHEZ!!

Mon, 06/09/2014 - 09:59 | 4836832 intric8
intric8's picture

The fed will backstop up the ass. Its like the market needs to take a much needed massive shit, but theres a butt plug in the way held in place by a doc from cedars sinai

Mon, 06/09/2014 - 09:59 | 4836833 buzzsaw99
buzzsaw99's picture

<-- Deutsche Bank
<-- Douche Bag

Mon, 06/09/2014 - 10:04 | 4836856 Stonedog
Stonedog's picture

In other words, the markets have gone full retard... got it...

Mon, 06/09/2014 - 10:05 | 4836857 JRobby
JRobby's picture
Full Blown "Mania"

Interesting the language that comes from banks these days. Trying to be good citizens are they?



Mon, 06/09/2014 - 10:13 | 4836892 Calculus99
Calculus99's picture

Not mania yet, probably have to wait for 20,000 Dow + the average Joe and the ladies down the Salon talking stocks, tips and how much they've made. I don't see much stockmarket talk amongst the masses, only those like us who are somehow involved in the markets, and we're too close to the action.

But hey, what the fuck do I know, what the fuck does anyone know these days?


Mon, 06/09/2014 - 12:58 | 4837423 SDShack
SDShack's picture

No, the stock market talk IS starting among the masses. Stock Investing Clubs are starting to spring up again. In our little circle of retired folks, there are some actively starting to coordinate meetings to discuss "investing". Stock Ticker Symbols are being thrown around at parties. Hell, even our tax accountant asked us for Stock Tips this year! John Hancock is running TV ads with couples saying essentially, "our money has been on the sidelines, but it's time to invest again". Nothing like BTFATH! The sheep are being set up for a major sheering, and the weak ones are being set up for slaughterhouse. I say it ramps higher until Q1 2015 when the full horror of 0zer0care kicks in, especially among Employer Health Plans. If the Repukes take over the Senate in 2014, then that sets up the Red vs. Blue WWF Smackdown Show that TPTB want to just divide and conquer the masses. Rinse and Repeat. This has been happening since 1987 on about a 7 year cycle and is this is following the plan perfectly. 1987...1994...2001...2008...2015.

Tue, 06/10/2014 - 19:44 | 4842422 MeelionDollerBogus
MeelionDollerBogus's picture

Seeing none of that where I am. Not a soul.

Mon, 06/09/2014 - 13:38 | 4837586 moneybots
moneybots's picture

"Not mania yet, probably have to wait for 20,000 Dow + the average Joe and the ladies down the Salon talking stocks, tips and how much they've made."


I don't think that matters this time around, as to whether there iscurrently a mania or not.  The stock market has crashed twice and housing has crashed, the job market has crashed and people are seeing through the BS of it all.


Mon, 06/09/2014 - 10:14 | 4836897 B.J. Worthy
Mon, 06/09/2014 - 10:17 | 4836911 Atomizer
Atomizer's picture

Ctrl+Z, or Alt+<-- Backspace

Mon, 06/09/2014 - 10:20 | 4836918 Atomizer
Mon, 06/09/2014 - 10:24 | 4836934 Incubus
Incubus's picture

all kinds of microorganisms have been growing in this place. time to douche.

Mon, 06/09/2014 - 10:36 | 4836976 quasimodo
quasimodo's picture

"in this place"..........I can't help but wonder if your avatar is in search of some summers eve?

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