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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
moneybots'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."


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 - 10:24 | 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?

Mon, 06/09/2014 - 10:45 | 4837007 SMC
SMC's picture

"Mania" equals "Collective Stupidity".

Too bad the US Government & Federal Reserve have rigged the markets for their crony masters, some puts would be nice to have for the next crash.

Keyes said it best : "The markets can remain irrational far longer than you can remain solvent." - perhaps looking at the US national and global situation from the 1% viewpoint may be a contributing factor to why his disciples abandoned a republic driven by capitalism for a oligarchy driven by fascism (merger of state and corporate power).

"Just Us" will schedule the crash, everyone else will pay for it, either through investment losses or increased taxes to cover government "bailouts".

Mon, 06/09/2014 - 10:49 | 4837018 silentboom
silentboom's picture

Live fast, die hard!

Mon, 06/09/2014 - 10:51 | 4837025 valley chick
valley chick's picture

And what is going on with oil?!

Tue, 06/10/2014 - 19:38 | 4842405 MeelionDollerBogus
MeelionDollerBogus's picture

Oil is black, water is wet.
Buy my newzletter!

Mon, 06/09/2014 - 11:00 | 4837048 khakuda
khakuda's picture

Finally, some of these guys are starting to acknowlege Fed-created bubble #3 of the past 20 years.

Poor Bianco, though.  He always turns bearish, then loses his job every cycle because one isn't allowed to do that on Wall Street.  Unwritten rule is to stay bullish even as it cracks and buy all the way down as it collapses 50%, then say no one saw it coming.

Mon, 06/09/2014 - 11:01 | 4837057 pcrs
pcrs's picture

Can stay there for 3 years it seems


Mon, 06/09/2014 - 11:05 | 4837076 Madcow
Madcow's picture

do not short this market. 

Gov-Co is determined to prove that supply, demand, cash flow, and future earnings estimates are barbarous relics - 

LONG:  Anti-gravity devices, perpetual motion machines, alchemy.


I'm also an investor in a new copany - its a spray called "math-be-gone" 

Mon, 06/09/2014 - 13:04 | 4837451 SDShack
SDShack's picture

"Anti-gravity devices, perpetual motion machines, alchemy". Exactly correct. Quackery is Fraud, and it always thrives when the Rule of Law is compromised. TPTB are enabling Fraud with TPTF. But history proves this will not end well for anyone. Plan accordingly. 

Tue, 06/10/2014 - 19:36 | 4842380 MeelionDollerBogus
MeelionDollerBogus's picture

Sounds like the new big pharma venture I'm getting into with a directly injectable compound called Bitch-B-Rich, which makes you an instant winner at all day-tradez.
Sounds like we should swap investment contact info & buy all in!

Mon, 06/09/2014 - 11:13 | 4837090 Quinvarius
Quinvarius's picture

These guys are pussies.  Do a bump of coke, go outside and start a car on fire, rip off your shirt, beat up the first woman or child you see, and then get back at your desk and buy.  This is a riot.  Act accordingly.

Mon, 06/09/2014 - 11:33 | 4837155 juggalo1
juggalo1's picture

Smart money, Zerohedge, bankers, pundits et al. cry that markets have gone crazy. Meanwhile the dumb "buy-and-hold" investors keep making more money, and reallocating their substantial winnings out of the manic stock-market.

Not that I think the market is rational or will keep going up, but betting on a massive crash that wipes out everything has never been a winning-strategy.  Buy and hold the broad market with appropriate allocations to countercyclical assets has been the clear winner (including 2008).  I notice you're not sucking John Paulson's stock or Sprott's management firm now that they have lost their hot-hand and dropped out of the public eye.  The problem with betting on the world to end, is you're wrong every time but maybe one, and then how do you collect your winnings?

Tue, 06/10/2014 - 19:26 | 4842369 MeelionDollerBogus
MeelionDollerBogus's picture

Actually those dumb "investors" aren't making money, those who manage funds for them are and are taking it all in fees.
The amounts the markets & stawks are moving up is so small that real gains are not going to happen.
Also, the dips happen frequently and while small, down is still not up, and that doesn't help.

Mon, 06/09/2014 - 11:40 | 4837184 Itchy and Scratchy
Itchy and Scratchy's picture

By stawks!

Mon, 06/09/2014 - 11:40 | 4837186 falak pema
falak pema's picture

amoral blizzard checkmates moral hazard, by enshrouding it in dopium.

Mon, 06/09/2014 - 11:40 | 4837192 walküre
walküre's picture

Hyperinflation is upon us. Markets are leading the way and the direction is becoming more and more evident. Money is worthless. Soon even $20/hour steady jobs won't be able to support anyone.

The CBs cannot control the perception of worth and faith in fiat. They've somehow managed to lose that battle. Maybe they shouldn't have used cotton balls to try and "fight" inflation.

There's credit available but the credit worthy don't need anymore. The non-worthy are struggling to get money and if they do, they pay expensive terms. Cars or furniture for example have a seductive 0% rate but the products are overpriced and depreciate faster than the speed of light.

Cars for example need to get build and sold at any cost. The car manufacturing is still the benchmark for the "healthy" economy. So they're building cars and trucks even when there's no demand as long as they channel stuff and mark them "sold" on their balance sheets. If they find stupid suckers to buy one of the vehicles at 0% even better but not necessarily required. Who cares if the dealers make money?

Essentials to living are going up in price. Real food is getting more and more expensive. Sure, the artificial and synthetic "food" can be bought for a fraction of the cost of real food but it comes with the price of obesity or potentially cancer later-on. You think that Costco beef, pork or chicken is healthy? Do your own research. Costco is trying to hold on to the middle class consumer but the middle class consumer is tapped out. So they cheat or their suppliers cheat in order to keep prices somewhat reasonable

The CBs, the TBTF banks, the hedge funds and the largest investors have struck a deal to hold tight and let this puppy ride. Seems that NOBODY is allowed to make any move that would potentially harm the "markets". Not sure whether this is collusion or if the CBs have all the players by the balls to a point where nobody can make a move or risk losing their status.

It's an illusion, it's a propaganda tool to allow the elite to keep control over the people. Rest assured that when the illusion comes crashing down, it is by the CBs for the benefit of the CBs and their club.

What is Bill Gross buying and selling these days? The world's largest hedge fund and once supreme bond king? Been pretty quiet from his end. He's losing money and losing clients. Even this guy can't muster any strenght to fight the CBs.

Mon, 06/09/2014 - 11:53 | 4837228 Quinvarius
Quinvarius's picture

"Here's to a son of the house of Frankenstein. "

-Baron Frankenstein, Circa 1931, "Frankenstein"

Mon, 06/09/2014 - 12:04 | 4837261 juggalo1
juggalo1's picture

Right.  The cars sales are all Channel Stuffing, and yet sales are up by double digits recently.  I agree the actual inflation that consumers are experiencing is probably a bit higher than reported, but hyperinflation?  Hardly.

Mon, 06/09/2014 - 12:13 | 4837288 walküre
walküre's picture

tell me how the CBs can contain all that liquidity sloshing around?

Mon, 06/09/2014 - 13:18 | 4837505 SDShack
SDShack's picture

It's being absorbed by the greatest mop ever invented. Falling real wages. An ongoing world wide depression + ongoing world wide population increases = declining real wages. Why do you think Europe keeps importing labor from 3rd world countries? Why is the Chamber of Commerce pushing another Amnesty program here? Why is there a push to make sure every HS graduate is forced to go to college to get even a shitty clerical job in this marketplace? It can't be so the student is forced to become a debt slave to banks and govt via student loans can it? It can't be crony capitalism that has infected colleges, just like business... a never ending cycle of debt slaves, banker money, govt. subsidies, and ever higher paid college administrators and bureacrats? This is wealth redistribution on a global scale. A Feudal New World Order.

Mon, 06/09/2014 - 14:46 | 4837931 juggalo1
juggalo1's picture

Tighter regulation, fear and need by banks to bolster reserves has resulted in lower loan creation.  We now have the perverse situation where banks won't lend to borrowers who need it, and those with access to credit are awash in cheap loans.

Again this situation will end eventually.  But to claim we are currently in a hyperinflationary period is to redefine hyperinflation.  Guessing if and when the expanded monetary base will transmit to higher consumer prices is a job for someone much smarter than me.

I just think it's funny when the online commentariat whines for years and years about looming hyperinflation and central bank ponzi schemes, while advocating capital losing strategies the whole way.  I'm not asking you to say you are wrong, but I don't see anyone admitting they have been wrong.

Tue, 06/10/2014 - 19:24 | 4842361 MeelionDollerBogus
MeelionDollerBogus's picture

They can't & they aren't. That's why the stock market & various holdings of warehouses are going way up in prices and rehypothecation & derivatives are on the rise.

Tue, 06/10/2014 - 19:22 | 4842356 MeelionDollerBogus
MeelionDollerBogus's picture

It's all greed. When GM said they wouldn't make the Impala anymore they told customers it's because they weren't buying new ones. Except they are just every 10 years not every 2. So they want to switch to forcing you to go every 2-5 years and customers would rather buy nothing than buy junk that is meant to die sooner than 10 years.

Mon, 06/09/2014 - 12:09 | 4837279 KnuckleDragger-X
KnuckleDragger-X's picture

I've got a great deal on some tulips...

Mon, 06/09/2014 - 12:34 | 4837364 homiegot
homiegot's picture

Gold is going to breakthrough this year. I can feel it.

Mon, 06/09/2014 - 12:18 | 4837298 I Write Code
I Write Code's picture

You may be right
I may be crazy
But it just may be
A lunatic you're looking for!

Mon, 06/09/2014 - 15:25 | 4838101 iamtheeggman wh...
iamtheeggman whooooooooooooo's picture

Ear-Rational Ex Booberance! Yellen gonna motorboat the markets! Whooohooooooo!

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