This page has been archived and commenting is disabled.

Goldman Admits Market 40% Overvalued, Economy Slowing, So... Time To Boost The S&P Target To 2050 From 1900

Tyler Durden's picture




 

One has to give it to Goldman Sachs: the bank which until a few years ago just couldn't lose a penny, is about to report earnings which will, even if they beat Wall Street's estimate, be an embarrassment to the bank that openly used to run the world until very recently. The reason, aside from the moribund economy, is that trading volumes have plummeted at an unprecedented pace as i) nobody trusts the centrally-planned capital markets any more and ii) valuations are, despite what permbulls can say on TV stations with record low viewership, so ridiculous few if any would actually go long here.

But the one area what Goldman has retained its swagger is its muppet-crushing talents. Because while Tom Stolper may have left the bank, much to the sorrow of FX traders everywhere, the bank is still second to none when it comes up to fabricating ridiculous narratives that are simply meant to baffle with bullshit what few clients Goldman has remaining, and hopefully, Corzine their money in the process.

Case in point: while Jan Hatzius once again declared the arrival of the above-trend growth for the US economy just as everyone else slashed their GDP forecasts for the year (it won't be the first time - he did the same just after Tim Geithner's idiotic "Welcome to the Recovery" oped, which lasted all of 3 months before Goldman recanted), Goldman lowered its year-end yield forecast by 25 bps to 3.0%. So.... a stronger economy that is getting weaker on a terminal basis? Brilliant.

But that's nothing. One has to read today's piece from Goldman's David Kostin to realize just how ridiculous Goldman's attempts to spin what has become a total farcial fraud of a market (just one word here: CYNK), and a completely broken economy (remember the business cycle and recessions in the day before ZIRP and QE? good times...) to realize just how far beyond the pale everything is.

Recall that it was David Kostin who in January admitted that "The S&P500 Is Now Overvalued By Almost Any Measure." It was then when the Goldman chief strategist admitted there was only 3% upside to the bank's year end target of 1900.  Well, that hasn't changed. In his latest note Kostin says that "S&P 500 now trades at 16.1x forward 12-month consensus EPS and 16.5x our top-down forecast... the only time S&P 500 traded at a higher multiple than today was during the 1997-2000 Tech bubble when margins were 25% (250 bp) lower than today. S&P 500 also trades at high EV/sales and EV/EBITDA multiples relative to history. The cyclically-adjusted P/E ratio suggests S&P 500 is now 30%-45% overvalued compared with the average since 1928."

In other words, rarely has the market been more overvalued. So at least that much of the Goldman plotline is still valid.

Furthermore, as Kostin says, "Goldman Sachs fixed-income strategists recently lowered their year-end 2014 bond yield forecast by 25 bp to 3.0%." One doesn't have to be a rocket scientist to know that yield forecasts don't go down when the economic forecast is improving. Quite the contrary. And here is where the first break in logic appears: "The improving macro data prompted our US economists to pull forward their projection for the first hike in the federal funds rate to 3Q 2015 from 1Q 2016." Yes, apparently it also prompted them to cut their 10 Year yield forecasts.

But where everything just goes full retard is here: "we lift our year-end 2014 S&P 500 price target to 2050 (from 1900) and 12-month target to 2075, reflecting prospective returns of 4% and 6%, respectively."

Wait, what???

So Goldman admits the market is up to 45% overvalued and that the economy is slowing down, thus cutting its yield expectations, and this leads to a... 150 boost in the firm's S&P500 year end target?

Clearly, this is idiocy. What's worse, is that this is merely goalseeked idiocy as Goldman realizes none of its valuation metrivs matter in a broken, centrally-planned market and all that matters is the endless liquidity infusion from the central bank cartel. But what is worst, is that Goldman is fully aware this kind of "forecast" will merely lead to riotous laughter with any of the "smart money." Thus the fact that Goldman Sachs no longer cares about that reaction, and thus, its reputation, is the most troubling of all...

Here is the weekend humor from David Kostin. First, the summary:

US equities soared 42% during the past 18 months but the stellar return borrowed heavily from the future. History shows S&P 500 rallies and the P/E multiple expands during the year prior to the start of a tightening cycle. But after tightening begins, the multiple contracts and the index typically delivers only modest returns. Incorporating our lower 10-year US Treasury yield forecast with other valuation approaches, we lift our year-end 2014 S&P 500 price target to 2050 (from 1900) and 12-month target to 2075, reflecting prospective returns of 4% and 6%, respectively. Our year-end 2015 and 2016 targets remain unchanged at 2100 and 2200.

And the full breakdown in which one can almost feel Kostin's humiliation at having to pen such moronic drivel.

The bulk of the 7% S&P 500 YTD return stems from earnings growth. Multiple expansion has contributed only a small share of the 2014 return. In contrast, P/E expansion powered nearly three-quarters of the full-year 2013 return of 32% while EPS growth generated a small share of the price gain.

 

Looking ahead, our top-down EPS estimates of $116 in 2014 and $125 in 2015 represent annual growth of 8%. Bottom-up consensus EPS growth is exactly in-line with our 2014 forecast. However, analysts expect 12% growth in 2015, which is 400 bp above our expectation.

 

S&P 500 now trades at 16.1x forward 12-month consensus EPS and 16.5x our top-down forecast. Note the current high P/E multiple coincides with record high profit margins that have remained static near 8.9% since 2011. In fact, the only time S&P 500 traded at a higher multiple than today was during the 1997-2000 Tech bubble when margins were 25% (250 bp) lower than today. S&P 500 also trades at high EV/sales and EV/EBITDA multiples relative to history. The cyclically-adjusted P/E ratio suggests S&P 500 is now 30%-45% overvalued compared with the average since 1928.

 

However, viewed in relation to bond yields, the US equity market still  appears attractively valued. The classic interpretation of the Fed model closes the gap between the forward earnings yield and bond yield to the long-term average spread. Goldman Sachs fixed-income strategists recently lowered their year-end 2014 bond yield forecast by 25 bp to 3.0%. If the yield gap converges from the current 370 bp to 300 bp by year-end 2014 (midpoint between the trailing 10- and 20-year averages) the Fed Model would imply a year-end 2014 S&P 500 fair-value of 2080, roughly 5% above the current level. It also implies a stable P/E multiple of 16.0x (see Exhibit 1).

 

Oh, the Fed model... Right. The same "model" which says that if there is a deflationary collapse, and 10 Years trade negative, then S&P should hit +infinity. No really. Look at the bottom left square: apparently all it takes for the S&P500 to hit 3,560 is for the 10 Year to trade at 2.0%. One can't make this up!

Incorporating our lower 10-year US Treasury yield forecast with other valuation approaches, we lift our year-end 2014 S&P 500 price target to 2050 (from 1900) and 12-month target to 2075 reflecting prospective price returns of 4% and 6%, respectively. Our year-end 2015 and 2016 targets remain unchanged at 2100 and 2200, respectively.

 

US equities soared 42% during the past 18 months but the stellar return borrowed heavily from the future. We expect the equity rally will continue, but the trajectory will be shallow. Domestic economic growth is accelerating, and earnings will continue to rise, but further P/E multiple expansion is unlikely given our and the market’s expectation for a Fed hike within 12 months. The improving macro data prompted our US economists to pull forward their projection for the first hike in the federal funds rate to 3Q 2015 from 1Q 2016 (see US Views: An Earlier Hike, July 6, 2014).

 

History shows the S&P 500 rallies and the P/E expands during the year prior to the start of a tightening cycle. But after tightening begins, the P/E multiple contracts and the index typically delivers only modest returns.

 

Our forecast S&P 500 next-12-month return of 6% is similar to the historical example leading up to previous “first hikes.” S&P 500 posted an average return of 17% during the 12 months prior to the three previous Fed hikes in 1994, 1999, and 2004. Excluding Tech, the average return was 12% and the median S&P 500 stock rose by 13% (see Exhibits 2 and 3).

 

Historical experience supports cyclical sector positioning. Information Technology is the only sector that outperformed the S&P 500 in advance of each of the three recent tightening cycles, although its historical average return is inflated because the second episode coincided with the Tech bubble. Materials and Industrials outperformed preceding two of the three examined hikes, while defensive Health Care, Consumer Staples and Utilities sectors underperformed in all three episodes. Consumer Discretionary historically has not posted strong returns prior to hikes but we expect the sector will outperform this time as the labor market continues to improve.

It wouldn't be Goldman, of course, if the firm's clients didn't lose money. So putting all of Kostin's brilliance to the P&L, led to this:

We close our recommendation to buy Russell 1000 Growth vs. Value.  The trade returned 300 bp from initiation in November 2013 through February 2014, but suffered as investors fled high growth and momentum stocks in late 1Q. In total the trade returned -50 bp (11.6% vs. 12.1%). Growth stocks typically outperform when economic growth slows, which is contrary to our expectation in 2H 2014. Our Growth factor has also posted unremarkable returns prior to the start of previous rate hiking cycles.

So a loss. But don't Goldman has another reco. Buy crap. Seriously.

We expect “low valuation” stocks will outperform ahead of next year’s tightening. Exhibit 5 lists the 50 S&P 500 firms across all ten sectors with the lowest valuation. “Low quality” stocks should also outperform as the economy improves. Our Micro Equity Factors indicate stocks with weak balance sheets, low returns on capital, low margins, and high volatility have outpaced their “high quality” peers since early 2013. In 2H 2014, we recommend investors buy a portfolio of S&P 500 stocks with weak balance sheets (Bloomberg: GSTHWBAL Index) vs. strong balance sheet peers (GSTHSBAL). The long/short strategy generated a 50% return during the past 24 months. We recently rebalanced both of these sector-neutral 50-stock baskets (see US Weekly Kickstart, May 16, 2014).

Which is ironic, because that is precisely the trade we said to put on...  about 24 months ago when we said the only way to make money in this farce of a market was to go long the most worthless names. Thanks Goldman for finally catching up to us.

And to think people accuse us of being permabearish.

In sum, after reading such garbage, it is impossible not to feel bad for Wall Street's best paid "strategists" (and certainly those working for the bank that formerly controlled the world): if they have to resort to writing such bullshit, then the end must truly be nigh.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Sat, 07/12/2014 - 17:28 | 4950761 Leonardo Fibonacci2
Leonardo Fibonacci2's picture

Lloyd Blankfein needs to tour Auschwitz-Birkenau instead of Club Med to get his thoughts back into perspective regarding the middle class of America.

Sat, 07/12/2014 - 17:43 | 4950798 wee-weed up
wee-weed up's picture

"To da Moon, Alice...  to da Moon!"

Sat, 07/12/2014 - 17:51 | 4950816 Mr Pink
Mr Pink's picture

We have been living in bizarro world for so long that this is starting to make perfect sense

Sat, 07/12/2014 - 18:05 | 4950839 yogibear
yogibear's picture

bizarro world for so long that this is starting to make perfect sense.

That's the idea. The Federal Reserve banksters believe if they can hold this sham together long enough it becomes the new normal.

Sun, 07/13/2014 - 07:20 | 4951841 Squid-puppets a...
Squid-puppets a-go-go's picture

and it COULD work perfectly and become the new normal, except for, you know, MATHS

Sun, 07/13/2014 - 11:46 | 4952299 DirkDiggler11
DirkDiggler11's picture

Treat Goldman Just like Dennis Fartman. Listen to what they say, and then take the opposite side of the trade. Money every time baby !

Sat, 07/12/2014 - 17:55 | 4950820 MillionDollarBonus_
MillionDollarBonus_'s picture

The key to growing the economy is supporting the Middle Class. The Middle Class make the world go round. They are highliy educated, progressive and occuppy all of the professional and management positions in the corporate world. They the most intelligent and politically versed people in the entire world, and their success is pivotal to the global economy. Only the democrats understand this. 

Sat, 07/12/2014 - 18:39 | 4950916 Escrava Isaura
Escrava Isaura's picture

Million Dollar Bonus...

For decades the liberal class was a defense against the worst excesses of power. But the pillars of the liberal class— the press, universities, the labor movement, the Democratic Party, and liberal religious institutions—have collapsed. In its absence, the poor, the working class, and even the middle class no longer have a champion.

Liberal institutions, including the New York Times, who have distorted their basic beliefs in order to support unfettered capitalism, the national security state, globalization, and staggering income inequalities. – Chris hedges

It’s obvious that you don’t get it… I just wonder why?

 

Sun, 07/13/2014 - 06:47 | 4951824 SilvertonguedAngel
SilvertonguedAngel's picture

You fudged up.

Liberal  'institutions' like NYT never had any 'basic beliefs'. Certainly not championing the poor.

But at least you get that the people don't CURRENTLY have any liberal champions.

Sun, 07/13/2014 - 07:53 | 4951845 Escrava Isaura
Escrava Isaura's picture

Silver....

Would care to enlighten us for which institution on the ‘Right’ care for the poor?  

Sat, 07/12/2014 - 17:49 | 4950811 slaughterer
slaughterer's picture

Lifted their target.  Bunch of wusses.  

Sat, 07/12/2014 - 20:15 | 4951111 JohnG
JohnG's picture

Damn lot of words to put lipstick on a pig.

Sat, 07/12/2014 - 17:28 | 4950765 Cattender
Cattender's picture

the overvalued Economy is slowing? no shit..

Sun, 07/13/2014 - 09:33 | 4950767 lakecity55
lakecity55's picture

Kermit, Zoltar, and the crazy Hitler!

A Trifecta!

Go, ZH!

We want the deer!

Well, dammit, it's time for my favorite ZH exclamation: "Run, men, we drilled too deep! She's gonna blow!"

Where is the deer?

Sat, 07/12/2014 - 17:31 | 4950772 Son of Loki
Son of Loki's picture

Anyone been to a clothing store this weekend? Foot traffic down, sales almost non-existent and revenues plunging despite all sorts of marketing Gimmicks [cash-backs, discounts, reward points, BOGOs, etc]  ... not to mention zilch profits. I expect July retail numbers to be a Bloodbath.

 

I guess it's all part of another "Summer of Rekovery."

Sat, 07/12/2014 - 18:00 | 4950831 Mr Pink
Mr Pink's picture

I live in a city of about 80k on Lake Michigan. I took a walk with a gf of mine through downtown last night between about 10pm to 12 am. This is a Friday night in the middle of boating season and it was actually somewhat warm.

Both of us were in shock observing how dead it was. Most bars had about 6 customers. A outdoor bar on the biggest marina had about 12 but was a quiet as a library. A beach bar on the river by another marina only had the owner and a band that had no one to play to. The new big sports bar had the doors locked and was cleaning up by 11:30.

Being a former restaurant/bar owner I honestly can't figure out how they stay in business. 

Depressing

Sat, 07/12/2014 - 18:11 | 4950853 yogibear
yogibear's picture

 I know of several people that were fed up with Chicago and Illinois. Those people moved their residence and business address to Dallas Texas. Now their taxes and cost of living is quite a bit lower.

Texas is where businesses are moving to.

The librtards in CA and IL are crushing people with their taxes, fees, tolls amd added costs.

 

Sat, 07/12/2014 - 18:15 | 4950861 Mr Pink
Mr Pink's picture

I have been planning on moving somewhere else for a couple of years. I can't take this much longer.

If I go out on a weeknight I honestly feel like Will Smith in "I am Legend"

Only difference is my dog is still alive and I don't talk to mannequins. Well, not yet

 

Sat, 07/12/2014 - 19:20 | 4951017 ClassicalLib17
ClassicalLib17's picture

Mr. Pink,  Just curious,  you obviously don't live in Illinois.  So,  is it Wisconsin, Indiana, or Michigan?   

Sat, 07/12/2014 - 19:54 | 4951063 Mr Pink
Mr Pink's picture

Wisconsin. Near Illinois. In a booming ghost town

Sun, 07/13/2014 - 11:39 | 4952279 Colonel Klink
Colonel Klink's picture

Sounds like Racine, not exactly the nicest place from what I've heard.

Sun, 07/13/2014 - 11:55 | 4952347 Mr Pink
Mr Pink's picture

Pretty much a pee pee soaked heck hole

Sun, 07/13/2014 - 12:03 | 4952385 Colonel Klink
Colonel Klink's picture

I have a number of friends who live in Wisconsin.  I spent a fair amount of time up by the Apostle Islands.  Beautiful state, not so much from a tax perspective or winter weather wise.

Sat, 07/12/2014 - 19:30 | 4951020 Escrava Isaura
Escrava Isaura's picture

Mr. Pink...

What you ‘we’ have witnessed in the past was a mirage. It was growing debt. Now it’s over. I mean, there are the central banks around the world feeding the fantasy, of course. However, not going to everyone, because of too many people. But they are trying to keep the party ‘illusion’ going.

But, if you think it’s bad now, I would suggest you read about the “Roaring 1920’s”. And the US is in much worse shape now, resource speaking. And with about 200 million more people.

Your mindset on the past shows, at least to me, that you’re unprepared and that you don’t understand what’s happening.

Sat, 07/12/2014 - 19:52 | 4951060 Mr Pink
Mr Pink's picture

I'm unprepared??? No one has been paying more attention to this train wreck than I have. In my opinion the collapse is long overdue

Sat, 07/12/2014 - 19:56 | 4951067 fonzannoon
fonzannoon's picture

I don't mean to pile on Mr. Pink but i feel like you don't have enough silver purchased at $40.

Sat, 07/12/2014 - 20:00 | 4951075 Mr Pink
Mr Pink's picture

Good one. Lucky for me I have a lot more that I purchased at $0

Sat, 07/12/2014 - 21:37 | 4951304 fonzannoon
fonzannoon's picture

That makes one of us.

Sat, 07/12/2014 - 21:05 | 4951163 Escrava Isaura
Escrava Isaura's picture

Mr. Pink... you said:"Most bars had about 6 customers. A outdoor bar on the biggest marina had about 12... Being a former restaurant/bar owner I honestly can't figure out how they stay in business. Depressing.”

At the next thread: “In my opinion the collapse is long overdue.”

So Mr. Pink, if you were depressed witnessing few people at those bars, let’s try imagining when they all collapse—close down.

And, there’s no way to earn income on the other side of this collapse.

How will silver help you? And Fonz, too? Not that I want to pile on Fonz, either.

Note: I think you should keep your silver, for sure. But keep buying silver? I question that—illusion.

Sat, 07/12/2014 - 21:10 | 4951252 Mr Pink
Mr Pink's picture

I for one think the collapse, while painful for most, won't thrust the country into a "Road Warrior" scenario.

So, how exactly are you preparing, old wise one? and since you seem to know so much, when exactly do we go full mad max?

Sun, 07/13/2014 - 08:52 | 4951337 Escrava Isaura
Escrava Isaura's picture

Mr. Pink... "...since you seem to know so much, when exactly do we go full mad max?

LOL! Anyway, it's a fair question.

If there are NO nuclear wars on the West, I give a 50% chance around 2027. And it goes to 90% at the beginnings of 2030's. I am basing this opinion on this book and this book.

However, I give an 80% chance that the next atomic bomb will be used by 2025. Most likely in Pakistan, India, or Iran.

A think when China goes down, it breaks into civil war; US won’t be a safe place to be. Russia, either.

Sun, 07/13/2014 - 07:30 | 4951368 Escrava Isaura
Escrava Isaura's picture

Mr. Pink: "...So, how exactly are you preparing, old wise one?"

US and dollar, for now. I believe in deflation, first. Actually, collapse. Life will change dramatically. Life will get really simple. Most people won’t have jobs. However, then comes the shortages. And the US won’t look so good, I am afraid. Americans don’t know how to live with little. And without growth.

This Titanic hit the iceberg already, Mr. Pink. Unfortunately, I can’t see the water to let you know how much time we have.

But, I am looking for lifesavers. I would suggest you do the same.

 

Sat, 07/12/2014 - 21:52 | 4951335 Ban KKiller
Ban KKiller's picture

Out of the getting pan into the fire. Slaves in Dallas all work indoors...there is zero nature...but taxes are low and the air, water and soil are clean. Right? 

Sun, 07/13/2014 - 17:36 | 4953336 Blankenstein
Blankenstein's picture

Down arrow?  Obviously someone who knows nothing about property taxes in Illinois - they are astronomical.  Or else some fluffer for the Chicago Cartel.  

Sun, 07/13/2014 - 12:39 | 4952520 Ward no. 6
Ward no. 6's picture

guess it is different other places

yesterday i was in maple grove minnesota and all the stores were packed....

whole foods, williams sonoma, trader joes... etc.

I don't see any depression or recession...

lots of wealthy ppl in this world...

but yes then again on the other side of the spectrum there are many living paycheck to paycheck and can't spend much..

 

 

Sun, 07/13/2014 - 14:44 | 4952948 presidentsarkozy
presidentsarkozy's picture

Loki you re lucky to still HAVE menswear shops in yr area !

We in UK said goodbye to mens outfitters about five years ago .
Now you re either a millionaire and have all your clothes made e g suits at sterling 1500 up -- or you go to a superstore called Primark which sells ill fitting clothes at cheapo prices for the masses . And if you are bigger than XXL SIZE tough titty ....either buy a pair of elasticated waist tracksuit bottoms or go naked.

Mon, 07/14/2014 - 15:16 | 4956405 StandardDeviant
StandardDeviant's picture

Oh, I can't let that go by.

There are still numerous tailors' shops in the City of London or on Jermyn Street who will sell you a decent suit for £250-500 or so (plus alterations).  Even on Savile Row you can buy something off the rack for much less than £1500; in fact, the venerable Gieves and Hawkes are having a sale at the moment.  (Bigger-than-XXL sizes may be hard to find off the rack, though.)

If you do need to have something made, it's true that a fully bespoke suit is likely to cost far more than £1500 -- but made to measure is much more reasonable, and there are sales as well.  It's worth shopping around.

There really is no reason to resort to Primark, let alone a tracksuit.  I'm sorry, but even Chuck Norris doesn't look good in a tracksuit.

Sat, 07/12/2014 - 17:34 | 4950779 khakuda
khakuda's picture

These guys get paid millions of dollars a year to state the obvious, after the fact.

All you need to know is that as long as the Fed keeps rates at zero and/or prints money, the market will rise faster than EPS growth.  Keep it up for too long and it will get overpriced.

Six years and running is probably too long.

Sat, 07/12/2014 - 17:38 | 4950790 Ban KKiller
Ban KKiller's picture

Bank talk is bullshit speak. 

Send this guy a nail gun.

Sat, 07/12/2014 - 17:45 | 4950793 29.5 hours
29.5 hours's picture

 

 

Looks like even vampire squids, under the current bizarre circumstances, can decide to go with the flow. This article deconstructed Goldman's pretensions of being out in front.  Goldman admits their tail-ending as justification for their continued skimming from the real economy.

 

 

 

Sat, 07/12/2014 - 18:32 | 4950905 disabledvet
disabledvet's picture

They're asking for you to go long actually.

They don't give a mix of debt to equity which is a dead giveaway that they're shorting their CRAP again.

The trade of the year still remains 100 percent treasuries.

"Caviar Emptor."

Sat, 07/12/2014 - 19:42 | 4951045 Mentaliusanything
Mentaliusanything's picture

quote " but the stellar performance borrowed heavily from the Future" unquote. No Shit Sherlock.

Snap back needed, indeed

Sat, 07/12/2014 - 17:43 | 4950794 oklaboy
oklaboy's picture

Is Fabbio on the cover of the GS report?

Sat, 07/12/2014 - 18:06 | 4950843 buzzsaw99
buzzsaw99's picture

Kostin is a harbinger of nothing. If you want a clear sell signal wait for "abby baby" cohen to make a bullish prognostication. It's a man baby! http://www.youtube.com/watch?v=WgOIEGz7o_s

Sat, 07/12/2014 - 18:09 | 4950852 GrinandBearit
GrinandBearit's picture

More useless noise.

Get physical or get debased.

Sat, 07/12/2014 - 18:35 | 4950914 Winston Churchill
Winston Churchill's picture

Take another look at Exters pyramid.

Bend over, and and kiss your ass(ets) goodbye.

Wipe with the paper you have left.

Sat, 07/12/2014 - 18:53 | 4950960 lotsoffun
lotsoffun's picture

this particular tyler is wrong.  GS is right and they know it.

So Goldmn admits the market is up to 45% overvalued and that the economy is slowing down, thus cutting its yield expectations, and this leads to a... 150 boost in the firm's S&P500 year end target?

Clearly, this is idiocy. What's worse, is that this is merely goalseeked idiocy as Goldman realizes none of its valuation metrivs matter in a broken, centrally-planned market and all that matters is the endless liquidity infusion from the central bank cartel. But what is worst, is that Goldman is fully aware this kind of "forecast" will merely lead to riotous laughter with any of the "smart money." Thus the fact that Goldman Sachs no longer cares about that reaction, and thus, its reputation, is the most troubling of all...

hyperinflation that all the 'classical economists' warned about is here today.  but it's not printed dollars - remember beranke laughing at us about that.  it's digital zeros.  and there sure are a lot of them.  and where do they go?  they don't go to pay rent or phillie cheese steaks.  they go into stocks.

stocks don't go down at this point, it will  probably be a VERY very long time until that 5 trillion (admitted) printing gets spread out into the world.  sort of like watching a flood wash over flat lands, takes a long time to soak up all the water.

if stocks go down, yellen will print more and they won't buy bonds this time.  they will buy stocks.  stock simply can't go down.  stocks go down, bonds have to go up.

get it?

 

 

 

 

Sat, 07/12/2014 - 19:19 | 4951015 starman
starman's picture

Anyone seen Toto?

Sat, 07/12/2014 - 19:20 | 4951018 Eyeroller
Eyeroller's picture

The forecast is 2050, but maybe there's a 1000 point dip between now and then...

Sat, 07/12/2014 - 21:58 | 4951340 Ban KKiller
Ban KKiller's picture

I don't care who is in power...they all become corrupted, clearly.

Tune in, turn on, drop out. Now more than ever. 

Be united against the fascist oligarchy. 

Meanwhile btfd. That is messed up...

Sat, 07/12/2014 - 22:11 | 4951365 Youri Carma
Youri Carma's picture

Not only the market is overcalued by 40%, so is the dollar.

Sun, 07/13/2014 - 19:17 | 4953686 AdvancingTime
AdvancingTime's picture

 What do stock markets around the world have in common with "girls gone wild" the video of college girls on spring break? The answer is both are crazy out of control. We have grown very complacent as money around the world has continued to flow into intangibles and promises.

Currently the market is all a twitter and locked in a "greed and stupidity loop." The loop can be explained as follows, stocks are rising so why get out, not getting out is causing the stocks to rise. When stocks do pullback it is a buying opportunity. Yes, we are indeed experiencing a double down and let it ride mentality. I don't have to explain the greed part. More about this subject in the article below.

http://brucewilds.blogspot.com/2014/06/stock-markets-and-girls-gone-wild...

 

Mon, 07/14/2014 - 08:02 | 4954868 Shizzmoney
Shizzmoney's picture

I root for the DOW and S&P to go higher and higher; that way, when it crashes to the ground, the lulz that will be had will be even sweeter

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