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Yellen's "Irrational Exuberance" Moment Arrives As She Pops Momo, Biotech, Social Media Bubble

Tyler Durden's picture


On one hand Janet Yellen, Series 7, 63-certified, and a consummate expert on equity valuation said the following soothing words about market values:

While prices of real estate, equities, and corporate bonds have risen appreciably and valuation metrics have increased, they remain generally in line with historical norms. In some sectors, such as lower-rated corporate debt, valuations appear stretched and issuance has been brisk.

On the other, and sadly for holders of biotech and social media stocks, Yellen appears to have just burst that particular bubble.

Nevertheless, valuation metrics in some sectors do appear substantially stretched—particularly those for smaller firms in the social media and biotechnology industries, despite a notable downturn in equity prices for such firms early in the year. Moreover, implied volatility for the overall S&P 500 index, as calculated from option prices, has declined in recent months to low levels last recorded in the mid-1990s and mid-2000s, reflecting improved market sentiment and, perhaps, the influence of “reach for yield” behavior by some investors....


... signs of risk-taking have increased in some asset classes. Equity valuations of smaller firms as well as social media and biotechnology firms appear to be stretched, with ratios of prices to forward earnings remaining high relative to historical norms. Beyond equities, risk spreads for corporate bonds have narrowed and yields have reached all-time lows. Issuance of speculative-grade corporate bonds and leveraged loans has been very robust, and underwriting standards have loosened. For example, average debt-to-earnings multiples have risen, and the share rated B or below has moved up further for leveraged loans.

Call it Yellen's "irrational exuberance" moment. Also call it a warning.



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Tue, 07/15/2014 - 10:24 | 4958861 Stoploss
Stoploss's picture

Looks like gold will be the outperformer.

As usual..

Tue, 07/15/2014 - 10:26 | 4958869 Croesus
Croesus's picture

Nah, that means S&P 8,000

Tue, 07/15/2014 - 10:28 | 4958879 MillionDollarBonus_
MillionDollarBonus_'s picture

This is all part of Yellen's plan to taper the equity rally and make sure that stocks don't get ahead of themselves. For the long term buy-and-hold value investor, this is just noise. I'm impressed that unlike many of her predecessors, Yellen is considering a complete range of economic indicators, including equity prices. Maybe if our Federal Reserve had paid closer attention to housing prices from 2002 to 2008, they could have prevented the housing collapse. It's important that economic planners take every indicator into account when planning the economy, in order to achieve optimal results.

Tue, 07/15/2014 - 10:32 | 4958896 kliguy38
kliguy38's picture

get lost you key stroke douche bag......

Tue, 07/15/2014 - 10:45 | 4958950 Headbanger
Headbanger's picture

On a busy eight lane highway too!


Tue, 07/15/2014 - 10:59 | 4959003 smlbizman
smlbizman's picture

i guess cynk just went down the sink....

Tue, 07/15/2014 - 11:06 | 4959056 slightlyskeptical
slightlyskeptical's picture

Saw a story on bloomberg. Trader who shorted CYNK at $6 has lost his job.

Tue, 07/15/2014 - 12:07 | 4959368 Hippocratic Oaf
Hippocratic Oaf's picture

Warren just asked yoda to comment with a 'straight face'

Not so sure what that means

Tue, 07/15/2014 - 16:09 | 4960338 newbie vampire
newbie vampire's picture

"Saw a story on bloomberg. Trader who shorted CYNK at $6 has lost his job."

This is what happens when Insanity rules.  All courtesy of the Fed.  MOAR MOAR MOAR !


Tue, 07/15/2014 - 10:32 | 4958898 ShorTed
ShorTed's picture

Excellent troll MDB...back to your old standards!

Tue, 07/15/2014 - 12:17 | 4959402 Greenskeeper_Carl
Greenskeeper_Carl's picture

Agreed. This guy is just fucking around. It amazes me so few see it for what it is. It's satire. Notice how many people disappear here for trolling stupid shit or pimping their bogus blogs, yet MDB is still around. Makes me wonder, has anyone ever seen MDB and Tyler durden in the same room together....?

Tue, 07/15/2014 - 12:54 | 4959537 Dollarmedes
Dollarmedes's picture


Tue, 07/15/2014 - 13:15 | 4959621 jbvtme
jbvtme's picture

carl...good call

Tue, 07/15/2014 - 10:33 | 4958902 moonman
moonman's picture

So true, I do not understand these posters on ZH who feel like they are smarter than our leaders and do not think that everything our government does is for our own good.

Tue, 07/15/2014 - 10:36 | 4958910 jmcadg
jmcadg's picture

Hey Moonman - you up MDB's moon - twat.

Tue, 07/15/2014 - 10:40 | 4958930 moonman
moonman's picture

Good too see another dumb fuckstick who does not recognize both of us are being sarcastic, do you need to the little <sarc> tag everytime?


Tue, 07/15/2014 - 10:50 | 4958965 tarsubil
tarsubil's picture

If you fool people, take it as a compliment.

Tue, 07/15/2014 - 12:01 | 4959347 Son of Loki
Son of Loki's picture

"Irrational Exuberance".....................................Sounds Bullish!

Tue, 07/15/2014 - 12:46 | 4959498 RevRex
RevRex's picture

There are so many braindead stupes here it is hard to tell.....


Just look how many say stupid shit like "Busch did it two and boath party's hour the same".....

Tue, 07/15/2014 - 14:36 | 4959905 allgoodmen
allgoodmen's picture

I can see how it might be hard to parse your <sarc> especially with MDB on board today

Tue, 07/15/2014 - 16:14 | 4960361 newbie vampire
newbie vampire's picture


Good too see another dumb fuckstick who does not recognize both of us are being sarcastic, do you need to the little <sarc> tag everytime?"

 Reckon you might do too.  Gits me a lil worried when folks take offence at sarcasm for face value.

Tue, 07/15/2014 - 11:56 | 4959314 GovernmentMule
GovernmentMule's picture

The moonman lead post proudly sponsered by the NSA. Thank you for reading and please tune in again soon...

Tue, 07/15/2014 - 10:40 | 4958921 TabakLover
TabakLover's picture

MDB, what size strap-on does Yellen do you with?

Tue, 07/15/2014 - 11:11 | 4959079 syntaxterror
syntaxterror's picture

No strap-on needed with that tool.

Tue, 07/15/2014 - 12:07 | 4959370 pods
pods's picture

"She's got a cock like a horse!"

<hat tip Slapshot>

Tue, 07/15/2014 - 12:35 | 4959467 Squid Viscous
Squid Viscous's picture

looks like she opened pandora's box, in more ways than one

Tue, 07/15/2014 - 10:55 | 4958991 Seasmoke
Seasmoke's picture

MDB has lowered expectations so low, that this looks like one of his bests posts.....MDB is good, really sneaky good !!

Tue, 07/15/2014 - 11:14 | 4959105 NoDebt
NoDebt's picture

You had me at "optimal results", MDB.  I keep thinking "optimal for whom, exactly?"

Tue, 07/15/2014 - 11:22 | 4959128 orez65
orez65's picture

Dear MillionDollarBonus, regarding your comment:

" ... economic planners take every indicator into account when planning the economy ..."

That is the problem, s..t head!!

It's called "central planning", as practiced in the ex Soviet Union !!!

A free market economy does not need any central planning !!

Tue, 07/15/2014 - 11:26 | 4959180 donsluck
donsluck's picture

New to the board, eh? MDB is a master at the straight-faced sarcastic zinger!

Tue, 07/15/2014 - 11:34 | 4959185 MillionDollarBonus_
MillionDollarBonus_'s picture

"A free market economy does not need any central planning"

Are you serious? Every economy in the world has a significant amount of central planning. Without central planning more than half of the world's economy would simply dissapear, including the entire healthcare systems of countries like Canada and the UK!!

Tue, 07/15/2014 - 11:35 | 4959222 Jack Sheet
Jack Sheet's picture

Cretin. Bugger off.

Tue, 07/15/2014 - 11:59 | 4959339 slightlyskeptical
slightlyskeptical's picture

The point being if there is Central planning then it is not a free market economy. It means there is not a free market economy anywhere in the world. As such anyone spouting out about free market economies is in reality a moronic sheep.

Tue, 07/15/2014 - 12:02 | 4959350 donsluck
donsluck's picture

Just to play along, capitalism cannot survive in a planned economy. They are mutually exclusive. A planned economy is a central tenent of totalitarianism. Think of it this way, money represents almost everything. If you control the way money is "printed", distributed, earned, taxed etc. you control everything. IE totalitarianism.

Tue, 07/15/2014 - 13:36 | 4959680 ejmoosa
ejmoosa's picture

"more than half of the world's economy would simply dissapear, including the entire healthcare systems of countries like Canada and the UK!!"


and that would be bad because...?

Tue, 07/15/2014 - 11:24 | 4959171 McCormick No. 9
McCormick No. 9's picture

Can anyone here do beter than Yellen? Look, we all know that we should have let the system implode in 08. But we didn't. Now, the problem is even worse, and there are fewer solutions. What would you do in Yellen's case?

Scenario 1) Continue to print mad ZIRP but let the equity bubble take its own course and explode on its own. Result- total destruction of modern society as a deflationary depression of unimaginable magnitude is unleashed upon humanity.

Scenario 2) Raise interest rates slowly but steadily until  the Fed rate reaches 2%. Result- a massive financial coronary as liquidity dries up faster than the coochie of a menopausal housewife with resentment issues. Then, as no-one can get debt-money to run their vig-payment scams, a massive deflationary depression sets in with actual Holodomor victims lying in the streets.

Scenario 3) Prosecute banksters and put them in jail and/or execute them. Govt stockpiles staple food items for redistrbution. Declare a debt moratorium and reset the entire system, based on a gold standard. In the interim, there will be issues of starvation and social dislocation, but you feed people until the economy gets back on its feet. Result: A total destruction of the Nuland-et al financial vampire system, and a return to real productivity without the onerous burden of usury debt slavery. This is totaly unacceptable to the Nuland et al drones like Yellen, so she will continue to muddle onwards towards a total disaster. But if the tribe survives, collateral damage is not important.

Tue, 07/15/2014 - 11:33 | 4959213 MillionDollarBonus_
MillionDollarBonus_'s picture

I'll assume your more extreme suggestions are just a joke, but the truth is many of your proposals have already been implemented in the Dodd-Frank bill passed by Predident Obama in 2010, which is one of the reaons we are seeing such promising growth in the economy. The Dodd-Frank bill amde a number of legislative changes, including improved oversight of the economy by government regulators and a number of changes to improve the stability of the financial system. 

Tue, 07/15/2014 - 11:37 | 4959231 vulcanraven
vulcanraven's picture

We Predident now

Tue, 07/15/2014 - 12:00 | 4959340 Beam Me Up Scotty
Beam Me Up Scotty's picture

MDB--Dodd-Frank also includes the provision enabling the banks to Corzine your bank account.  I suppose you support that as well.  As a reminder, dollars are nothing more than a representation of your labor.  You earned them, you paid taxes on them.  So if they bail-in the banks, its nothing more than outright THEFT of my LABOR.

Tue, 07/15/2014 - 12:05 | 4959364 donsluck
donsluck's picture

At the risk of a -1 vote, I need to point out that deposits in banks under FDIC protection are not insured over $100,000.00. Therefor, you are assuming risk when your deposits exceeed these limits.

Tue, 07/15/2014 - 12:29 | 4959414 Beam Me Up Scotty
Beam Me Up Scotty's picture

Its actually $250,000 now.  However, that doesn't preclude them from taking more than that if there are bail-ins.  Remember, they can write the rules and change the rules any time they want.  It won't be in your favor or mine though.  Just a reminder, however, that dollars are just a representation of your labor.  Taking your dollars is nothing more than taking your labor.  Taking your labor is slavery.

Tue, 07/15/2014 - 12:53 | 4959532 Herd Redirectio...
Herd Redirection Committee's picture

Don't call it a 'bail-in'.  Call it 'creditors' doing their part to save the banks they love.

Tue, 07/15/2014 - 13:34 | 4959668 Beam Me Up Scotty
Beam Me Up Scotty's picture

That might be the politically correct thing for them to call it, or the Orwellian thing to call it, but it's still theft. Most people "think" they are putting "their" money into the bank for safekeeping. Not to become a shareholder.

Tue, 07/15/2014 - 11:37 | 4959232 Jack Sheet
Jack Sheet's picture

Y o u are the joke here.

Tue, 07/15/2014 - 12:16 | 4959409 OC Sure
OC Sure's picture



As long as there is "monetary policy" there will never be stability;

Effect, be-cause.

As long as there is "monetary policy" there will always be tyranny;

Effect, be-cause.

The problem is "monetary policy."

The solution is to resolve the problem.

Tue, 07/15/2014 - 11:57 | 4959317 Calmyourself
Calmyourself's picture

3, my children deserve a chance to avoid this:

third down;

Tue, 07/15/2014 - 12:44 | 4959496 Excursionist
Excursionist's picture

It is so, so telling when a Fed chairman opines on equity sector valuations.  I read the transscript and despite my cynicism that I thought couldn't get worse, I still had a WTF moment.

Tue, 07/15/2014 - 11:43 | 4959255 moneybots
moneybots's picture

"Maybe if our Federal Reserve had paid closer attention to housing prices from 2002 to 2008, they could have prevented the housing collapse."


It was Greenspan's intention to create a housing bubble.

Tue, 07/15/2014 - 11:44 | 4959259 Blano
Blano's picture

I green arrowed you for finally showing up again.  Where the hell have you been????

Tue, 07/15/2014 - 11:52 | 4959296 jughead
jughead's picture

"Economic planners"?  Is that like "military intelligence"?

Tue, 07/15/2014 - 12:24 | 4959436 teslaberry
teslaberry's picture

this was actually one of your better ones in a long time. well done mdb.  WELCOME BACK YOU LOVEABLE DOUCHE YOU.

Tue, 07/15/2014 - 13:25 | 4959647 Da Yooper
Da Yooper's picture

Yo Tyler's


Would it be possible that when someone gets to a -50 on their post - when that happens the post disappears


at - 50 a post is most likely BS & really dont deserve to be read IMO

Tue, 07/15/2014 - 14:03 | 4959771 ajax
ajax's picture



Da Yooper sounds like a sore winner

Wed, 07/16/2014 - 14:24 | 4963599 realWhiteNight123129
realWhiteNight123129's picture

You´re impriving MillionDollarBonus. Really good stuff.


Tue, 07/15/2014 - 10:28 | 4958881 jbvtme
jbvtme's picture

this fucking hag has me looking at broom etf's

Tue, 07/15/2014 - 10:32 | 4958877 slaughterer
slaughterer's picture

Looks like Yellen is boycotting Kev' from pumping IBB/FB/LNKD/CYNK/RUT for the rest of the summer.  No problem.  You can still buy the ATH in other sectors. 

Tue, 07/15/2014 - 10:40 | 4958908 Miggy
Miggy's picture

The players that mean anything are now short.


Look for a planned crash in the fall so money will flow into the bond market to make up for lack of QE.


John 3:16

Tue, 07/15/2014 - 10:40 | 4958931 SuperRay
SuperRay's picture

I though John 3:16 read: The holy players that mean anything are now short.

Tue, 07/15/2014 - 10:42 | 4958936 Miggy
Miggy's picture
John 3:16 

 For God so loved the world, that he gave his only begotten Son, that whosoever believeth in him should not perish, but have everlasting life.


I encourage you to work out your salvation through Jesus Christ.

Tue, 07/15/2014 - 10:56 | 4958993 SuperRay
SuperRay's picture

I encourage you to work out your death anxiety through Friedrich Neitzche, Albert Camus, and John Paul Sartre

Tue, 07/15/2014 - 11:18 | 4959135 Oh regional Indian
Oh regional Indian's picture

The Fundie force is strong on ZH SuperRay....:-)

Rather the no-Fun die crowd.

Those damn nihilists need to take it up their dead german ashes too though.

Two sides of the same misery coin.


Tue, 07/15/2014 - 14:07 | 4959785 ajax
ajax's picture



To Kierkegaard: do not pass Go, do not collect $100.--

Tue, 07/15/2014 - 11:15 | 4959113 goldpercent
goldpercent's picture

Funny how I can't find a quote in the Bible where Jesus says anything even remotely close to that sentiment.  Do you really believe it could be that easy?  Just believe in him, and then you are saved?  Really?

Tue, 07/15/2014 - 11:17 | 4959136 slightlyskeptical
slightlyskeptical's picture

Religion = having someone to get you off the hook everytime you sin.

Tue, 07/15/2014 - 11:23 | 4959161 SheepDog-One
SheepDog-One's picture

All hail the Cheesus Sliced!

Tue, 07/15/2014 - 11:30 | 4959198 donsluck
donsluck's picture

I fucking HATE religion. Truly.

Tue, 07/15/2014 - 14:39 | 4959911 allgoodmen
allgoodmen's picture

The only thing you and Zhers have in common is we both believe the end is near.

But you have been waiting for the end of the world for 1,972 years

Tue, 07/15/2014 - 10:52 | 4958973 tarsubil
tarsubil's picture

If there is a plan, I think that would be it.

Tue, 07/15/2014 - 12:37 | 4959471 Squid Viscous
Squid Viscous's picture

i'm buying more Amazon cuz Bezos is building a moat around his zero margin some point they will be enormously profitable, LOL

Tue, 07/15/2014 - 10:37 | 4958915 thunderchief
thunderchief's picture

So why did a dashing young fella like Ben leave such a prestigious job and hand it over to an old lady?

Gosh, I bet every Wall Street boardroom has their scalpers out at the old folks homes around New york. You just can't beat the experience.

After all, its just one of the worlds most important jobs.

If your hanging on this old lady's words, you may as well be hanging from her teets.

Tue, 07/15/2014 - 10:38 | 4958916 slaughterer
slaughterer's picture

SPY down .03%.  This is a tough day for bulls.

Tue, 07/15/2014 - 10:51 | 4958970 disabledvet
disabledvet's picture

"Our current estimate at the Fed for returning to normalized monetary policy remains somewhere between 800 and a thousand years. Or when hell freezes over, whichever comes first. Now I look forward to your questions."

Tue, 07/15/2014 - 12:43 | 4959495 Squid Viscous
Squid Viscous's picture

or until my unused twat dries up like a raisin, oh wait ...

Tue, 07/15/2014 - 11:13 | 4959099 tempo
tempo's picture

FED wants gld/corn lower, DJIA higher, lower rates. No one cares about small caps. More illegals, more ebt, more dreamers, more financial aid, more subprime, more part time, more FED central control please.

Tue, 07/15/2014 - 12:05 | 4959359 HardAssets
HardAssets's picture

Same ole, same ole. The fed crooks blow up a bubble, and blame the 'markets' for reacting in a predictable manner. Of course, they're all are on the same side.

Can't get any attention put on the fed though. That would end their little rigged casino. The fed is the in-house dealer passing aces to 'the boys'.


Once you see through all this . . . it almost seems obvious. Doesn't it ?

Tue, 07/15/2014 - 12:07 | 4959369 BobTheSlob
BobTheSlob's picture


Tue, 07/15/2014 - 10:26 | 4958865 Agent P
Agent P's picture

For example, average debt-to-earnings multiples have risen, and the share rated B or below has moved up further for leveraged loans.

I wonder what the current interest rate environment has to do with this....hmmm???

Tue, 07/15/2014 - 10:25 | 4958868 Honey Badger
Honey Badger's picture

Central planning knows no limits.

Tue, 07/15/2014 - 10:29 | 4958870 buzzsaw99
buzzsaw99's picture

the fed only cares about one thing, the stock market. FB is almost as big as JPM. Now that's some funny shit right there.

Tue, 07/15/2014 - 10:36 | 4958912 Al Huxley
Al Huxley's picture

It's the best way available for the retail market to participate in the current bull market in spying and invasion of privacy - of course their valuation's sky rocketing.

Tue, 07/15/2014 - 11:05 | 4959043 codecode
codecode's picture

what does JPM add to the economy?

Tue, 07/15/2014 - 13:03 | 4959579 Slave
Slave's picture

Shitloads of commercial bank funny money.

Tue, 07/15/2014 - 12:46 | 4959503 Squid Viscous
Squid Viscous's picture

trying to guess which one's more funny, the insolvent bank or the useless "social media" stock that everyone will be laughing about in 5 years?

Tue, 07/15/2014 - 10:29 | 4958884 Agent P
Agent P's picture

Bubble popping, Dutch Boy looking, mother fucker!!!  Bring back that guy with the beard!!!! 

Tue, 07/15/2014 - 10:30 | 4958888 Rocket De Stock
Rocket De Stock's picture

It's about time, as to retain any type of credibility Yellen "has to talk this thing down a bit".

USD/JPY can only hold on so much longer here before finally breaking down in conjunction with YEN breaking out.


Carry unwind is going to come much sooner this time around , as NO ONE is gonna get caught with their pants down around their ankles this time.


More on this and other great forex trade related info at :

Tue, 07/15/2014 - 10:30 | 4958889 slaughterer
slaughterer's picture

Zuckerberg needs to fly to the Fed and get on his hands and knees pronto: all part of his fiduciary duty. 

Tue, 07/15/2014 - 10:31 | 4958891 spastic_colon
spastic_colon's picture

and this...."there are mixed signals concerning the economy" LOL along with "noise" etc translates to "I have no clue"

Tue, 07/15/2014 - 14:00 | 4959766 HardAssets
HardAssets's picture

Naw . . . she's got all the numbers, you can bet on that.

They know exactly how its going . . . . theyre the ones doing it. 

Never fall for their 'duh . . . we're cluess'  act.


Tue, 07/15/2014 - 10:31 | 4958893 morning
morning's picture

Espirito Santo holding about to go Fukuyama, or Hiroshima, make your pick.

Tue, 07/15/2014 - 10:32 | 4958897 buzzsaw99
buzzsaw99's picture

Bizarro World News headline:  Bank Profit Falls 8%, Stock Price Up 4%

Tue, 07/15/2014 - 10:32 | 4958900 Zeptemberalevin
Zeptemberalevin's picture

she just popped my cum bubble :) 

Tue, 07/15/2014 - 10:37 | 4958914 WTFUD
WTFUD's picture

I saw everything; It was the Groundhog who dunnit!

Tue, 07/15/2014 - 10:39 | 4958923 Racer
Racer's picture




LOLOLOLOLOL, oh ha ha, ha ha, ha... my sides, my sides... ha ha ha, LOL

Tue, 07/15/2014 - 11:31 | 4959208 KnuckleDragger-X
KnuckleDragger-X's picture

False dawn? Is that what it is? I thought it was the headlight of an oncoming train.

Tue, 07/15/2014 - 10:39 | 4958927 Bokkenrijder
Bokkenrijder's picture

I like those bathroom tiles as background for that chart!

Tue, 07/15/2014 - 10:43 | 4958941 MWizard
MWizard's picture

Can praying increase your profits?

Tue, 07/15/2014 - 11:33 | 4959214 SheepDog-One
SheepDog-One's picture

Kindly fuck off with your religion bullshit, no place for it here.

Tue, 07/15/2014 - 12:05 | 4959361 BobTheSlob
BobTheSlob's picture

Another tolerant lover of the first amendment. Most normal people simply ignore...and there we have it!

Tue, 07/15/2014 - 12:46 | 4959505 allgoodmen
allgoodmen's picture

First Amendment applies only in the US, and then only to Congress. So take your religion and bugger off

Tue, 07/15/2014 - 12:54 | 4959539 philosophers bone
philosophers bone's picture

A friend of mine convinced me to attend a "CEO" (Christian Enterprise Organization) seminar where the message was that belief in God would make you "wealthy".  When pressed by what was meant by "wealthy", it turns out that they meant financial wealth, not just wealthy in spirit, etc.  The key, we were told, was to "tithe" which was to give 10% of what you made to the church.  Then someone asked whether the tithing rule applied to personally owned businesses, holding companies and family trusts and whether tithing applied to gross revenue, net profits or EBITDA.  After some blank stares and awkward stumbling, we were told that God would like the rule to apply to gross revenues, but that it was sufficient if you gave net profits.  It was really nice to get that clarification

Tue, 07/15/2014 - 13:09 | 4959601 Squid Viscous
Squid Viscous's picture

bob it seems you only like your religion, while all "moooslimes" are terr'rist fucks...?

Tue, 07/15/2014 - 10:47 | 4958957 azengrcat
azengrcat's picture

Another Bay Area jealous liberal intellectual NIMBY twisting the knife into the backs of local industry (1 percenters!!!) whenever she gets the chance.

Tue, 07/15/2014 - 10:50 | 4958967 GrinandBearit
GrinandBearit's picture

More jawboning and gobbledy gook.

Just fucking crash already.

Tue, 07/15/2014 - 10:51 | 4958968 shanearthur
shanearthur's picture

Trying to get my mind around this one since I'm a rookie financial news junkie. To use an analogy:


We have a plane at 30,000 feet with engine failure and broken landing gear approaching an eventual crash landing. The likes of Santelli say, "Hey, we need to warn the passengers that all is not right with this plane and it will eventually crash." The likes of Leisman would say, "We've descended in this lovely atmosphere for 20 minutes and we haven't crashed yet, so your advice is sh!t. See how pretty the clouds are. And besides, we'll be so rich by the time we land, we'll be too happy to care." The likes of Yellen and The Bearded Guy knew the plane was defective before it launched, but are just arguing at which altitude to tell the truth that would avoid the commoners rushing first class where they are sitting.

Do I have this about right?

Tue, 07/15/2014 - 11:02 | 4959021 Tenshin Headache
Tenshin Headache's picture

I'd say you have it about right. And the altitude for truth-telling is treetops.

Tue, 07/15/2014 - 11:09 | 4959070 buzzsaw99
buzzsaw99's picture

naw, treetop level is just "noise"

Tue, 07/15/2014 - 11:26 | 4959183 shanearthur
shanearthur's picture

Haha. And here's the thing. My aunts and uncles, my father, mother and nieces all see that this is the true state of affairs. Years prior, all they knew about how the economy was doing was listening to a 30-second announcement on the radio from ABC News about now much the stock market went up or down that day. But now we have alternative media and we know, and are preparing for the next crash the best we can. Watching the Fed try to transform reality into unreality is idiotic to us.

Tue, 07/15/2014 - 11:11 | 4959083 RaceToTheBottom
RaceToTheBottom's picture

You also could tell about FEDs from different countries fighting over who is in first class while pointing out the others are in economy.

Because that will make all the difference.

Tue, 07/15/2014 - 11:15 | 4959112 Eyeroller
Eyeroller's picture

Not quite.

The Ponzi Munchkin and her Beard knew the plane was defective, and arranged to be paged just before boarding in order to announce an emergency has called them away.  "We'll meet up with you on a later flight.  BonVoyage, Bitchez."

Tue, 07/15/2014 - 11:21 | 4959148 shanearthur
shanearthur's picture

I guess you could say that with the very nature of The Fed, they designed the plane to crash and convinced the government that their design was sound and that they should manage all the crash landings like a self-serving consultancy.

Tue, 07/15/2014 - 10:56 | 4958994 jubber
jubber's picture

Gold now getting fucking slammed


Tue, 07/15/2014 - 10:58 | 4959002 sbenard
sbenard's picture

In language so cryptic, Alan Greenspan would blush!

Tue, 07/15/2014 - 11:00 | 4959009 Tenshin Headache
Tenshin Headache's picture

Dow promptly plunges 0.05%

Tue, 07/15/2014 - 11:21 | 4959147 Eyeroller
Eyeroller's picture

A serious level, given the whistling past the graveyard that has gone on since May.

This is why there will never be a 10% pullback:  if that began to happen, the muppets would panic, having never experienced anything like that in recent memory.  The panic would lead to a crash.

The Fed can't print Xanax once panic sets in.

Tue, 07/15/2014 - 11:01 | 4959010 ekm1
ekm1's picture

Only one thing matters:




Rates are irrelevant as they do not extinguish reserves.


Eventually Senate will order the Fed to drain reserves by selling bonds, otherwise world will totally dump USD and resort to barter as it is doing.

Tue, 07/15/2014 - 11:02 | 4959019 ekm1
ekm1's picture

Reserves make the market


Reserves break the market


Nothing else matters.

Tue, 07/15/2014 - 11:03 | 4959022 LawsofPhysics
LawsofPhysics's picture

Selling bonds to whom?  With real inflation running well over 3%, who is going to buy those bonds?  LMFAO!!!!

Tue, 07/15/2014 - 11:07 | 4959048 ekm1
ekm1's picture

Lot's of buyers if yield is high enough


There are $40 trillion officially in existence and another $20-30 trillion rumored to be in computers in 80 offshore locations.


Drainage of dollars is needed otherwise world will totally ignore it

Tue, 07/15/2014 - 11:47 | 4959271 LawsofPhysics
LawsofPhysics's picture

That's the point moron, yeilds are not high enough.  There are no buyers for that shit paper.

Tue, 07/15/2014 - 11:54 | 4959286 ekm1
ekm1's picture

Ok, let me explain this to you:


USD = bonds without expiry and without yield


UST = bond with expiry and with yield


That is just a swap for yield. Both are bonds.


Only Fed or Gov can extinguish USD.

UST self extinguishes at expiry


At right yield, people will swap yieldless USD with acceptable yielding USTs

Let's say: 5-6% of 10 yr?

Tue, 07/15/2014 - 12:02 | 4959352 Ghordius
Ghordius's picture

I agree on your bonds/banknotes lecture, but the reason for wanting/holding bonds or cash is different

I, for example, hold USDs for liquidity needs reasons. a Pension Fund manager buys bonds for yield. he has no use for USDs and I have no use for USTs

USTs "self estinquishes"? a UST has to be estinguished with... USDs

Tue, 07/15/2014 - 12:12 | 4959385 ekm1
ekm1's picture

Correct for normal economic situation When world keeps using USD without doubting it.


World is dumping USD now because there are too many of them.

$40 trillion officially exist and another $20-30 trillion unaccounted for in offshore locations.


As within anything, the value of something depends on its scarcity

USD scarcity is needed for the world to keep using it

Tue, 07/15/2014 - 12:24 | 4959437 the grateful un...
the grateful unemployed's picture

you have it wrong, the more of something you are selling the more widely used that thing becomes and the more valuable it is. (the textbooks are wrong) scarcity means there is no market for your product. the dollar is reserve currency because its traded everywhere and has a liquid market and is not likely to change much in value overnight. big dollar problem is when someone other than US takes dollars in payment for goods and services they few options to buy American goods (or more importantly military hardware, because we limit who can do that) and so they are forced to take UST in exchange, zero interest paper, while the dollar loses value slowly and erodes their exchange value. thats why foreigners dont like the dollar

Tue, 07/15/2014 - 12:29 | 4959451 ekm1
ekm1's picture

So let's print $10000000)00 trillion more

Dollar bonds stocks are not edible

The value of a currency is acceptance for goods and services not for bonds and stocks


The term "deep liquid market" is just propaganda and means nothing.

Financial market disconnected from economic output kills the economy

Tue, 07/15/2014 - 13:02 | 4959578 ekm1
ekm1's picture

It's the opposite.

USD is extinguished with UST sold by the Fed.



Tue, 07/15/2014 - 11:56 | 4959311 donsluck
donsluck's picture

And there you have it, for the yield to rise, the price must fall and the current holder will take the loss. The FED would have to be bailed out. won't happen. We can look forward to decades of capital destroying low interest rates.

Tue, 07/15/2014 - 11:58 | 4959329 ekm1
ekm1's picture

Triple Lehman is far far far far far better than the world dumping USD which is under way and accelerating


This is now a National Security issue with Military involvment.

Tue, 07/15/2014 - 13:13 | 4959611 SillyWabbits
SillyWabbits's picture

In a nut shell:

It seems to me that most people don’t get the fact that the world doesn’t need Americans.  They could all be replaced with a computer that receives invoices from different currency origins and prints the necessary “dollars” to fulfill payment.  The producing nation need not produce anything except invoices to get the dollars to buy oil.

Unlike other nations, we need not “produce a tradable thing” to get “dollars"

America needs to produce nothing and thus need not exist in a logical sense.

The only thing the “computer” would need to do is protect itself from being destroyed, and not allow other “printers” to create dollars.

The “computer” could trade the various currencies, within its memory, against one another for yield to pay for electricity and satellite laser rays.

It boils down to these facts once distilled to its lowest common detonator.

I know this is far too brief for so complex an intertwining of factors, but in essence – that’s about it.    

Tue, 07/15/2014 - 13:19 | 4959619 ekm1
ekm1's picture


That is correct.


Though USA does offer one service:



US Military protects world trade routes and "forces" commodity and energy countries to them.

Without US Military doing this job, world would be like in 1930s, mostly bilateral trade, no world currency, which basically what is slinding into currently.


USA Military is the dollar backup.

If USA military stops intervening defending world trade routes and LITERALLY FORCING resource countries to export their resources, world would be going towards ww3.

It is sliding into the mode right now.

Tue, 07/15/2014 - 14:20 | 4959836 SillyWabbits
SillyWabbits's picture

Sadly so!

The Homeland (UTB America) is a nation without a people.  Although, via unprecedented immigration from all nations, the citizens of America are becoming the people of other’s nations, who see themselves as a people who are citizens in the Homeland.

The Homeland is not America.  It is post modernistic and Eastern Philosophically.    

Unlike the long resident citizens of America who assimilated into a nation of citizens as a people, the now unassimilated value their people cohesion over the rights of citizens, while demanding all the benefits of citizenry in a democracy; one of which is to remain separate as a people, demanding they be accepted as they are, and the citizens change in their favor because citizens have no history as a people.

As this progresses through time, we(The Homeland) will become a polyglot nation,  as Teddy Roosevelt warned, undone by old prejudices, which will divide the nation.

Then, world peace will evaporate into WWI all over again, if in fact that war has ever ended.


Tue, 07/15/2014 - 14:36 | 4959901 ajax
ajax's picture




To put it another way: America? There is no there there.

Tue, 07/15/2014 - 14:39 | 4959909 SillyWabbits
SillyWabbits's picture

There you go!

Tue, 07/15/2014 - 13:15 | 4959620 philosophers bone
philosophers bone's picture


Tue, 07/15/2014 - 13:19 | 4959634 ekm1
ekm1's picture

True. It's always been, but now it's very acute. World is abandoning USD

Tue, 07/15/2014 - 11:23 | 4959160 Eyeroller
Eyeroller's picture

Not the current Senate.

Tue, 07/15/2014 - 11:26 | 4959175 ekm1
ekm1's picture

There is no other option for Congress.


Order the Fed to Drain reserves in trillions and manually cause Triple Lehman or see dollar die.


It's already too late.

Congress is corrupted, but not stupid.

Congress just killed Iran deal today.

Tue, 07/15/2014 - 11:01 | 4959013 pragmatic hobo
pragmatic hobo's picture

GPRO is a 5 billion dollar company ...

Tue, 07/15/2014 - 11:33 | 4959215 Billy Sol Estes
Billy Sol Estes's picture

Candy Crush, Pandora, Linkedin (a fucking website and nothing more), Facebook


Tue, 07/15/2014 - 13:13 | 4959609 Squid Viscous
Squid Viscous's picture

you have to value it based on 2025 earnings, when everyone with any dough will be walking around with a Gopro taped to their skull...

Tue, 07/15/2014 - 11:04 | 4959030 Ariadne
Ariadne's picture

Yellen? I heard you was dead.

Tue, 07/15/2014 - 11:06 | 4959057 khakuda
khakuda's picture

So what?  Her warnings are followed by promises not to upset the apple cart.

Tue, 07/15/2014 - 11:06 | 4959058 Ariadne
Ariadne's picture

And now back to your scheduled PM adjustment.

Tue, 07/15/2014 - 11:08 | 4959067 slightlyskeptical
slightlyskeptical's picture

It is pretty simple. The FEd has lost all credibility. They have to pop the equity bubble to get some back.

Tue, 07/15/2014 - 11:09 | 4959072 luckylogger
luckylogger's picture

This babbling macroprudential bitch is driving me crazy this morning trying to trade...

WTF is macroprudential- can anybody define it????

Thats what I thought, just another woman that likes to hear her macroprudential mouth talk............

Tue, 07/15/2014 - 11:14 | 4959108 Tenshin Headache
Tenshin Headache's picture

That would be "showing careful good judgment in a big picture sense."

Which is bullshit of course, lol.

Tue, 07/15/2014 - 11:19 | 4959140 SheepDog-One
SheepDog-One's picture

You tradin'? I got some candy bar wrappers here, what ya got to trade fer?

Tue, 07/15/2014 - 14:14 | 4959816 Wahooo
Wahooo's picture

I got some baseball cards for your candywrappers.

Tue, 07/15/2014 - 11:13 | 4959098 johand inmywallet
johand inmywallet's picture

I don't care how small of a hole the FED tries to control the burst, it still blows up. Shit, I'll just use a smaller pin to pop the bubble. That's like saying I'll use a smaller match to light the gas with.

It's gonna be loud when it blows!

Tue, 07/15/2014 - 11:17 | 4959127 SheepDog-One
SheepDog-One's picture

Dire warning from the bubble-poppin Fed.....DOW now down a jaw dropping -5 points.

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