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IMF's Christine Lagarde Joins The Chorus, Warns Market Is "Too Upbeat"

Tyler Durden's picture


First, three weeks ago, it was the BIS.

Then, last week, it was Janet Yellen, Series 7, 63 certified, who during last week's Humphrey Hawkins testimony, did what no Fed Chairman had done before: commented on stock prices, and what's worse (if only for the momo, liquidity addicts so used to be being bailed out by the Fed always and forever) she had her "irrational exuberance" moment when the Chairmanwoman of the Fed explicitly stated that biotech and social-network stocks are in a bubble.

Scotiabank's Guy Haselmann summarized it best:

The most shocking moment came shortly thereafter, when Oscar-winner Yellen screamed to Hensarling after a question, “Because you can’t handle the truth!” She then launched into an explanation about how the plan all along has been to intentionally create asset inflation (as opposed to asset bubbles). Such a proclamation means that Yellen must be an expert on market valuation metrics and can responsibly recognize the difference between asset inflation and asset bubbles. To be fair however, she admits that should (another) boom /bust mistake be made, she has great confidence (this time) that the FOMC has the ability to clean up the fallout through macro-prudential and regulatory tools. Regrettably, not making the transcript was her barely audible whisper of “pump and regulate, baby”.

That she finally admitted that the market is approaching its upper limit should have been enough to launch a major market correction. Instead the market barely budged and subsequently recovered virtually all its losses, even as the war in Ukraine and Gaza reached new highs, in the process confirming that other recurring Fed concern: that the market has hit record complacency (to be sure, the Fed had zero commentary that it is the Fed's fault the market no longer responds to any newsflow, fundamentals or stimuli).

It appears that the Fed has created a terrifying "central-planning" Frankenstein monster with its monetary policy, one which will keep going higher and higher until it crashes so epically, it will complete the finacial system wipe out that was started with the collapse of Lehman and merely delayed with the $4 trillion Fed balance sheet expansion. And the Fed is finally realizing just this, with a 5+ year delay: after all we cautioned just this would happen in March of 2009.

Then, yesterday, it was none other that the IMF's Christine Lagarde, who joined the chorus of warnings that the market is overvalued and due for a correction. From Reuters and BBC:

"The head of the International Monetary Fund warned on Friday that financial markets were "perhaps too upbeat" because high unemployment and high debt in Europe could drag down investment and hurt future growth prospects... She also warned that continuing low inflation could undermine growth prospects in the region.


"There is the danger of a vicious cycle: persistently high unemployment and high debt-to-GDP ratios jeopardize investment and lower future growth," Lagarde said on Friday, according to the prepared text of her speech

So to summarize: first the BIS, then the Fed and now the IMF are not only warning there is either a broad market bubble or a localized one, impacting primarily the momentum stocks (which is ironic in a new normal in which momentum ignition has replaced fundamentals as the main price discovery mechanism), they are doing so ever more frequently.

And how do the same momentum algos react? They promptly ramp the S&P 500 to essentially its all time high. Why? Because at this point it is far too late for even the Fed to pretend it has any control over the "centrally-planned" market. Or rather, centrally-unplanned. And because it is now also too late for the Fed to even conduct a controlled crash.

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Sat, 07/19/2014 - 17:46 | 4978005 Bollixed
Bollixed's picture

That lead-in image of CL looks like a Salvador Dali rendition of the Portrait of Dorian Gray.

She's never looked better...

Sat, 07/19/2014 - 17:52 | 4978009 Pinto Currency
Pinto Currency's picture



The central banks buy $29 trillion of equities and financial assets and then the BIS, the IMF, and the central banks tell us the markets are "too upbeat".  Thanks.

Sat, 07/19/2014 - 17:53 | 4978028 DoChenRollingBearing
DoChenRollingBearing's picture

The central banksters and the numerologists agree: stocks are too high, look out below.

Despite that odd couple, there may be truth there.  It is important to see what Lagarde, Yellen & Co. are saying, that the building (stocks) rests on shaky foundations...

Sat, 07/19/2014 - 17:58 | 4978037 Pinto Currency
Pinto Currency's picture



The cb's have propped the market up on a shakey foundation and now that all the retail investors are in, they give some warnings.

Sat, 07/19/2014 - 18:18 | 4978096 CognacAndMencken
CognacAndMencken's picture



All this bull-market skepticism from Wall Street banks to Yellen to IMF/BIS officials to internet blogs means only one thing:  the market is going higher.  Skepticism is the single healthiest ingredient to a bull market; temporary pullbacks here and there are great, too.    

Sat, 07/19/2014 - 18:27 | 4978136 Leonardo Fibonacci2
Leonardo Fibonacci2's picture

Fake tan bitch!!!  Why do the wrong people get melanoma's

Sat, 07/19/2014 - 19:13 | 4978278 Keyser
Keyser's picture

"Only two things are infinite, the universe and human stupidity, and I'm not sure about the former." - Albert Einstein

Sat, 07/19/2014 - 19:58 | 4978409 max2205
max2205's picture

She'd look better with a gallon of cum all over her face....on second thought...

Sat, 07/19/2014 - 20:02 | 4978426 gh0atrider
gh0atrider's picture

gh0atrider knew Christine Lagarde was a shape-shifting reptilian.

Too much moonshine one night and he went there.

Sat, 07/19/2014 - 20:13 | 4978445 Thought Processor
Thought Processor's picture



Anyone else find it just slightly odd that this comes out of her mouth after giving that lesson on numerology?  Not to mention Dick Cheney coming out of his closet recently to bless us with his dire predictions.


This crowd has a history of giving prognostications of future events that they help create.  



They are digging their own graves.




Sat, 07/19/2014 - 18:52 | 4978181 Eirik Magnus Larssen
Eirik Magnus Larssen's picture

" I can calculate the movements of the stars, but not the madness of men. " -- Isaac Newton on the South Sea Bubble

Sat, 07/19/2014 - 21:25 | 4978643 HardAssets
HardAssets's picture

I guess it helps, a tiny bit, to be reminded that Newton lost his ass in the South Sea Bubble. If he couldn't predict the moves of a scam 'market' very easily, who of us here can do so today.

Sat, 07/19/2014 - 18:04 | 4978062 ms8172
ms8172's picture

If the central banks buy stocks... do they have the ability to short them?  Anyone know?  I would say yes... they might be warning what is coming.

Sat, 07/19/2014 - 18:24 | 4978124 john39
john39's picture

They bought the entire planet with monopoly money.  Now time to stomp humanity's guts out. Or so they think.

Sat, 07/19/2014 - 18:44 | 4978190 Offthebeach
Offthebeach's picture

What are you implying? That markets are rigged?

Sat, 07/19/2014 - 18:53 | 4978217 Redneck Hippy
Redneck Hippy's picture

Like the Fed and the IMF have been such great forecasters...d

Sat, 07/19/2014 - 18:53 | 4978218 Redneck Hippy
Redneck Hippy's picture

Like the Fed and the IMF have been such great forecasters...d

Sat, 07/19/2014 - 18:09 | 4978070 toxic8
toxic8's picture

scary stuff, that thumbnail image!

Sat, 07/19/2014 - 20:03 | 4978431 Implied Violins
Implied Violins's picture

My balls could only enhance two of those chins, max.

Sat, 07/19/2014 - 18:39 | 4978175 yogibear
yogibear's picture

She might look good at night with extermely dark sunglasses.

Sat, 07/19/2014 - 19:02 | 4978235 cowdiddly
cowdiddly's picture

Well, her and Angelo Mozillo do make such a lovely couple. Pass the TANG tm

Sat, 07/19/2014 - 18:45 | 4978193 Tarshatha
Tarshatha's picture

"That lead-in image of CL looks like a Salvador Dali rendition of the Portrait of Dorian Gray.

She's never looked better..."


Reptilian shape shifting glitch. 

Sat, 07/19/2014 - 20:07 | 4978433 TeamDepends
TeamDepends's picture

Yep, bravo Tyler for putting it right there in your face. Won't be much longer boys, before we go toe to claw with these things.

Sat, 07/19/2014 - 22:17 | 4978801 TheFourthStooge-ing
TheFourthStooge-ing's picture


Reptilian shape shifting glitch.

Also known as molting.

Sat, 07/19/2014 - 17:47 | 4978008 Pinto Currency
Pinto Currency's picture


Sat, 07/19/2014 - 18:21 | 4978111 Jumbotron
Jumbotron's picture

First "Yellen like a Felon"....now Lagarde.  This is code for the Elites and the Smart Money to start getting out before the Panic.  Controlled collapse is coming.  We'll see how controlled it is.

Sat, 07/19/2014 - 17:36 | 4977986 nidaar
nidaar's picture

"When the seven years of plenty came to an end, and the seven years of famine began to come"

From 2007 to 2014...

Sat, 07/19/2014 - 17:52 | 4978026 Chief Wonder Bread
Chief Wonder Bread's picture


Sat, 07/19/2014 - 18:00 | 4978047 knukles
knukles's picture



Still won't bring Mary Jo back from her swim.
Talking about swims, know what kinda wood don't float?

Sat, 07/19/2014 - 18:49 | 4978206 Chief Wonder Bread
Chief Wonder Bread's picture

Does anyone know anymore who Mary Jo was, knuks? Few I suspect.

Know what kind of moon don't rise?


Sat, 07/19/2014 - 17:40 | 4977989 Cognitive Dissonance
Cognitive Dissonance's picture

I think this is as close to "SELL" you'll ever hear from the central banks and other financial omnipotents..

Sat, 07/19/2014 - 18:29 | 4978146 NoDebt
NoDebt's picture

This could be the creepiest article I've ever read on ZH.  I'm buying more Facebook on Monday morning.

Sat, 07/19/2014 - 19:02 | 4978248 disabledvet
disabledvet's picture

Actually "inverting the yield curve and being speechless for over 18 months" was a far better cue.

This is all about noise and the market knows it..."start talking over valuation and then print anyways" (reverse repos.)

So "just in case" the market corrects anyways...say "just invade" ...I mean... "say just in case."

The fact is the only thing better for Central Banks than debauching and devaluing is creating a MASSIVE "bubble in everything." Takes the "monkey off the back" so to speak and allows "the other bubble blowers" (rhetoricians) to explain while in fact your life is a living hell...in fact you've never had it better! (Now here's your sweaty wad of Benjamin's.)

I think we have achieved Peak Pete Puma here. "How many lumps? A WHOLE LOTTA LUMPS!" And instead of trying something new (like anything other than fiat/central planning) "we'll try coffee instead of tea!"

Sat, 07/19/2014 - 17:42 | 4977993 Chupacabra-322
Chupacabra-322's picture

This Major League Pure Evil CUNT is just blowing smoke up people's asses. Die Bitch, just fucking die already.

Sat, 07/19/2014 - 18:25 | 4978130 john39
john39's picture

The undead must be burned.

Sat, 07/19/2014 - 18:48 | 4978200 Seahorse
Seahorse's picture

kill it with fire

Sat, 07/19/2014 - 17:42 | 4977994 xamax
xamax's picture

Each time the fucking idiots of FMI or FED warn about topic markets, its only to accelerate the upward move, will not be different this time.

Sat, 07/19/2014 - 17:46 | 4978002 medium giraffe
medium giraffe's picture

This is gonna hurt price/equity ratios.

Sat, 07/19/2014 - 17:46 | 4978003 debtor of last ...
debtor of last resort's picture

Yeah, sunburn causes cancer, bitch.

Sat, 07/19/2014 - 18:27 | 4978134 Jumbotron
Jumbotron's picture

We can only hope.

Sat, 07/19/2014 - 17:45 | 4978004 IridiumRebel
IridiumRebel's picture

please take that pic down from the front page of Satan LaGarde.

Sat, 07/19/2014 - 17:59 | 4978030 knukles
knukles's picture

Dude!  She's Shape Shifting!
Fucking Reptilians; they're everywhere.  I've warned you..... but you'll see them soon enough...

"We were somewhere around Barstow on the edge of the desert when the drugs began to take hold. I remember saying something like "I feel a bit lightheaded; maybe you should drive...." And suddenly there was a terrible roar all around us and the sky was full of what looked like huge bats, all swooping and screeching and diving around the car, which was going about a hundred miles an hour with the top down to Las Vegas. And a voice was screaming: "Holy Jesus! What are these goddamn animals?" Then it was quiet again. My attorney had taken his shirt off and was pouring beer on his chest, to facilitate the tanning process. "What the hell are you yelling about?" he muttered, staring up at the sun with his eyes closed and covered with wraparound Spanish sunglasses. "Never mind," I said. "It's your turn to drive." I hit the brakes and aimed the Great Red Shark toward the shoulder of the highway. No point mentioning those bats, I thought. The poor bastard will see them soon enough."
Hunter S Thompson

Amongst other oddities, on this day in history in 1969, Ted Kennedy drove a car off a bridge in Chappaquiddick MA drowning his secretary.  After a night of supposedly sane and sober behavior.

Sat, 07/19/2014 - 18:01 | 4978048 medium giraffe
medium giraffe's picture

...once you get locked into a serious drug collection, the tendency is to push it as far as you can.

Sat, 07/19/2014 - 18:11 | 4978078 knukles
knukles's picture

"We had two bags of grass, seventy-five pellets of mescaline, five sheets of high powered blotter acid, a salt shaker half full of cocaine, and a whole galaxy of multi-colored uppers, downers, screamers, laughers... and also a quart of tequila, a quart of rum, a case of Budweiser, a pint of raw ether and two dozen amyls.  Not that we needed all for that trip...."

           -The Good Doctor
Sat, 07/19/2014 - 19:23 | 4978307 Boozer
Boozer's picture

Knuk, my internet went down yesterday and I pick up my original copy of that classic

to reread for the umpteenth  time!  It's yellowed but still in decent shape...also has

phone number of favorite college concubine on inside cover.  Now where did those

35 years go?  Seem to suddenly have a craving to chew up some blotter...

Sat, 07/19/2014 - 18:12 | 4978079 nmewn
nmewn's picture

The few, the proud, the Heads ;-)

Sat, 07/19/2014 - 18:16 | 4978101 IridiumRebel
IridiumRebel's picture

When killing time on youtube I'll eventually màke it to the Reptilian vids...

Sat, 07/19/2014 - 18:28 | 4978140 john39
john39's picture

Imho, it is best interpreted as a metaphor.  Although I don't rule out that some carry demon in their dna.

Sat, 07/19/2014 - 19:41 | 4978372 Rusty Shorts
Rusty Shorts's picture

"Ruled by Aliens" - interesting indeed.


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