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"The Bigger They Are, The Harder They Fall"

Tyler Durden's picture




 

It is unclear which aphorism best describes the latest note from Guggenheim's Scott Minerd:

  • What goes up must come down

or

  • The bigger they are, the harder they fall.

He is referring to what happens to every "bull market", even the most patently rigged and manipulated ones such as the current one on the back of the Fed's central planning and global central banks' financial engineering, following what is now nearly 1000 days without a 10% correction.

From Guggenheim:

The Bigger they Come the Harder they Fall

 

The S&P500 has now gone nearly 800 days since a correction of more than 10 percent – the “meaningful” level for many analysts. The more extended the market becomes, the larger the eventual decline may be. Over the last 50 years, the longer the time between market corrections, the steeper the drop once the correction does occur.

His take:

In his famous speech, [former Fed Chairman William McChesney] Martin preceded his punch bowl comment by saying, on behalf of the Fed, “…precautionary action to prevent inflationary excesses is bound to have some onerous effects…” The flipside -- a lack of precautionary action by the Fed -- will have its own set of consequences in time. It is very difficult to say when exactly these will happen, but near-term indicators suggest the hangover won’t hit while you’re relaxing at the beach this summer.

Unless it does of course.

But for now, just pretend the nearly 200% move higher from the 666 lows is real and keep kicking the can, because as even the Fed has admitted, once the selling finally begins, not even the Fed will be able to stop it.

 

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Fri, 07/25/2014 - 09:20 | 5003048 Hippocratic Oaf
Hippocratic Oaf's picture

The ponzi won't allow a collapse

Let me be clear, sit back and eat your peas, the fed has this under control

Fri, 07/25/2014 - 09:22 | 5003062 gh0atrider
gh0atrider's picture

Wayne Kramer knows the harder they come... (so keep stacking)

https://www.youtube.com/watch?v=0TBIBlyP8E4

Fri, 07/25/2014 - 09:36 | 5003104 GetZeeGold
GetZeeGold's picture

 

 

We shall go on to the end. We shall print in France, we shall print on the seas and oceans, we shall print with growing confidence and growing strength in the air, we shall defend our markets, whatever the cost may be. We shall print on the beaches, we shall print on the landing grounds, we shall print in the fields and in the streets, we shall print in the hills; we shall never surrender

Fri, 07/25/2014 - 09:54 | 5003177 NoDebt
NoDebt's picture

I want the 3000 day run with the 18% correction at the end.  Pretty sure I could live with that.

Fri, 07/25/2014 - 10:04 | 5003225 Headbanger
Headbanger's picture

Please do not worry.

Fri, 07/25/2014 - 11:58 | 5003738 Beam Me Up Scotty
Beam Me Up Scotty's picture

"I want the 3000 day run with the 18% correction at the end.  Pretty sure I could live with that."

I saw that too.  We could go alot longer than the current 800+ days.  Its happened in the past, it could happen again.

Fri, 07/25/2014 - 09:24 | 5003074 oudinot
oudinot's picture

A 'Ponzi scheme', by definition, has to crash!

So you make no sense if you agree the current market is a 'Ponzi scheme'.

Fri, 07/25/2014 - 09:26 | 5003080 Hippocratic Oaf
Hippocratic Oaf's picture

Can't get the joke, mang?

Fri, 07/25/2014 - 10:06 | 5003231 SuccorMoney
SuccorMoney's picture

A Ponzi scheme, by definition, has to crash when it exhausts the available supply of new money.  If Ponzi can create new money out of nothing, without limit, (s)he may be tempted to believe a crash does not have to happen.

Fri, 07/25/2014 - 12:05 | 5003757 Beam Me Up Scotty
Beam Me Up Scotty's picture

I've said this before, and I'll say it again.  The S&P doesn't measure the health or welfare of the economy anymore.  Its like using a thermometer to measure wind speed now.  We'll end up like the people in the Hunger Games movies.  Massive wealth concentrated in the hands of the few, while everyone else works to be lucky to be destitute.  This thing is just crashing higher, not lower.  The higher it goes, the shittier it will be for alot of people.  The ones hardest hit will be the top 10% not including the .01% of that top 10%.  They will be taxed and inflated to the shithole with everyone else.

This is like a super nova.  Star blows up, then collapses on itself creating a black hole.  We are in the blowing up phase.

Fri, 07/25/2014 - 12:33 | 5003898 demoses
demoses's picture

All Ponzis are fueld by "stupid" and we just do not seem to run out of "stupid".

Fri, 07/25/2014 - 09:25 | 5003076 booboo
booboo's picture

Exponential growth foreva, "We are gods now" said Helen Of Yellen.

Fri, 07/25/2014 - 09:30 | 5003093 tempo
tempo's picture

direct, non stop flights for all illegals anywhere in the world to any USA city, free, w ebt card, health care, student loans, laptops, housing. Yes, that is compassion and Christian love your neighbor teaching.

Fri, 07/25/2014 - 09:36 | 5003106 BeetleBailey
BeetleBailey's picture

....until they don't....and won't be able to Hans Brinker the motherfucker when it rolls over.....shit...the Squid  and Fed are planning/have been planning this as we ...type...Dragon-speak....

it's like "Wheel of ....

well...SPIN THE WHEEL....MAKE A DEAL....(and every one is a shitty one...)

MAX! AUNTIE! THAT WEIRD FUCKED UP ANNOUNCER!

https://www.youtube.com/watch?v=TEzD2zf5kUU

Fri, 07/25/2014 - 09:41 | 5003122 slaughterer
slaughterer's picture

When does Kev' go on vacation?  Would seem crucial information to have ths summer.

Fri, 07/25/2014 - 09:21 | 5003060 overmedicatedun...
overmedicatedundersexed's picture

agreed, but inflation will eat the gains in equity prices ..but then it won't matter because starvation and horror will fill the land.

Fri, 07/25/2014 - 09:32 | 5003094 Quinvarius
Quinvarius's picture

And the Mexican version of ISIS, armed by Eric Holder during Fast and Furious, is currently invading across the border.  If you look at the methods Obama has used across the world to destabilize nations, this border crisis appears quite ominous.  Obama finds the biggest group of thugs and shitbags available, arms them, gives them money, and sets them loose.

Fri, 07/25/2014 - 09:50 | 5003153 Postal
Postal's picture

 Obama finds the biggest group of thugs and shitbags available, arms them, gives them money, and sets them loose.

Indeed: DOJ & DHS

Fri, 07/25/2014 - 12:05 | 5003779 Milestones
Milestones's picture

I saw this in action in Mexico about 10 years ago. Met a guy down in Barra Navidad and he showed me this happening as they filed out all the dangerous ones out, put them them on buses and shipped them north. They were told to not come back or else.       Milestones

Fri, 07/25/2014 - 09:21 | 5003063 yogibear
yogibear's picture

Amazon is the Wall Street poster child for being way over-valued.

It should come down hard.

Fri, 07/25/2014 - 09:27 | 5003084 Oh regional Indian
Oh regional Indian's picture

Thing is, they are growing like crazy in India, so I assume a few other growth markets as well.

Purr haps, US NUMBers will begin to matter less and less over time, because EBT can pay for only so much fun.

And regarding this coming correction, I think the POV is correkt.

The financial melt-down will be timed with something else equally big this time though, I feel.

4 Airliner crashes in 10 days, it's all looking a little weird right now, and six sigma is visible over my shoulder as I speak.

ori

Fri, 07/25/2014 - 10:09 | 5003243 juggalo1
juggalo1's picture

Amazon is an interesting case.  They haven't posted meaningdul profits since ever, and yet they are pushing top line sales dramatically.  They are making a case that they can dominate the future of retail, and they have pushed aside competitor after competitor based on a low price high volume model.  The question still is hanging: when do profits matter?  The answer may be: not until interest rates rise.

Fri, 07/25/2014 - 12:11 | 5003805 Beam Me Up Scotty
Beam Me Up Scotty's picture

Interest rates will never rise.  There won't be a Volker moment when they get jacked up like they did in the 80's.  The .gov debt won't be able to sustain that.  They will paper interest rates over for as long as they need to.  No one has any idea how much money the Fed is really creating right now, except for the Fed.  They could be printing all they need to peg interest rates to wherever they want to.  You think they are tapering?  How do you know?   They could be buying stocks hand over fist with freshly printed money to keep the market up and support the bond market as well, in the face of said "tapering".  Stealth QE.  They have taken full control of the printing press.  There is no market anymore.  Any number can be goal seeked in this world we now live in.

Fri, 07/25/2014 - 09:27 | 5003085 Quinvarius
Quinvarius's picture

The Fed and treasury had all the same tools to stop the decline in 2008 that they have now.  They worked after a 50% decline.

Fri, 07/25/2014 - 09:31 | 5003095 101 years and c...
101 years and counting's picture

2008 was prior to the Fed killing liquidity and repo in the bond markets by printing 3.5 Trillion.  WHEN this bubble goes, 2008 will look like child's play.

Fri, 07/25/2014 - 09:47 | 5003135 Quinvarius
Quinvarius's picture

Indeed.  0% doesn't matter when there is no collateral to borrow against.  You can't keep buying people's treasuries if you already bought them.  And that is the link between the speculative money and the markets.  The funniest thing about all of this is that if they had not smacked gold, and had not continually insisted it is not good enough to be collateral in their system, they would have the good collateral they need.  But they were on a mission.  So they will not benefit from gold.  Without collateral, they can only print bailout checks or die.

Fri, 07/25/2014 - 09:43 | 5003126 ekm1
ekm1's picture

The decline was preplanned. Fed engineered the decline

Fed makes and Fed breaks

Fri, 07/25/2014 - 09:27 | 5003086 WTFUD
WTFUD's picture

FUNDA -FUCKA- MENTALS ARE A BITCH

Fri, 07/25/2014 - 09:27 | 5003087 buzzsaw99
buzzsaw99's picture

clearly the stock market is a pump and dump ponzi scheme. as soon as bag holders are found the dump will commence.

Fri, 07/25/2014 - 09:34 | 5003096 ekm1
ekm1's picture

The financial system, which is totally and entirelly centrally commanded (note that I do not use the term 'market), is just one Executive Order away from Triple Lehman.

 

If that does not occur soon, world will simply accelerate avoidance of USD and western lobbies will start executing each other's executives.

Fri, 07/25/2014 - 09:50 | 5003157 Everybodys All ...
Everybodys All American's picture

You can't save both the bond and stock "markets". One will have to be sacrificed to save the other and it's always been the bond market that survives. In this socialist experiment who knows what these bastards will ultimately do. Unless this debt is allowed to clear the system we will never ever grow organically in this country like we are certainly capable.

Fri, 07/25/2014 - 09:52 | 5003170 ekm1
ekm1's picture

agree.

Government will have to choose winners and losers as it always does.

 

Some real bloodshed could be needed to define 'winners' and annihilate losers.

Fri, 07/25/2014 - 09:39 | 5003108 ejmoosa
ejmoosa's picture

So for every 100 points they push it higher, they fear only losing 10% of that.....

 

Seems like they are banking on 90% of every gain.  And with fractional banking, think of the leverage.

The reporting needs to change.  What % of the gains since the last "bottom"  would be wiped out by a 10% drop in the overall index?  20%?  30%?

The risk versus the reward here magically evaporates.

 

Fri, 07/25/2014 - 09:41 | 5003124 youngman
youngman's picture

The bigger they come......the more money they make for the money shot..and that is how I feel about this market....that this is one big Porno movie..with fake bodies ..silicone...fake emotions....yes yes yes..harder..oh my God.....fluffers...the FED..and money shots..IPOs

Fri, 07/25/2014 - 09:44 | 5003127 Postal
Postal's picture

What correction? Don't you know this is the new normal?

/sarc

Fri, 07/25/2014 - 09:50 | 5003136 astoriajoe
astoriajoe's picture

Jimmy Cliff, because its Friday and headline appropriate.

http://www.youtube.com/watch?v=sjtXfkHCEkY

Fri, 07/25/2014 - 10:18 | 5003270 Dr. Venkman
Dr. Venkman's picture

Here's another song for a future headline:

http://www.youtube.com/watch?v=EtwmjcsQi1E

Fri, 07/25/2014 - 16:03 | 5004989 astoriajoe
astoriajoe's picture

thanks. hadn't heard that one.

Fri, 07/25/2014 - 09:50 | 5003154 sbenard
sbenard's picture

This headaline is exactly what I've been saying for months! Here's another way of saying the same thing: PARABOLIC UP, PARABOLIC DOWN!

Fri, 07/25/2014 - 10:59 | 5003165 RaceToTheBottom
RaceToTheBottom's picture

Why is a 10% correction viewed as a solution for a market that has been pumped for 4 years?

Until the market is down 50%-70% from here, it is still manipulated up.

Fri, 07/25/2014 - 09:56 | 5003188 Wahooo
Wahooo's picture

Tylers, give it up. This morning's fret was nothing but a BTFD opportunity.

Fri, 07/25/2014 - 09:57 | 5003191 Hindenburg...Oh Man
Hindenburg...Oh Man's picture

market is on its way to going back to the green now. Couldn't even handle one day in the red....

Fri, 07/25/2014 - 10:03 | 5003219 NoWayJose
NoWayJose's picture

800 days - I was wondering how long it has been since all the QE's started.

Fri, 07/25/2014 - 13:29 | 5004170 BeetleBailey
BeetleBailey's picture

about....800 days

Fri, 07/25/2014 - 10:05 | 5003229 juggalo1
juggalo1's picture

Music is playing.  Must dance.

Fri, 07/25/2014 - 10:07 | 5003239 centerline
centerline's picture

I suspect we have not seen anything yet.  Where else is capital going to go (aside from tangible assets)?  The whole world is yield starved - running on cash flow only.  Meanwhile, real inflation is eating everyone's lunch.

Fri, 07/25/2014 - 10:12 | 5003257 q99x2
q99x2's picture

Markets don't fall, Nations do. The NWO has arrived. Prepare to die M'Fers.

Fri, 07/25/2014 - 10:54 | 5003450 BringOnTheAsteroid
BringOnTheAsteroid's picture

On that cheery note I'm off to bed.

Fri, 07/25/2014 - 15:07 | 5004692 Otrader
Otrader's picture

Early morning day trades did well?  lol

Fri, 07/25/2014 - 11:03 | 5003491 Thomas Aquinas
Thomas Aquinas's picture

The whole thing is a scam and has been for at least a century. When the real rulers want it to blow, they will blow it:

 

"Lindbergh on the Federal Reserve" by Charles A. Lindbergh, Sr. a reprint published by Noontide Press in 1989. The book was formerly entitled "The Economic Pinch" and it was originally published in 1923.

I have so far skimmed through it. He describes banker bailouts that happened back in 1913. Here is an excerpt:

p.95 Chapter 11.

"Under the Federal Reserve Act panics are scientifically created. The present panic is the 1st scientifically created one, worked out as we would figure a mathematical problem.

After a panic, rather at the tail end of a panic everything has gone to the bottom in price except money. Money is at the very top price. A panic, in all other things and commodities, becomes a boom for money. Money is the one thing in demand by everybody, and nearly everybody throws everything else overboard to get money. Money becomes scarce to most people, for they do not get much for what they sell; besides, most have debts dragging behind them and what they get goes to pay the debts. It is after a panic has driven every commodity to the bottom and has got farmers, wage workers, the smaller business interests and small speculators all down in the dumps, discouraged, that things are again made ready for a boom.

We observed that the World War took the American profiteers somewhat by surprise. They were not quite ready for a thing like that, they did not look for it just at that time. But they are versatile and quickly got ready. Their first act was to create a panic, that is, to intensify the one already started in 1913. Everybody was keyed up by the suddenness of the war and it was to be easy picking for Wall Street, but even Wall Street was not able to meet such an emergency without the aid of Uncle Sam. That aid could be achieved the easiest by first scaring the people out of their wits.
Wall Street, with its vast banks in New York City and associated banks in all other large cities, suggested that there was prospect of the most disastrous panic that the world had known unless Congress gave them emergency currency. The Federal Reserve Bank Act was al
ready law but it took a long time to organize, and was not when the War started organized to do business. Therefore the profiteers, unless they got assistance from Uncle Sam, would not be able to get the bargains that were offered when Europe was forced to throw on the market five or six billion in American securities that she held against American debtors. Neither could these great, swivel-chair operators of Wall Street exploit the commerce that would folIow between the war nations and our country, as a great profiteering game, unless UncIe Sam came to their aid financially-that is, would give them more currency.
Instead of aiding the people as the government should have done, Congress immediately passed an Emergency Currency Act to furnish the banks that the speculators controlled, all the money they should need till they could operate the Federal Reserve Act. The speculators received from Uncle Sam nearly $400,000,000 under the provisions of the Emergency Currency Act, and when the Federal Reserve Act really got to operating they had nearly 4,000,000,000 at one time under that Act and could get as much more as they wanted. Of course they would use judgment about the amount, lest they defeat their own purposes. They could be depended upon so far as that was concerned.

With the Emergency Currency Act passed and the money in their hands, the Federal Reserve Act almost whipped into operation, a Federal Reserve Board, composed of Wall
Street adherents, and the greatest of wars in progress across the waters-the year 1914 was me beginning of the greatest speculative boom; he world has known. Following that, and still in progress, came the greatest panic the world has known. The principal operators in this great boom and the present panic are the Wall Street group. Our banking system in the hands of the operators is the mother of both the boom and the panic.
All the gold snapped up and piled up in the twelve Federal Reserve banks was the basis for inflation to start and conduct the boom. The law made a path direct from the Federal Reserve banks to the Treasury of the United States, to get money. For every $1,000 of gold with eligible paper, pledged as security, Uncle Sam gave $2,500 of paper money and charged only half of one per cent, 80 it can readily be seen why these Federal Reserve banks grabbed the gold. They have in their vaults now more than $3,000,000,000 of gold, and could and would stop the money stringency at once if Wall Street might make more money by doing that than by continuing the panic."

Fri, 07/25/2014 - 12:08 | 5003794 devo
devo's picture

It's different this time!

Fri, 07/25/2014 - 15:06 | 5004684 Otrader
Otrader's picture

With a tax payer backed market, the sky's the limit. 

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