Don't Fight The Fed - Stocks Tumble Post-Yellen "Stretched Valuations" Warning

Tyler Durden's picture


"Don't fight the Fed," unless she tells you to sell your favorite idiot-maker momo stock. For a few days, investors were anxious after Yellen's July 15th warning, then a barrage of disgruntled asset-gatherers explained how 'she knows nothing about stock valuations' (but we must trust her every word on the economy). Now - 3 weeks later, Dow and Trannies are down 4%, S&P and Russell down 3%, and Nasdaq down 2% from her warnings... still wanna fight the Fed?



However, Bullard's "sell your bonds" - BULLARD: MARKETS SHOULD BE PRICING IN RATE INCREASES BASED ON WHAT THE FED SAYS call did not work out so well...


Charts: Bloomberg

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Thu, 08/07/2014 - 13:17 | 5059711 junction
junction's picture

Yes , right, we should rely on Yellen's actions as the world economy tanks.  Just like we relied on L. Paul Bremer's actions ten years ago, when he fired the entire Iraqi army a day after arriving in Baghdad.  Expect Obama to be forced to send in the Marines to Arbil in the Kurdish stronghold now facing annihilation by the Islamic State.


USAToday article excerpt in 2004: "The much-debated "de-Baathification" policy emerged in a May 16 decree from newly arrived U.S. administrator L. Paul Bremer. It fired tens of thousands of Baathists from government jobs.

A week later, a flourish of Bremer's pen disbanded Iraq's 350,000-member military and barred high-ranking officers from receiving pensions, saying they were too tainted by ties to Saddam's party to have a place in Iraq's future."

Thu, 08/07/2014 - 13:22 | 5059777 NOTaREALmerican
NOTaREALmerican's picture

Maybe ISIS is the "retired" republican guard?

Thu, 08/07/2014 - 13:25 | 5059801 LawsofPhysics
LawsofPhysics's picture

A man's got to do what a man's got to do and it's still a predator/prey world.

like my father said, if we are going to go to war in Iraq again, then let's really go to war.

same as it ever was.

Thu, 08/07/2014 - 13:27 | 5059814 max2205
max2205's picture

Did she mention NFLX or TSLA?

Thu, 08/07/2014 - 13:43 | 5059926 disabledvet
disabledvet's picture

I was thinking "but you can keep your guns" actually...

Thu, 08/07/2014 - 14:37 | 5060353 SoilMyselfRotten
SoilMyselfRotten's picture

Newest Fed appointee: Stretch Armstrong

Thu, 08/07/2014 - 13:23 | 5059787 LawsofPhysics
LawsofPhysics's picture

"A week later, a flourish of Bremer's pen disbanded Iraq's 350,000-member military and barred high-ranking officers from receiving pensions, saying they were too tainted by ties to Saddam's party to have a place in Iraq's future."  --


things like this underscore the problem with the progressive mantra.  Where did all these people go?  They don't simply disappear.  Moreover, if your intention really was to "build a better Iraq" I fail to see how taking away the income of 350,000 people and then telling them "they have no place in the future of Iraq" helps with your stated goals.


Hhhmmm, maybe the real goals are not the stated goals?  But we all know this around here.

Thu, 08/07/2014 - 13:28 | 5059824 kliguy38
kliguy38's picture

you mean the "neocon" mantra.........Bremmer was a NEOCON....and labeling conservatives or progressives is just the way the agenda is designed to divide and conquer

Thu, 08/07/2014 - 13:34 | 5059849 LawsofPhysics
LawsofPhysics's picture

No, the NECONs of the past that I am familiar with actually kill people.  Are you suggesting that they are getting soft?  It is either that or the new "information age" really is making the killing part harder for them, and I don't see any evidence to support that. Especially given the size of the military budgets.


Sorry Bremmer is/was a fucking puppet.  What he was is irrelevant, who is boss is/was is what matters.  I can see how letting these people keep their weapons could have been beneficial to some.  yes, halliburton comes to mind etc.

Thu, 08/07/2014 - 13:45 | 5059942 disabledvet
disabledvet's picture

No surprise he's not on any shirt list to run for President. "Hear dat, bro."

Thu, 08/07/2014 - 13:31 | 5059846 junction
junction's picture

A day after Bremer fired almost the entire Iraqi army, the first car bomb blew up in Baghdad.  One of the American generals at the meeting with Bremer concerning Army Baathist soldiers said that these Iraqi soldiers still have their weapons.  Bremer ignored that general's comment and now denies remembering hearing any such comment.

Meanwhile, al-Maliki has lawyers in federal court here in California trying to seize a Kurdish tanker loaded with Iraqi oil.  The important stuff, graft from oil exports.

Thu, 08/07/2014 - 14:42 | 5060364 SoilMyselfRotten
SoilMyselfRotten's picture

He thought he could buy peace with those pallets of $100 bills

Thu, 08/07/2014 - 13:16 | 5059734 ebworthen
ebworthen's picture

Yellen summary: 

"Listen, I'm going to do a Greenspan.  Now that the bubble is blown I'm going to raise rates and pop it.  This will hurt savers and retirees the most, which is what the FED is here to do.  Questions?"

Thu, 08/07/2014 - 13:35 | 5059874 Bossman1967
Bossman1967's picture

You know if this is what it takes to wake the American people ie sheeps up well thats why i sold my biz and dumped my money in gold silver physical that is deep in the ground in an undisclosed bunker much more warning do people want. wAKE THE FUCK UP

Thu, 08/07/2014 - 16:21 | 5060927 Miggy
Miggy's picture

My grandparents made 15% on their money in the fifties. What a difference a QE makes.


John 3:16

Thu, 08/07/2014 - 13:18 | 5059743 Spungo
Spungo's picture

Sell bonds right now I'm going to have anal sex with Alan Greenspan on live TV
-Janet Yellen

Thu, 08/07/2014 - 13:29 | 5059838 Jack Sheet
Jack Sheet's picture

That would be a Greenspasm.

Thu, 08/07/2014 - 13:36 | 5059879 Dickweed Wang
Dickweed Wang's picture

I'm going to have anal sex with Alan Greenspan on live TV
-Janet Yellen

While watching, the prez jerks off in the oval office. . . . . .

Thu, 08/07/2014 - 13:35 | 5059880 Bossman1967
Bossman1967's picture

Bad image disgusting actually gross

Thu, 08/07/2014 - 13:18 | 5059746 Kaiser Sousa
Kaiser Sousa's picture

should have waited for the predictable V-shaped recovery in the Dow b4 posting this...
just sayin.

Thu, 08/07/2014 - 13:40 | 5059910 Frank N. Beans
Frank N. Beans's picture

can't have one without t'other


Thu, 08/07/2014 - 13:18 | 5059748 TheRideNeverEnds
TheRideNeverEnds's picture

well they told me to sell bonds so I did, I don't think they have had a downtick since.....

Thu, 08/07/2014 - 13:19 | 5059752 LawsofPhysics
LawsofPhysics's picture

Remind me, how does one "value" anything in the absence of true price discovery?

Thu, 08/07/2014 - 13:20 | 5059768 NOTaREALmerican
NOTaREALmerican's picture

With bullshit.    Bullshit adds "value" to everything.

Thu, 08/07/2014 - 13:24 | 5059791 Grande Tetons
Grande Tetons's picture

Bullshit, at times, is a product itself. 

Thu, 08/07/2014 - 13:59 | 5060060 Harbanger
Harbanger's picture

This is true.  I learned this a long time ago in dealing with different RE brokers.  You sell thru a good bullshitter and buy from a lousy one.  The price varies tremendously.

Thu, 08/07/2014 - 13:25 | 5059804 dracos_ghost
dracos_ghost's picture

Dart board with random values on it and a bottle of vodka. Still beats Jim Cramer.

Thu, 08/07/2014 - 13:39 | 5059904 mastersnark
mastersnark's picture

How dare you.

Thu, 08/07/2014 - 13:25 | 5059798 mastersnark
mastersnark's picture

Controlled bubble popping is possible. All hail Yellen!

Thu, 08/07/2014 - 14:07 | 5060128 venturen
venturen's picture

she isn't popping anyone bubble else she will meet with a nail gun accident doing flower gardening

Thu, 08/07/2014 - 13:32 | 5059854 jubber
jubber's picture

looks like ZH just bottom picked again, Dow up 50 since this post S&P up 9  Russell up 5 and Naz just turned green

Thu, 08/07/2014 - 13:38 | 5059890 Bossman1967
Bossman1967's picture

Not any more pop that buble janet then kiss my ass

Thu, 08/07/2014 - 13:44 | 5059938 nosoeawe
nosoeawe's picture

The Zero Hedge effect is almost as accurate and timely as the Gartman effect


Thu, 08/07/2014 - 14:44 | 5060396 Keltner Channel Surf
Keltner Channel Surf's picture

On a related topic, I often think people get it backwards in thinking machines take us down on geopolitical news, then dip-buying humans lying in wait take us back up. 

I have a feeling it’s the reverse, as it seems there was big-volume buying near Friday’s lows, with machine targets likely key moving averages just a bit higher.  I suspect this week has been hard to trade more because the algos back off during news downdrafts, then turn themselves back on automatically, like a garden soaker, to frustrate any short follow thru. If I’m correct, we could see a surprise moon-shot-from-the-opening-bell up day in the Russell soon, up toward the 20 or 200 DMAs, on the next “good news” day.  

However, if worried humans could breach Friday’s lows, hitting the machine stops could produce fireworks better than the 4th.  Volume is respectable, but not crazy high today, with JPY near the day's lows.  It's man vs. machine in the final hours . . . think I hear hexadecimal chatter starting . . .

Thu, 08/07/2014 - 13:39 | 5059902 buzzsaw99
buzzsaw99's picture

heed what bulltard has to say at your own peril

Thu, 08/07/2014 - 13:41 | 5059924 mastersnark
mastersnark's picture

Are my CNYK shares going to be ok?

Thu, 08/07/2014 - 14:07 | 5060138 Ness.
Ness.'s picture

Fuck the FED.  

Buy the catastrophe. Buy the ebola.  Buy the sanctions.  Buy the bombs.  Buy the swans.  Buy the slaughter.  Buy the ethnic cleansing.  Buy the civil war.  Buy the corruption.  Buy the libor, the FX, the Gold manipulation.  Buy the hope.  Buy the change.  Buy WWIII.  





Thu, 08/07/2014 - 14:21 | 5060158 Keltner Channel Surf
Keltner Channel Surf's picture

Clearly, Fed QE operations no longer involve buying TSY bonds (even they know that trade is toast after geopolitical events calm), but instead focuses on selling small caps, which is why the Russell stabilized today shortly after 11:15 on a big POMO day.

Thu, 08/07/2014 - 14:21 | 5060237 SheepDog-One
SheepDog-One's picture

Don't fight the FED, the slogan works just as well either direction and no doubt they'd like you culled from the world population anyway.

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