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"Danger, Will Robinson!"

Tyler Durden's picture




 

Submitted by Jim Quinn via The Burning Platform blog,

It’s funny how the truth sometimes leaks out from the government. I’m guessing that Mr. Ted Berg will not be working for the Office of Financial Research much longer. This new agency was created by the Dodd Frank Law and is supposed to protect consumers from the evil Wall Street banks. But we all know the evil Wall Street banks wrote the bill, have gutted the major provisions, have captured all the regulatory agencies, own the Federal Reserve, and control all the politicians in Washington D.C. So, when an honest government analyst writes an honest truthful report that unequivocally proves the stock market is grossly overvalued and headed for a crash, the Wall Street banking cabal will surely call the top government apparatchiks to voice their displeasure. Truth is treason in an empire of lies.

The soon to be fired Mr. Berg’s verbiage is subtle, but pretty clear.

Option-implied volatility is quite low today, but markets can change rapidly and unpredictably, a phenomenon described here as “quicksilver markets.” The volatility spikes in late 2014 and early 2015 may foreshadow more turbulent times ahead. Although no one can predict the timing of market shocks, we can identify periods when asset prices appear abnormally high, and we can address the potential implications for financial stability.

Markets can change rapidly and unpredictably. When these changes occur they are sharpest and most damaging when asset valuations are at extreme highs. High valuations have important implications for expected investment returns and, potentially, for financial stability.

However, quicksilver markets can turn from tranquil to turbulent in short order. It is worth noting that in 2006 volatility was low and companies were generating record profit margins, until the business cycle came to an abrupt halt due to events that many people had not anticipated.

The full report can be found here:

http://financialresearch.gov/briefs/files/OFRbr-2015-02-quicksilver-markets.pdf

The meat of the report is in the charts. The CAPE Ratio, which has been a highly accurate predictor of market tops is now almost two standard deviations above the long term average and at the same level it was before the 2008 crash. It has only been higher in 1929 and 1999. That should give you a nice warm feeling about the coming bull market. Right?

Profit margins are at all-time record highs as corporations don’t have to pay higher wages, can borrow for virtually free, and continue to outsource to foreign countries. Profit margins are 60% above the long-term average and always revert to the mean. Do you expect them to expand or contract from here?

 

Warren Buffett, before he became a shill for the status quo, judged the value of the market based upon corporate market value to GNP. This ratio is also almost two standard deviations above the long term average. It is higher than it was in 2007. It is 75% above the long-term average. It has only been higher during the internet bubble in 2000. Would you bet on it reaching 3 standard deviations above the long-term average? Wall Street and CNBC are telling you to make that bet.

We all know about the cash on the sidelines ready to come into the market and drive it higher. The fact that margin debt is at an all-time high shouldn’t be a concern at all. Right? What you have are a bunch of monkeys who think they are brilliant investors. They are sure Janet has their back. The panic when this market begins to go south will be epic. As the margin calls come in, the market will spiral out of control, creating more margins calls. The bodies will be piled high and calls for Janet to save the monkeys will be shrill.

As you may have noticed, the market is now regularly experiencing 200 to 300 point swings on a regular basis. Low volatility and a steady rise in prices is a hallmark of bull markets. High volatility and choppy markets is a sign of bear markets. The spike in volatility since September is a warning sign. But the captains of the Wall Street Titanic banks declare “full steam ahead”. We all know what happens next.

Some people never learn. Even though we’ve experienced two horrific stock market crashes in the last fifteen years, with losses of 40% to 80%, the professional monkeys posing as investment experts ignore facts, history, and common sense. At current stock market valuations, you are virtually guaranteed to lose money in the market over the next ten years, and experience a death defying collapse in the foreseeable future. Will the Ivy League MBA’s heed these warnings? Not a chance. They think they are the smartest guys in the room.

 

We’re Lost in Space. Danger is everywhere, but no one seems to care.

 

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Wed, 03/25/2015 - 20:41 | 5927620 zeroaccountability
zeroaccountability's picture

Yes; and Mr. Yellen is 'Pretty, Handsome, Doctor Smith'.

Wed, 03/25/2015 - 20:46 | 5927637 HedgeAccordingly
HedgeAccordingly's picture

well those responsible for 2008 still living 'high on the hog' 

http://hedgeaccordingly.com/2015/03/vanity-fair-wall-street-titans-who-c...

Thu, 03/26/2015 - 01:24 | 5928252 JamesBond
JamesBond's picture

Yellen is the worst pump monkey of them all. 

Thu, 03/26/2015 - 02:39 | 5928305 lakecity55
lakecity55's picture

"Markets fall 40%. Yellin offers Spiderman Towels to cool everyone down"

Wed, 03/25/2015 - 20:48 | 5927639 knukles
knukles's picture

Oh come on, now.  Ease up.  It's a new agency and takes some time to get the talking points straight.
His next assignment will be testing the efficacy of toaster handouts in exchange for deposits at negative interest rates

Wed, 03/25/2015 - 20:52 | 5927649 TideFighter
TideFighter's picture

I remember a show in the series whereby the robot turned evil against Dr. Smith. Smith actually feared for his life and changed to a do-gooder, thereby reversing rolls. Under the robot's cover plate it read, "Manufactured in Hawaii, with 51% of total parts imported from Kenya." 

Wed, 03/25/2015 - 22:39 | 5927939 Tall Tom
Tall Tom's picture

Will the Ivy League MBA’s heed these warnings? Not a chance. They think they are the smartest guys in the room.

 

And that is the crux of the problem.

 

Actually it is working according to their plan.

 

You are not smart enough to make the wise decisions, the decisions which they make as the technocrats which they are. Therefore you will submit or suffer their punishment.

 

Since you have refused to submit then that leaves them but one alternative.

 

It is a Brave New World.

 

Where is my soma?

Thu, 03/26/2015 - 02:37 | 5928303 lakecity55
lakecity55's picture

Will, my dear boy, I have a special Test for you. Blow into this instrument.

Uh, Dr Smith, that's your d--

Nonsense, my boy, it just looks like one. Now, here, blow away.

Danger, Will Robinson, Danger!

Wed, 03/25/2015 - 20:43 | 5927625 buzzsaw99
buzzsaw99's picture

At current stock market valuations, you are virtually guaranteed to lose money in the market over the next ten years, and experience a death defying collapse in the foreseeable future...

so btfd then?

Thu, 03/26/2015 - 06:04 | 5928419 Practical Cogitator
Practical Cogitator's picture

That's the bottom line and let none of us forget that!  Along with killing as many hill-tribesmen and dirt-farmers all around the world as are needed to satiate the appetites of good Christians and Jews in Neoconica and to keep our Military-Security-Complex flush with money.  In this regard, we have to admire what our puppet-masters have accomplished in Yemen - supplying both sides with weapons.  The marvel of Neoconican ingenuity!  Die hill-tribesmen and dirt-farmers! Die!

Wed, 03/25/2015 - 20:45 | 5927631 lordbyroniv
lordbyroniv's picture

 

Yellen said BUY ASSETS.

Thu, 03/26/2015 - 02:34 | 5928299 lakecity55
lakecity55's picture

Assets?  I thought its was Asses. I had a room full of hookers and blow last night.

Now I can't buy any assets.

Wed, 03/25/2015 - 20:47 | 5927642 Jack Burton
Jack Burton's picture

Truth is treason in an empire of lies

Very well said!

Wed, 03/25/2015 - 21:12 | 5927710 r00t61
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"Truth is treason in an empire of lies."

This is actually from Ron Paul's 2008 book Revolution: A Manifesto.

Wed, 03/25/2015 - 20:55 | 5927656 zeroaccountability
zeroaccountability's picture

Yellen is the 'Girl from the Green Dimension'.

Unable to see economics clearly through the fog, and clearly calling things something they're not.

Wed, 03/25/2015 - 20:55 | 5927658 Drummond
Drummond's picture

Please God when can we stop talking about crashes and actually fucking have it? Every night I pray tomorrow will be the day. I know I shouldn't live for tomorrow because obviously it never comes but surely this can't carry on till September like this can it? This is a fucking joke of the highest order.

Wed, 03/25/2015 - 21:18 | 5927725 22winmag
22winmag's picture

How many Tea Party fakers voted for the recent Ukraine war funding bill?

Wed, 03/25/2015 - 21:49 | 5927801 Van Halen
Van Halen's picture

Probably a bunch of Tea Party fakers. But how many Liberal Hope and Change/reset button/smart power fakers voted for it too?

Wed, 03/25/2015 - 21:48 | 5927798 Van Halen
Van Halen's picture

Best thing you can do for this country is to tear the Ivy Leagues down brick by accursed brick. Plow the property with salt. Take anyone who is graduated from any of them or is currently enrolled and make them work in menial labor for 3 years as minimum punishment while reciting loudly at the end of each workday, "I was an overeducated jackass!"

Wed, 03/25/2015 - 21:59 | 5927823 rsnoble
rsnoble's picture

Some people don't know this, but President Obama was actually discovered by the Jupiter Crew, and unfort, bought back to Earth:

http://www.rockypatterson.com/dumbing/bloop.htm

When President Obama was asked about this, this is all he had to say:

http://www.rockypatterson.com/dumbing/dumBloop.wav

Wed, 03/25/2015 - 22:03 | 5927840 petedanels
petedanels's picture

10 more years with one more bail out.  Will come when we all have given up.  It will surprise us...

Wed, 03/25/2015 - 22:26 | 5927902 Jungle Jim
Jungle Jim's picture

Some of us don't have 10 years. Some of us don't have 10 weeks.

Wed, 03/25/2015 - 23:16 | 5928037 PrecipiceWatching
PrecipiceWatching's picture

Speaking of LIS:

 

Any idea why the promising Lost in Space series, quickly veered off into disgusting Queerland with the ridiculous emphasis on the nauseatingly effeminate and cowardly Dr. Smith fag character?

 

Pretty much unwatchable.....unless you enjoy watching a grown man scream like a little girl, and prance around the soundstage sporting an unending litany of homosexual affectations. 

Thu, 03/26/2015 - 02:31 | 5928293 lakecity55
lakecity55's picture

Maybe Jonathan Harris was PDG- Pretty Darn Gay.

Wed, 03/25/2015 - 23:32 | 5928074 luna_man
luna_man's picture

 

 

Get the mop!...Even with the airconditioning, CRIMINALS, are sweating bullets!

 

pressure

Thu, 03/26/2015 - 00:18 | 5928165 Magooo
Magooo's picture

As if this guy is THAT stupid.

 

This is just more bullshit being leaked by the Fed to tamp down irrational exuberance.  Same as the Fed saying they are going to raise interest rates 'tomorrow'

 

Like the free beer is always tomorrow - it is nevery going to happen

Thu, 03/26/2015 - 06:07 | 5928423 sidiji
sidiji's picture

alot of the money is moving to europe...where the qe is

Thu, 03/26/2015 - 07:17 | 5928509 NoIdea
NoIdea's picture

"death-defying collapse". Only some traders/investors and companies won't defy death and will be completely wiped out.

Thu, 03/26/2015 - 08:10 | 5928634 J J Pettigrew
J J Pettigrew's picture

THere is an entire group of stock brokers that have never seen a down market...

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