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Smile, Nod, Lie, & Prepare For The Reset
Submitted by Thad Beversdorf via FirstRebuttal.com,
Seems as though we have perpetual state of hedge fund conference with all those biggest and brightest men (wish I could say and women) in the world of finance. The conferences are set to provide a forum of discourse and a sharing of ideas. Surely has nothing to do with egos. Actually I’m sure it does but that’s no different from Hollywood and all of the self celebratory events they now have. This is our world, love it or leave it.
Listening to these guys today and over the past few conferences we definitely hear less euphoria but we still hear very little honesty from this crowd. Almost no one is willing to admit that the US markets have gone complete retard and are not just overbought but grossly overvalued to levels never before seen. I can’t tell you how many guys suggest and/or agree that the markets are about average relative to historic valuations.
Such a view of course is based on PE’s that have been totally synthesized by way of share buybacks and diverting capex to income. That’s it. And if these guys honestly believe that corporate performance has been strong enough to support what can only be described as the absolute best market performance ever well then I’d like to sell them my magic porcelain genie pot just full of treasure I know they appreciate.
This is going to be a short and to the point post because there isn’t much we have to do to get at the truth this time. The view that markets are anything but euphoric is simply ingenuous or ignorant. Over the past year I’ve talked quite a bit about how sales seem to have disappeared from valuation models altogether. This is factual. I’ve had a look at BMO’s economic/market outlook (2yrs) and not once did they mention sales, not one time. So the reality is that when something is very ugly we just don’t bring it up. That pretty much sums up today’s market commentary. Another example of if it’s ugly leave it out is the U6 unemployment figure. We used to get it along with the U3 and that too has disappeared. Ugly is just so unloved.
But so let’s have a look at two periods of time. First is the 7 years following the peak year of the internet boom in 2000, so ’01 through ’07. And let’s compare that period to the 7 years following the peak year of the credit boom in 2007, so ’08 through ’14. Specifically I want to look at growth in S&P sales vs. S&P price level. The only single thing that all businesses in all the world MUST have is sales. Without sales there is no business, period. One would therefore expect sales to be a topic of much discussion when it comes to market valuations. But it isn’t and this is why.
What we find is that during the internet bust recovery, real sales growth led the market higher. That is perfectly reasonable. One would expect that as real sales grow the business expands and thus future expected cash flows too would grow pushing market valuations higher. So that period is a text book model of market growth. Then we move over to the credit crisis recovery. What we find here is that real sales have yet to make it back to pre crash levels. Given that sales growth has been sluggish one would expect market valuations also leave something to be desired. Remember real sales growth led market valuations higher during the previous recovery.
However, investors this time around have decided that those average PE’s coming by way of reducing the amount of shares outstanding (by about 5%) and by diverting capex to income justify just about a 40% increase in market valuation. That’s right, while CEO’s have been maintaining average PE ratios by shrinking the business, investors have been rewarding them with record high valuations. Investors have been getting rich, C-suite managers have been getting rich and employees have been getting laid off. Sounds like a can’t lose growth strategy eh??
Now this is the point where the market cheerleaders come to the rescue shouting that U3 is back to a 5 handle! Profits have never been higher! And those things support expected future cash flow valuations to increase by 40%! The problem is that growth of earnings through contraction of the business can only last a few years before the business is gone. This means no future business and no future cash flows. So I’m not sure how one increases future cash flow expectations by 40% when the strategy is actually contracting the capacity for the business to grow. And all companies are doing it.
Bottom line is very simple. Unless you are growing sales i.e. expanding the business, any growth in cash flow is temporary. And that is really the point of all this isn’t it? Today the market place has nothing to do with expected future cash flows because nobody is in a trade long enough to be around for future cash flows. So why pay any attention to them?? Well we don’t.
So go ahead boys tell me how the market is fairly valued. Tell me that PE’s prove it. Tell me how earnings are great and that unemployment is bang on in line with a full steam ahead economy. Tell me the lackluster economic growth year on year since the big bang is just transitory pains with a bit winter thrown in. I, like you, will smile and nod, both knowing it’s a lie and both of us preparing for the reset. But let’s see how many more retirees we can keep in this thing before the bottom falls out eh? Their loss is our gain and well that’s what it’s all about ain’t it boys?
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This haircut is going to be epic!
More like a lobotomy, and/or a trepanning.
Reset in 3, 2, 1.
it's not going to be a reset, it's going to be a shutdown
Its going to be baltimore on steroids x 1000
Hey! I didn't even read this and I say YEAH! Bitchez.
good times
There's more good news, it's Friday!
Already there.
Nobody wants to hear the truth.
So be it.
Something about Babylon is fallen comes to mind...
:-) Smile! It's just a Walmart "Rollback", not a "reset". More Walmart smileys... :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-) :-)
and don't be surprised if you get a BSOD trying to bring it back up again
I have been reading of a reset for years and each time it looks like we are here well it judt goes on and on. I honestly believe there will not be a reset and they will keep this misery going for quite some time to come. People act like all is normal nothing and I mean nothing has appeared to change. Now my business is slow slow slow but been this way for years I feel something is around the corner but reset is laughable.
yeah... rigged markets, fake numbers and piling more debt upon mind numbing amounts of debt can and will go on forever.
"yeah... rigged markets, fake numbers and piling more debt upon mind numbing amounts of debt can and will go on forever."
Yes, but likely to hold out longer than you think it can, and just when you think it won't happen: Bam! its begins before you can react.
Recall that the last rest resulted in two world wars, Odds favor a third global war when the reset begins.
The problem is that our money is abstract now, so all the rules can be whatever "They" say they are. We look to "laws" of economic as if they were the same as laws of nature, like gravity. Maybe they used to be (I have my doubts) but there's no doubt they're not now. You can't pick and choose which fudged official numbers you want to use. They all, at some point, rely on a fake number, so they're all corrupted.
My business has to do with corporate meetings and events. My business shut off like a light switch in November 2008. I survived 2009 somehow, and had slow recovery until about 6-8 months ago; recovering the levels I was at in 2006 or so. Recently, though, my business has exploded, back to bubblicious 2007-2008 levels. I'm booked almost solid until the end of April 2016, and a possible large project in October 2016. I've had to turn down more work than I can take this year so far, because I can't be in multiple places at the same time.
To me this isn't normal; it's a bubble, and I fear the worst. "Hopeful Pessimism" has always worked for me, but when the corporates are spending so much money on themselves, it's always a sign of approaching collapse in my business. Right now what I see from my clients is that they're spending more than they have since 2008, but they're all talking about "Cost Optimization," which usually means they don't want to pay what things cost and they're hinting around for freebies from their vendors, contractors and consultants, but sparing no expense for their insiders. The companies I work for are all into stock buybacks, and their employees are all piling into their employers' stock. They're all talking about "reinvention" and reorganization, embracing whatever new bullshit is out there to redefine corporate structure, as if that's the only thing keeping them from untold riches. The fact is, corporate structure is the problem for most of them, and calling things different names doesn't change anything. A good worker still has to do all the same things, no matter what his title or what internal meetings he has to sit in, or to whom he has to report.
I don't see a "reset" because when that looms large, the rules will change yet again. I do see that most of my Fortune 500 clients are now little more than stock vendors and traders, and their supposed "core business" barely matters to them. That can't be good in the long run, but as long as all national policy is geared toward fake abstract money manipulation, that's going to be the only growth industry. Something is indeed around the corner, but the wholesale housecleaning we all know is needed probably ain't it.
That was insightful.
I don't see a "reset" because when that looms large, the rules will change yet again.
Huh? A reset is a change in the rules.
"This isn't going to hurt, is it"?
Stock up on some KY just in case.
For the scalp?
only if you are not sitting on the board of G.E. or J.P.Morgan and the like
Its going to be a Kojak!
Who loves ya baby?
What's the alternative - capital must be parked somewhere!
There is no capital , only debt
We can all go back to barter. Little discs of gold, silver and copper in various denominations.
Productive land, gold, silver, bitcoin, ammo, guns, food, water, drugs...
Excellent observation Pladizow.
If someone (a big statu quo player) dumps bonds, dumps stocks, then where are they to put those sizable funds?
Hold as cash in some form? Get real, large holdings are especially vulnerable to bail-ins whether in a bank or a market account.
Remember Pimpco's TotalReturnFund? Supposedly they are prevented by their charter from investing in PMs (and besides, we all know there is a gov/CB jihad against PMs).
What fund manger would spit against the wind.
The break down in this piece was epic. The whole stupid world is on the wrong side of reallity, keep stacking, praying , and generally preparing.
I just listened to a CTV podcast with Tom DeWeese RE: Agenda 21.
Zero growth is the goal according to the blueprint Slick Willie signed on sustainable development.
So HTF are the corporations going to make money? The few Elite just shut it all down because they've sucked the life out of all of us?
Forward midway. This man is making a bit of difference.
https://www.youtube.com/watch?feature=player_embedded&v=hP8yfhvIjCE
I honestly don't think the reset is going to be anything any of us have imagined.
EVERY property owner should be damn well concerned with the verbage "Right of Use".
Call is seizure. They will tell you if & how you can use it.
Do your trimmers have a setting for decapitate? Mine do not, thankfully. Banker trimmers... perhaps not so much (or yes).
Preparations for the Great Reset in full bloom:
"The Danish government has proposed exempting certain shops from the obligation to accept cash payments in a move seen as pushing the country a step closer to a “cash-free” economy.
Businesses such as clothing retailers, gas stations and restaurants will no longer be required to accept cash next year, the government of Denmark said on Wednesday, according to Reuters. The move comes as part of a pre-election package of economic growth measures aimed at reducing costs and increasing productivity for businesses.
The proposal is supported by the Danish Chamber of Commerce which agrees that it is time to give shops the option to go cash-free.
“Society has changed so much that there is no longer a need for requirements on cash payments. Plus, cash has become tremendously expensive to handle due to security reasons,” chamber spokesman Henrik Hytolft was quoted as saying by The Local.
The government’s move is not likely to meet opposition in Denmark, where cash payments have become less popular than those made by mobile phone or credit card. "
http://rt.com/business/256149-denmark-shops-cashless-economy/
I guess they don't want any foreign tourists in Denmark.
A Bitcoin backbone is already working for just that problem of tourists. Carry a Bitcoin balance, wither spend bitcoin or exchange it into a national currency when needed.
we're going to need more nailguns
Yeah, but you're going to have to show a credit card to buy the nailgun.
People have bartered solid gold earth for fiat water and will soon drown in it.
666
666 is what the bank is carrying on the books.
Actual retail price is $19.99. And that includes a fabulous set of amazing Ginsu knives.
but...but...these Tulips are special and they just go up in value!
Remember the line "The guy with the most toys, when he dies, wins"?
Well, the variation on that theme applies to the RESET: "The one with the most Real Assets at the Reset, wins"
Unlike Austrian Economics, that applies to Sheeple, ZiBorg Economics for Elite Rulers dictates that you swap your Out-Of-Thin-Air Tertiary/Paper Wealth for Primary and Secondary Wealth. Hence: Bonds bad, Stocks good.
Or with best survival skills, gun and 20-20 vision. No contact lenses bro! Can't eat 1's and 0's. Gold? Can't eat that either, and good luck keeping it. It will be like sitting in a house in New Orleans during Katrina with a full fridge.
Which is good, time for Reality to ask Economics "are you for real?".
Yeah- and here's what "real assets" are:
Your personal capabilities.
Your survival knowledge, skills, and wisdom.
Your physical, mental, and spiritual health.
What your faith is in.
Don't let that bug-out bag out of your sight!
I won't- you can count on that.
"Don't let that bug-out bag out of your sight!"
Bug out where? A bag is not going to get you very far. Better to relocate to a homestead and become self-reliant, that go nomadic.
Practice what those of us that are prepared preach
Nod and lie to yourself, just like you have about 9/11 and the JFK Jr. crash all these years.
It's all a big conspiracy, isn't it?
Yes it is. Stay up to date with the big conspiracy at http://facebook.com/bigconspiracy/
You'll need your password or the page won't work.
... would have been so much more convincing if "euphoria" was spelled correctly ...
"This is our world, love it or leave it." Why not shoot them?
The market is fairly valued according to FED software. To make it go down you push the lever to the left.
True Patriots
No disrepect on the author but, I feel like I'm caught in a time warp reading about this, all the time.
Fuck fuck Friday is beer time bottoms up. crank it you tards
https://www.youtube.com/watch?v=n9q7EjHxYsE&feature=youtu.be&t=40s
Sales have clearly taken a back seat to the more important share buybacks---
Welcome to Repurchases Unlimited Inc.--how can we help you with your shares today ?
This is nothing more than sour grapes blather from a group of people who missed out on the near tripling of the stock market since March 2009, but have somehow managed to capture all of the losses of gold and silver since 2011.
Zero Hedgers are a peculiar breed of the Born Loser. What they lack in actual IQ, they make up for with sticktoitivness and constancy. You gotta love 'em!
-1
It's easy enough to tell by your shit-lipping, but just in case, you are NOT the real TheFourthStooge-ing.
DUH!
http://www.zerohedge.com/users/thefourthstooge-ing
Fuck off you obnoxious, patronising smelly dog turd.
You don't know me or we.
You 8 week, 6 day imposter shill.
I think...it's all going to be okay and nothing will go wrong. Where did I put those damn red pills?!?
No haircut if markets do not operate
A violent decoupling of the producer and the parasite classes is inevitable.
I have employed the strategy of nod, lie and agree etc.
Usually to shut up know it all fuckwits who think they have all the answers. When these geniuses (usually on break from college) spew their bullshit I just nod and say wow you are right ..you know I never thought of it that way before.
I don't waste my breath debating with them that way their undeserved sense of superior intellect is buoyed and I have the quiet smug satisfaction of knowing these poor dumb fucks will see the error of their ways, likely soon and probably in the most unpleasant of ways. Suffering imparts lasting knowledge,fuck them let them learn the hard way.
For some reason Government has underground bases in mountains.
How are the ‘producer’ and ‘parasite’ classes defined?
Producer class produces.
Parasite class sucks.
Tell me that PE’s prove it. Tell me how earnings are great and that unemployment is bang on in line with a full steam ahead economy. Tell me the lackluster economic growth year on year since the big bang is just transitory pains with a bit (of) winter thrown in.
Okay.
PEs prove it.
Earnings are great.
Unemployment is bang on in line with a full steam ahead economy.
Lackluster economic growth year on year since the big bang is just transitory pains with a bit of winter thrown in.
You're welcome.
//s//
Lucifer, Father of Lies and Lord of Darkness
PS-- Adolf says "hi" to all his well-wishers and supporters and wants them to know that he's doing great here in his new job.
What happens when every hard asset is nationalized? Pm's, land, all buildings commercial and private as laid out by executive order. All manner of production, agriculture, etc. Will they allow you to buy it back. With what if all fiat is gone and Pm's belong to the state.
It's not a lie - the dollar is being massively devalued...the market is measured in $s. It goes up in $ terms. Why is that hard to understand?
someone observed the last two major crashes (2000 & 2008) were election years. i can't help but think TPTB have one planned for 2016 to cause chaos before the election to stampede the sheeple.
I like the way you think, but the it was actually 2007 when it started falling apart, and didn't ebb until 2009 or 10. The 2000 exponential blow off top was baked in since 1995 or earlier and under little control. There is a hegalian dialectic going on for sure, but they are very short term plans.
I have given up trying to short this ponzi-fied excuse for a "market"...and it's the CRIMINALITY of it that blows me away. I want these bankers to get ass-blasted in The Big House for the amount of money it has cost me trying to play "by the rules"...
The view that markets are anything but euphoric is simply ingenuous ...
Unless you're being ingenuous yourself, you really mean disingenuous.