5 Things To Ponder: Odds And Ends

Tyler Durden's picture

Submitted by Lance Roberts of StreetTalk

5 Things To Ponder: Odds And Ends

Earlier this week I discussed the oxymoron of the "bearish bull market" suggesting that the deterioration in the technical backdrop of the market acting in a manner only seen at previous major market peaks.

However, the real divergence is occurring within the market itself as shown in the chart.

 

Currently, every single internal measure of momentum and relative strength have not only deteriorated, but are behaving in a manner that only previously existing during the last two major market peaks.

 

This is what I meant by using the oxymoron of the "incredibly bearish bull market." 

 

Despite the significant number of economic, fundamental and technical data points that suggest risk has risen to elevated levels,the bullish exuberance in the market remains."

That last sentence is critically important. While there are many fundamental, economic and technical warning signs that suggest investor caution currently, the markets remain hovering near their all-time highs.

I was speaking at a conference recently discussing this very important point of managing money. When managing money we can make logical assumptions about what we think will happen in the future. While that logical outcome will eventually mature, the markets can, and do, act illogically for longer than logical analysis would expect. Therefore, investors who try and predict future market outcomes, and act accordingly, suffer the outcomes of being wrong.

Our job as investors is to make money, not by being right. This is why, despite the current evidence of deterioration, the markets remain bullishly biased for now suggesting the portfolios remain fully allocated. As investors we must be "patient"  in awaiting those market driven instructions. But patience, and complacency, are two entirely different things.

While there is little doubt that a major market reversion is on the horizon, there is no evidence that such a correction is in the immediate future. Therefore, we wait patiently, but not complancently.

So, while we wait patiently, this weekend's reading list is a collection of articles that I just found very interesting that I thought were worth sharing with you.   

1) The 7-Maleficent Behaviors Of Individuals by Robert Seawright via AboveTheMarket

"The Magnificent Seven is a terrific 1960 movie "western" about seven gunfighters hired to protect a small Mexican village from marauding bandits. A re-make is currently in the works and the "original is itself a re-make of Akira Kurosawa's Japanese classic, Seven Samurai. Meanwhile, Maleficent is the "Mistress of All Evil" in Sleeping Beauty who curses the infant princess to prick her finger on the spindle of a spinning wheel and die before the sun sets on her sixteenth birthday. Today I'm offering up a mash-up from these movies to outline what I'm calling the Maleficent 7 – seven inherent human problems and limitations that impede our ability to make good decisions generally and especially about money."

Read Also: The Great Bond SellOff by Bill Bonner via MoneyWeek

2) How's This For An Epic Fail by Cullen Roche via Pragmatic Capitalist

"This month marks the 36th straight month in which the Fed has missed its inflation target."

Fed-fail

Read Also: New Retirement Age Is Not 65, 80 or 95: It's Higher by Eric Rosenbaum via CNBC

3) The Most Crowded Trade On Wall Street: Denial by Jesse Felder via The Felder Report 

"It just doesn't matter." This is the mantra of the bulls who, no matter what bearish evidence is presented, simply insist, "earnings don't matter. Valuations don't matter. Margin debt doesn't matter. Market breadth doesn't matter." You name it and they defame it. I was recently told by a bull who was dead serious that, not only do none of these things matter, there is an invisible magical force more powerful than any of these them which ensures stocks will continue to march higher. I was dumbfounded."

Read Also: When It Comes To Investing: It's Not Data Mining by Cliff Asness via AQR

4) Fed Urged To Delay Rate Hikes Until 2015 by Kasia Klimasinska via BloombergBusiness

"The Federal Reserve should delay raising interest rates until the first half of 2016, the International Monetary Fund said as it cut its U.S. growth forecast for the second time this year.

The lender also said that the dollar was 'moderately overvalued' and a further marked appreciation would be 'harmful,' in a statement released in Washington on Thursday on its annual checkup of the U.S. economy.""

Read Also: Odds Of A Bear Market Are High And Rising by Mark Hulbert via MarketWatch

5) 10 Bearish, 1 Bullish Chart by Meb Faber via Meb Faber Research

"10 charts or stats to mull over this weekend."

Read:  The Trend In Profits And GDP by Dr. Ed Yardeni via Dr. Ed's Blog

ANYTHING HAPPEN YET? OKAY, OTHER STUFF WHILE WE WAIT

Why Women Cheat by Noel Biderman, Founder/CEO Ashley Madison via CNBC

"At the heart of it is being the object of desire. Someone thought you were the greatest thing and wanted to spend their life with you. Ripping that away from someone feels awful. Now they don't even want to look at you, touch you, talk to you. But you have economic stability — A home. Kids. Family. You don't want to walk away from that just because you feel less than desired. People think, 'I'll just put myself out there in an anonymous way.' They want to rekindle that object of desire. You'll often find women seeking this attention by Facebooking with past lovers."

Liquidity Everywhere, But Not A Drop To Drink by Tyler Durden via ZeroHedge

"And yet almost every institutional investor, in almost every market, seems worried about liquidity. Even if it's here today, they fear it will be gone tomorrow. They say that e-trading contributes much volume, but little depth for those who need to trade in size. The growing frequency of "flash crashes" and "air pockets" – often without obvious cause – adds weight to their fears."

Chart Of The Week by Julie Verhage via Bloomberg Business

"'Are stocks overvalued, depends on which measure you use."

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BoPeople's picture
BoPeople (not verified) Jun 5, 2015 3:34 PM

This is Satan's world. No additional understanding is necessary.

Those who run the system are his minions. Those who do not are the ones he is trying to corrupt.

BoPeople's picture
BoPeople (not verified) BoPeople Jun 5, 2015 3:38 PM

A better understanding of the history of the world and who is running it.

 

https://www.youtube.com/watch?v=xt3cmlp5naM

 

While I do not believe this is a perfect explanation, I believe it is closer than most.

Buckaroo Banzai's picture

"Odds and ends, odds and ends
Lost time is not found again"

--Bob Dylan

https://youtu.be/_ZNewkW0dB0
Rainman's picture

Doesn't these people understand that corrections have been outlawed .. ? ponder that .

IntercoursetheEU's picture

A perceived real uptick in the US economy, even if slight, or contrived, may be what causes a dramatic reversal. 

Higher interest rates are simply intolerable, whether viewed from perspective of future value of dividend stream , or in the problems this would introduce in servicing US debt.

Let's say the 'improving' job stats unexpectedly keep coming. The Fed may be forced to raise rates. This would reveal the paradox of higher interest rates in an ecomony which is truly in decline despite the 'stats'.

This is the flipside of our current status quo, where 'bad news is good news'. Short bursts of undeniable good news would flip the equation, to 'good news is very bad news'.

Yen Cross's picture

   I got a good laugh when the tards at CNBS said that they were worried about inflation after the jobs print this morning.

   Bond yields aren't higher because of growth.They're higher because of uncertainty brought on by lack of liquidity from 7+ years of ZERO risk premiums.

 I'm worried about stagflation... We've got massive global over~capacity, and the blowhorn clowns are worried about inflation?

Rainman's picture

good analysis ..... all CNBS projection models are locked into 20th century thinking.

Stagflation is the dirtiest word you can call an economy and they know it.

Yen Cross's picture

  Thanks. Rainman ;-)

gdpetti's picture

Reminds me of an expanded or stretched out version of the market in 2000... this happens everywhere in life... like any relationship, things stagnate when neither party/parties want to break up, they stay together out of fear of what the breakup will mean, how it will change their other relationships... so no one 'rocks the boat'.... but they all know that a tsunami is coming and gathering speed and strength as they keep 'kicking the can down the road', making that day of reckoning even worse. We have found ourselves still alive after the first edge of the storm has passed by, we have picked ourselves up and stand a little slumped over when we look around and see that we are in the eye of the storm, with the worst of it yet to come... just moments away, and what follows this storm will deposit us in a Land that Time Forgot.

There's a time to walk away and a time to run.

Another way to look at it, is th 'Phony War' before the real one started, later called in the West, WW2.

Son of Loki's picture
Real Estate Analyst Jurow: 'Housing Collapse Ready to Resume in Earnest'

 

http://www.newsmax.com/Finance/StreetTalk/Jurow-housing-collapse-mortgag...

jimfcarroll's picture

"I was recently told by a bull who was dead serious that, not only do none of these things matter, there is an invisible magical force more powerful than any of these them which ensures stocks will continue to march higher."

This is actually true. It's called QE.

stant's picture

Moot . We are going to war. And not just a play in the sand box war .a MF navy war , air land sea

Bobbo's picture

The Great God War will save us from Destruction.

 

What could possibly go wrong ?!