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Is This Complacency, Idiocy, Or Both?
If one listens to the financial media mavens give their detailed analysis of late, you would have thought the The Onion™ decided to try its hand at TV and radio.
Since last Friday as they anticipated the most recent “jobs” report with bated breath to be announced, into this week that just ended. I have been left slack-jawed more times resembling the cartoon characters I grew with up as a kid. However, at least back then the cartoons were trying to be funny. Today, what is being touted as “serious insightful analysis” is so much more comedic – its tragic.
As I awaited this months version of the report. I had playing in the background one of the financial shows that were parsing, and mincing the usual data points. When suddenly I heard a few statements that made me do the double-take of “wait…what?”
As usual the schpiel is basically the same or formulaic on all of these program types. The host plays the sounding board as the guest plays “the seer of all that’s unseen by us mere mortal schlubs.” On this day in particular; replace “mortal” with “idiot” and you are closer to the truth of how you, or I, are looked upon by these masses of the so-called “smart crowd” perusing Wall Street today.
And just to clarify; the word “idiot” is in quotes not in some air quote manner. Rather: that is the exact word used to describe people like myself (and maybe even you) that question their insight. So if you’re reading this – now you know where you may stand within Wall Street’s loving and caring mind. (I know it’s satire) For question their glowing analysis of dog crap? And it’ll be your nose they’ll attempt to rub in it. Elitist insight at its best.
One of the reasons given why this guest could tell “the economy was doing much better than perceived” was: As he traveled about the country to places like the West Coast, and a few others. (The list was what anyone with half-a-brain would understand are at the epicenter of a pick your bubble flavor expansion) From his observation “These places are doing very well!”
As I listened to the list of places that were ticked off where they had visited (as to speak.) One thing was quite obvious to anyone who was actually listening. The examples were from what one would infer to be: Silicon Valley (proper.) New York City (proper) etc., etc. My reaction was along the lines of, “Well – Golly! Who’da thunk that!”
It makes one wonder exactly who do they think (or believe) we are when we hear these words of insight. I just can’t for the life of me understand the arrogance of so many on Wall Street today that take to the airwaves or print and talk down to others (especially those of us that presumably are their customers!!!) when anyone with a miniscule of business acumen can see they are nothing more than bloviating meme-of-the-momement pontificates. And people like this have the audacity to literally call people like myself (as well as you dear reader) “idiots” or “data deniers.”
I could go on to list even more revelations in absolute meaningless insights I bared. I mean truthfully; how much financial “insight” or “analysis” to notice that places that are currently in a real estate or Silicon Valley bubble are doing “Very well?” Idiotic would be an understatement.
How about what’s happening just outside these areas? Never mind 100, or even 50, rather, just 25 miles outside? Do they not want to venture (or speak) there? Or, is it for just as their analysis implies; as in that untold or unmentioned dirty little secret. i.e., Mom and Pop have no cash left to invest – so why bother going to a financial desert? Which so happens to be spreading almost as fast as the desert is reclaiming California. Both with no relief in sight on, or over the horizon.
After all, just venture to any mall, Sears™, JC Penney™, Macy’s™, Walmart, McD’s™ and a cadre of others you’ll find just outside, and it’s hard too miss they’re having serious issues with either half filled shelves, sparse foot traffic, falling sales, revenue killing markdowns, adjacent retailer vacancies, or worse: the pre-vacant with their “going out of business sale” signs that stay up till the very end giving every other business within eye-shot an uneasy feeling to ponder daily. i.e., Am I next?
They’re not “doing very well” as their neighbors like Tiffany’s™, or Louis Vuitton™ might seem to be just a stones throw away. But one has to be willing to go for a burger outside of town rather than the steak at the hotel. Or else, well you know.
As stupefied as I was listening to all this dribble, just when I thought I heard it all, the coup de gras of “wait…what?” was spoken.
In an explanation for clarifying their now informed insight, the reference given for what we all need to contemplate today is: “What the Fed. thinks is now bad or good, and what they’ll do about it.” i.e., “Does bad still mean good for stocks, and is worse still terrific?”
I’m sorry. Maybe it’s me. However, weren’t we told by this crowd “to not believe the data – we were idiots?” For if that data is to be believed: What in the world does The Fed. have to do with stocks? Unless of course the undeniable truth is, that since QE halted 6 months ago – the markets have done little more than zig zag in a pattern reminiscent of (you guessed it) the birth of QE itself. Meaning: The Fed. is the market. Period.
All you need to know is right there. For years people like myself and a few others were labeled as “idiots” or “data deniers” when we made the case there is no “market” in equities if not for The Federal Reserve and its interventionism. And for years we were told “the data states otherwise.” And now we are being told (or sold): All that matters is that the data remains bad, for if not, the Fed. may react in a way that fells the market! Again – you can’t make this stuff up. Personally I had to make a conscious effort as to not spew my coffee.
The data (we said) if looked at through an eye of “truth be told” rather than the Three-Card-Monty version of “specious to be sold” there is no fundamental, financial, or any other reason these markets are to be at these levels (never-mind never before seen in history highs) other than a financial bubble being blown and fueled by the Fed. to proportions; that an impending “pop” could result in making the last crisis look like a cake walk.
Now, suddenly (just to reiterate it’s only been some 6 months since the spigot of QE was shut off) as the markets have gone nowhere fast. Their “analysis” is now changing faster than a “double seasonally adjusted” data point. And we’re the idiots?
Now persistent sell offs (which for years were all but forgotten) are followed by out-of-the-blue volume-less miracle rallies fueled by HFT stop seeking algos in the “most shorted” arena of stocks driving the main indexes from the ledges of scary cliffs – back to the heights of euphoria.
This has now become common place as opposed to the one way market of just 6 months ago. Yet, this in turn still supplies headlines for the main stream media such as “Dow rallies impressive triple digits” or “The markets set another record today” on ___________ (fill in the blank with anything you wish like “a cat was petted today” because it just doesn’t matter. And will probably be closer to reality than what you’ll hear from the “experts.”)
But the headlines mask the onerous implications underneath. For zag-zag patterns enable just what they imply: zigs to euphoria followed by zags to a portending abyss. It’s when the next zig after the last zag fails to show is when all heck breaks loose. And the last time we saw this type of action? QE1 was implemented. Not too worry though because – “This time it’s different!”
Remember, if the economy was doing as well as we were told the “data” states: Why do we still need interest rates held as zero? Again – If housing is so swell, and employment is near statistical (cough, cough) full employment. And the markets are once again within their never before seen in the history of mankind highs. A raising of 1/4 of 1% is cause for concern? If not outright panic?
Think this through with me…
Why should anyone be concerned about the markets if the Fed. raised rates a miniscule 25 basis points? Or why should one ever question the omnipotence of the Fed. to save the markets at anytime regardless? Are they omnipotent or not?
Just look at what was expressed via this Friday’s market reaction to the impending concern, as well as more probable than possible Euro Zone train wreck that could very well be coming apart at the seams. Not only with an exit by Greece, but also a default on their debt. Debt that by all accounts is intermingled with far-reaching tentacles within the financial markets, currency area, CDS markets, and more. All while Spain, as well as Italy look and ponder their own issues concerning the EU and more.
Our markets not only didn’t care – they didn’t even shrug, blink, or wince. Talk about complacency. This is complacency turned up to 11!
I ask again: How can it be implied that the markets are too fragile to deal with an unexpected raise of interest rates to (gasp) 1/4 of 1%, if all the “data” we were told has been showing signs of all this “improvement?” Or better yet: How can all that good data we were told (or sold) to accept as “truth” now mean it’s bad for the markets? Is this idiocy? Lunacy? I can’t tell, I guess I’m just too dumb to figure it out.
And that reminds me. For if memory serves me correctly. We were told at the end of last year, as they began to contemplate this year. They (The Fed.) were most likely going to be ready in June based on what the “data” was showing then. And June came and went while they’re now singing the line “See you in September la, la, la….”
At the end of last year as we were transitioning into this one. All the hand-wringing was about a possible rate hike in June based on the improving data. Now that data showed (to both the Fed. as well as demanded by Wall Street) June needed to be off the table and Sept. is more likely of a probability. (key word again – “probability”)
Some interject another reason for no hike at this past meeting was in reaction to the whole Greece thing, and the impending possible ramifications. However, we’re also told (by nearly every next in rotation fund manager on TV or radio) the impact to the U.S. for anything Greece related would be near nil for “We’re just not that exposed.”
Let’s see: The Federal Reserve does have limited exposure I guess. I mean, they only deal directly with “a few” European banks like those that are listed on the coveted “primary dealer” list. But is it lost on this so-called “smart crowd” those lowly few just happen to be the biggest banks in all of Europe! With probable derivative exposure of countless trillions of not only €uros, but Lord knows what else.
Yeah, I guess they’re right. Nothing to see here. Move along, thanks for coming by! It’s not like our banks or markets may have intermingling exposure of trade derivatives, currency swaps, or anything like that I guess. What could possibly go wrong?!
Talk about convoluted, nonsensical logic chains. And we’re referred to as “idiots” if/when we refuse to accept such nonsense as fact!
So now I guess the question still remains: How does any Ivory Tower prognosticator, or Wall Street talking head, square all these circles?
Simple – they don’t. They just act as if it they didn’t or won’t happen. Or, just continue to act as if we’re too dumb to answer.
This is complacency, idiocy, and more – all turned up to 11!
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Human nature is evil, and goodness is caused by intentional activity.
http://www.philiacband.com/propaganda.html
nar, we're all just somewhere on a spectrum from selfless to selfish.
The problem is that precisely half of us are in the lower 50 percentile towards selfishness
Everybody calm down. It's just Elysium, minus the orbiting space station.
Complacency *IS* Idiocy, just another synonym.
When all Hell breaks loose, the markets will control the Fed, rather than the Fed controlling markets.
AP publishes photo of gun pointed at Ted Cruz's forehead:
http://tinyurl.com/qc8x925
Spieth just won USOpen
none of this matters, does it? are central banks going to continue supressing interest rates or not? can companies issue debt at near zero interest to fund stock buy backs?
Central banking at it's "retard'ist".
The desert isn't reclaiming Kalifornia. The libtard smelt lovers, that won't allow new basins to store ( agua "aka" H2 0 , common sense) are locked in their own little " water rights" dilemma, ( Cal-PEC) </sarc> that we can't get new storage built.
There's plenty of water. The transmission is another story.
aS uSUAL...
not complacency, not idiocy...pure moral hazard to the nth degree.
This system breaking down was inevitable and the ongoing Federal response inevitable as well. That Wall St. would take advantage not a big shocker.
Here's what drove the increasingly flawed system over the edge...
http://econimica.blogspot.com/2015/06/0ne-simple-chart-explains-great.html
I stand corrected Ham-Bone.
I miss those wonderful bond charts you spent (hard earned) time to provide for us.(realists)
I'll bet you have to dig even deeper, as fact becomes fiction.(ratings agencies)
Chicago, Detroit, bum fuked Egypt?
Yen - not correcting you...just augmenting your thoughts while enjoying some crown n cola this fine fathers day.
Good thing that whole bond thing turned out ok once the economy recovered...not sure what I was worried about?
Ham-Bone , you're so F*%king sweet with your understanding of macro financing. You're absolutely genius.
Yeah, it's awesome. I've got a small fortune from writing about economics...unfortunately I started with a large fortune.
Maybe we can package some derivatives Ham-Bone?
your blog is a really good read thanks ham.
what strategic things would you do with spare usd to weather and profit from the storm?
follow kyle basses lead? stack physical? short debt somehow?
Unfortunately I'm not nearly sophisticated or machiavellian enough to take advantage of the CB moral hazard opportunities (I like Bass but always struggle how much to trust money managers who must quarterly outperform their peers to maintain their assets under management...and if this will work on in the long run).
Still, money must go somewhere and there are very few options. Comes down to a basic premise of investing with the rigging or against the rigging...and whatever time horizon you believe the rigging will continue to succeed. If things really do go pear shaped, what will maintain or gain in value and what "insurance" policies may pay off.
I wrote on this topic previously but I have no good answers, just questions in the article.
http://econimica.blogspot.com/2015/04/how-to-invest-ugly-truth.html
that was money, the real kind thanks. im lucky enough to have eliminated all debt, and diversified with a heavy weighting of real assets and an ability to short the inevitable end. the worst thing a man can face is a total reevaluation of his values, were what he traded away his life for, and slaved for, and saved, is in reality worthless, and the question arises who is to blame? and how could i have been so stupid?
When was QE ended?
it cant end, the system has to create moar debt by design. oh to be an evil bankster and control the majority whilst they are clueless to whom is their controller. i o io off to a shitty job i go, ha...
i can tell you what raising the ffr by a mere 0.25% would do.
I'm going to tell you something, and you must listen and try and understand... [/Luis Chama, Joe Kidd]
zirp is everywhere, it is all around us. do you have any idea how much money would shift to being on deposit at the fed if they raised rates? a 26 week bill is paying 0.07. credit unions are paying 0.02% on savings. money markets are paying 0.11%. You want to see some havoc? go ahead, make my millennium. [/Beetlejuice]
I can't wait to see the negative rate " South Park" episode Buzz.. ;-)
Doc was so steadfast 2 years ago. He called it?
you know that emergency credit line you set up last week?
aaannnddd it's gone! it's all gone. poof!
Remember the(SouthPark) Bebe episode buzz? (boobies)
smell the glove.
The Ponzi is being fed on a whim and a Hilsenrat type whisper campaign. How any of these filthy political and bankster corp scum can Keep a Straight Face is disconcerting. MSM (Ministry of SadoMasochism) will fight to the last sheep's death for those Gubby bailout cheques. A right crock of BS is being served up.
Proof beyond the least doubt the upper bound of our exceptionalism
Great article!
You definitely soldier on! Late Sunday. :).
Tomorrow it all continues.
Rates will be raised to -0.25% along with the chocolate rations, citizen.
It's ALL beginning to make sense now! s/c
I swore to the girlfriend that if she didn't marry me i'd kill myself and she said she'd think about it if i didn't but if i did she couldn't envisage a future between us.
Bankster bitchez?
pull my finger........
Was watching a TV financial show a couple weeks ago. The show host was interviewing a tech fund manager who's fund has hunderds of millions of dollars invested in tech stocks. The host asked the fund manager "Is there a bubble in tech stocks?" Fund manager replied "No". LoL!
"I just can’t for the life of me understand the arrogance of so many on Wall Street today that take to the airwaves or print and talk down to others (especially those of us that presumably are their customers!!!) when anyone with a miniscule of business acumen can see they are nothing more than bloviating meme-of-the-momement pontificates."
All fun and luxury until the guillotines show up. And they will show up.
Liberty is a demand. Tyranny is submission.
9/11 was an inside job
You're preaching to the choir here.
The public just don't do numbers. Tell them employment was up three million percent last month, and they just shrug.
First, we are in the zero interest rate trap written about by many real-world market analysts. Governments cannot suffer even a small increase in interest rates or they/we go under in a series of connected events.
Second, as this article says, there is no real market. It is like asking what the free market, real world price of a fighter plane is. No one knows because the only market is the government. I suggest that the entire market is supported or dependent upon government interventions.
Last, even a slight rise in interest rates is not necessarily the problem. It is the change of direction it would signal. It is similar to your boat being near the beach and the tide is no longer coming in but going out. You will not wait long till you pull up anchor and leave. You know how the tides work and what the signals for change are. Too slow and you are beached.
This is the entire problem with central planning of an economy. An economy is infinitely complex like a rain forest. No one person, committee, or bureaucracy can run it. They can only torture it. Government turns a rain forest economy into a weedy corn field, measure corn tonnage as success and tells you it would have been a vacant lot but for their genius interventions.
One of my former sales partners was trying to buy her fist home in the northern part of the state. She said the prices were rocketing up.
My sales territory had been redrawn to the north, as well and I decided to check out the possibilities of moving north and avoiding the long drives and terrible city traffic myself. So, I checked out Zillow and a few other sources. My former partner was right. It was like watching plane ticket prices change as you check. Two days ago as I was driving through the area a real estate ad came on and said home prices had gone up 20% in twelve months. I had not heard of these kinds of escalations even in the last boom except perhaps CA.
My point is that outside of the old mining boom-towns, there cannot be any justification for these soaring prices. Are incomes up 20%? Is employment up dramatically? Do you see ads promising hiring bonuses because job demand is high? Nope. There are no markers for increasing prosperity except a sideways stock market and that stores are closing more slowly than the last bust. And they are still closing as far as I can see.
I am not sure of what I should do but my instincts tell me not to fight the market but profit it from it and prepare for the bust...which I have actually done to the degree I can.
Fed/government policies are recreating the very bubble that burst before and calling it success. Anyone remeber what was promised with the Fed charter?
My advice:
Take a napkin, and draw 3 equi-distant lines through it.
Think about taxes, maintenance costs, desire to "up-keep", etc.
Column 1: Pros of Home Ownership
Column 2: Cons of Home Ownership
Column 3: Pros of Home Rental
Column 3: Cons of Home Rental
Then- Add up the costs.
I am confident in stating that, in the vast majority of markets- you will decide in favor of renting.
Hey Marc, for future reference – it's "drivel", not "dribble", unless the idiot was spouting nonsense while drooling, in which case...
Could be the interviewee was at his local basketball court?
Ah, good point. Though he should, then, have been called for "double drivel".
The reason the Fed has not, and will not, increase interest rates is very simple: That would trigger about $500 trillion in interest rate derivatives. They'll talk about it, but they will never do it.
And the data shows... Great rant!