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The Coming Credibility Hammer
There are a lot of credibility “nails” that will either be hammered home or pulled out all together in the coming days, weeks, and months. They run the gambit on this financial house of cards that has been built over the years and currently, there are just too many shingles that have come loose along with siding, cracked foundations, and a host of others. Where credibility not only contends with the structure itself, but also with the so-called “smart crowd” of analysts, advisers, fund managers, media outlets and more. The coming storm now appears credible, where it’s made even the staunchest revelers of the status quo appear nervous. Forget about what may, or may not, be showing signs of de-lamination; for things may be about to come completely unglued as well as unhinged.
The Federal Reserve’s Open Market Committee will end a two-day meeting today. What they say as well as don’t say will be parsed over with bated breath and heated keyboards as soon as the it ends with no presser as to parse or mince the details any further. All that one will have is what they currently believe the meaning of the Fed’s version of “is” is. That or Jon Hinsenrath’s now famous near instantaneous rebuttal to what they “really mean” if the market goes in a direction other than the Fed intended.
The Fed lost its credibility a long time ago and long time readers are well versed. Anyone with real business acumen or understanding of free market capitalism with all it entails knows the Fed has remained far too accommodating, and for far too long where much higher consequences are going to be paid in the future, so there’s no reason to drone on. The only issue today is when those prices are to be paid – not if.
Whether or not they should have intervened at all during the original crisis is still a debatable question with valid arguments on both sides. Remaining and expanding that intervention some 7 years is not. The only credible question that now remains is: Just how much of a price will be paid, and can it be afforded? When that bill comes due is still an unknown. Yet rest assured – it will come.
However, the credibility of the media at large along with its subsets such as “the financial media” are also going to face what I feel is an enormous credibility hammer. To give you an illustration of what I’m trying to express I ask you dear reader to answer the following: Who has more credibility? A person, media outlet, investment firm et al that has tried to hammer the point that these markets were not to be trusted as they continued a near vertical assent up nearly 300% from the low? Or, one that has continually scorned the first and told you to grab this party with both hands and enjoy the ride – as the wheels now begin falling off the bandwagon? All while you finally notice even the band itself (i.e., the real economy) was never on the wagon to begin with. Just you, your 401K fund, and what is now coming into view – a cliff at the end of the road/horizon.
This is the situation I believe many are going to find themselves in. All one needs for proof is to open their eyes and look out on that horizon. It’s all they’re coming into clearer view on a near daily basis. Where once the horizon shielded it over its edge is no longer the case. The only way not to see it today – is to look away. Yet, ignoring it doesn’t mean it’s not so: which is precisely what both Wall Street along with its revelers want you to not only think – but believe. This is a perilous diversion with grave consequences in my opinion.
I saw no greater example of this than just Tuesday of this week I was watching a segment on Bloomberg Surveillance™ when I had what is now commonplace for me, that “Wait…what?” moment.
In a discussion about earning and more the conversation turned on the questioning of metrics. The guest Tony Dwyer made his usual argument on why he believes this is such a bull market and so forth. However, it was the defense he gave for his reasoning when he received a little push back from one of the hosts (Vonnie Quinn) in her assertion that it’s easy to beat a bad number in regards to “earnings beats” and the fundamental fact is earnings have not been all that better than tepid, in which she’s dead on.
It was the seemingly perplexed retort that shook me. Mr. Dwyer responded with: “They haven’t been the entire cycle and we’ve had a 300% gain. Look, I’m trying to understand how we keep coming on every quarter, that the earnings are terrible, revenue growth is terrible, this is going to be bad – and we’re up 300%” He added as to reaffirm he still believes double-digit gains just 6 months out from here.
I don’t know Mr. Dwyer and that’s a bold call. However, what I do know is this. Yes, technically he is indeed correct. Yet again, for those who don’t understand how the “markets” have worked over these last 7 years, along with those who have only heard the revelry calls of many a fund managers “And we’re going higher!” It is precisely these within the near future that will get clobbered once the full effect of what has fundamentally propelled these markets that 300% which are now stalling, and sputtering without it.
These markets have demonstrated to be nothing more than HFT fueled short covering, stop hunting, panic rallies out of nowhere to make up for the preceding sell off the day before. And with no fundamentals (i.e., true economic fundamentals not fudged data points) to propel a market above its last high let alone double digits. Along with the only “fundamental” reason in the first place for its rise being the $4+ TRILLION in QE that made it possible has since ended. Going double digits higher from here (let alone in 6 months) seems more like fantasy to my ears than reality. And if it doesn’t and ends up actually reversing? The credibility of anyone who has remotely sounded like the above in my opinion will be not only sanctioned – but shunned. If you want an example of what could develop one needs look no further than China’s current stock market calamity.
In China people were experiencing not only double-digit performance in the year, some experienced triple! And in less than 90 days it all has fallen apart with people not only losing some of their investment. Some have lost all, and some even more because of the leverage. They too were advised or heard across the media as to “buy in” to a “sure thing.” After all, who would have thought there was an issue in China when all you’ve heard from the media channels and more is “China will lead the world out of this malaise.” Yet, now it looks like it may actually drag it all down passing malaise – into outright catastrophe.
People will shun their brokers and advisers going forward (and some will for generations) that argued the reasons to “buy, buy, buy” as will the media that gave their readers nothing more than specious headlines as to soothe concerns rather than pragmatic insights they could have used to help protect themselves. It will be the clarity that comes from years of disillusionment that will have impact on everything going forward. Banks, the media, brokers, advisers, stocks ________(fill in the blank) all of it will change.
This is where as I’ve professed many times in responding to how far these “markets” have risen and why: “I may have been wrong – but it’s been for all the right reasons. And I would rather keep my credibility and argue my reasons why, than take the obvious easy route and buy into what I know to be wrong.” Keeping one’s credibility is hard enough, trying to restore it after you’ve lost it is quite another. I think many like myself are about to gain a whole lot more credibility sooner rather than later which the so-called “smart crowd” stated we didn’t have in the first place – as they lose most if not all of theirs.
Who knows what is yet to come. Or, whether I’m right or wrong in the end is meaningless. However, just the very act that you are reading this is de facto proof at least you took it upon yourself to search either this article or others like it as to shape your own decisions rather than to just believe hook, line, sinker or with cowbells, or buzzers by the so-called “smart crowd” that things were just hunky-dory, and pay no attention to the nay sayers of this wonderful bull market we’re currently enjoying in equities.
Credibility matters, it will matter even more in the near future when there seems none to be had from those who may have lost – or sold theirs.
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nailguns everywhere
Pension destruction comes first.
Then all hell brakes loose.
The comfort of a fat pension gone will lead to a really bad day.
No haircuts first?
You'd think so, but I'm not so sure. If it's done piecemeal fashion, and done so it can be blamed on the "markets",
then everyone may stay hooked into the matrix like good little batteries. The use of attrition should wheedle out many
of the malcontents. Municipal and private pensions may get another hit of S&P/Fitch/Moodys' triple-A rated derivatives
to ease their valuations down to the point of the SouthPark moment then you may be right, the batteries may short out.
I'm in agreement with Chuck. Pensioners have families (Well, most anyway) who will shoulder the expense of Pop's lost pension and that will without a doubt get them very pissed off.
The impact on families will be profound. It may be enough to force them to finally act against those would beggar, then bugger them.
I honestly do not believe the death of pensions will happen without widespread social unrest.
You may very well be right, especially if you are talking about 401K's as well, rather than just old school pensions.
There's been a good bit of this going on for sometime now, but it's only a tradgedy when it happens to you.
http://www.nytimes.com/2005/09/18/business/whoops-there-goes-another-pen...
A lot of ex-cops (ex-agents, ex-co's, ex-military, ex-whatevers) in that 40-50 y.o. age-bracket collecting a (too) sweet pension. When they realize they've been fucked, they're still young enough and knowledgeable enough to cause a lot of damage to those who pissed them off.
I know this from direct experience.
It will be lone wolves, not an organized movement-- at least at first. And then it will be cells. and then it will be a movement of individual cells working together. And then...
A lot of damage needs to be undone. And the rewards of this work will not be enjoyed by our generation, but hopefully the next will see light upon the horizon.
Indeed, Chucky. If you have a pension, I advise a good read on Loss Aversion, what it is and how to become robust to it. It's one thing to lose a monetary benefit, and quite another to be destroyed psychologically, which leads to physical destruction.
Anybody who thinks their pension lives in a little box with their name on it, they need to read up on loss aversion.
But I have a contract?
LOLOLOL.
Take a number and stand in line.
After attorney fees, you may get enough to burry you.
Old fools.
We can all take some consolation in knowing that the old fool's life savings was enough to pay a bankers salary for a week. Thus it is a virtuous circle,
what would have been squandered on food, utilities and health care, can now safely be ensconced in a Cayman account so as not to over stimulate the
markets. Trickle-away-economics. It's not just for breakfast. Long cat food.
It wont just happen without another 911 and 2008.
But then it will happen.
Sacrifices must be made for the good of all.
Word.
Credibility? What's that?
depends on who is talking. besides the usual, more common definition as in this article, not long ago "credibility" meant if a CB was believed it would unleash a QE or not
and so, like Pavlov's pets, many are trained to salivate when they hear "credibility", because used to that meaning "up, up, and forever up!"
It's kind of like class (As in classy person), you either have it or you don't.
The most precious commodity in short supply --
Trump is not getting in because Obama is not leaving... read numerous prophecies about Obama, his coming assissination, the collapse of the dollar, and the coming attack on America! http://revelation12.ca
False prophet.
peddle your crap elsewhere
What the hell would Obama want to stay in office for?!? He can't get $250,000 speaking engagements, or set up "philanthropic" foundations while in office!!
Geez man! Use your kidneys!
Are you reading this Blo Pony??? (did I spell that correctly?)
Bo-Loney or Blo Pony, something like that. Yeah, but he sold at the top, so yeah.....
If you want to understand how the market works nowadays, just go to the pool hall and watch how the hustlers make their living. This is all three card monte on a trillion dollar scale.....
"Markets will continue going up because i've got this here ruler and if i put it over this here graph the ruler goes in an upward direction."
That's what passes for financial analysis these days.
When did they stop using the dart board ?
They still use a dartboard, but it's just one big bullseye that says bullish.
i like the term credibility better than confidence. a lot of analysts predict a loss of confidence in the dollar, and markets in general. i dont think confidence matters much, when you run a monetary utility, you are selling electricity, do people lose confidence in electricity. the power goes off for long periods, you lose confidence in the power company, you dont throw away your lightbulbs. but credibility is real and it addresses the people who run this economy.
+1M
... full faith and credit of the united states?
Credibility is to nice a word, how about lyers and crooks.
Credibility has a whole other meaning when you control the regulators, banks, media, money, courts and congress.
House prices always go up.
Markets are just the same.
Credibility left the financial world 14 years ago and the erosion has increased with every new crisis. Mark to fantasy, non GAAP, double seasonal revisions to made up numbers, and zirp make it impossible to have any real read on anything.
When you change the rules because the outcome is not what you want what's the point of trying to make any real assessments.
Double long WRC (War with Russia/China) ETF, if this baby turns by October...?
There's a word to describe our situation: Fascism.
No wonder everyday Americans are talking about 9/11, the FED, and the AIPAC bootlikkers in CONgress.
I overhear stuff like this every day at the pizza shop, gas station, and shooting range.
The Wall Street Con Market Casino has one function and that is to strip mine the wealth from the American People to give to the rich. I want to remove the rich Oligarchy's heads. I don't give a rip whether they have any credibility afterwards.
Credibility. When I see a mass shooting not targeting political criminals, I know its a false flag. Credibility.
Psst. You're supposed to use "credibility" in a sentence!
Alright. Bill Cosby has far more credibility than Jonathan Pollard and his ghetto rat crew. You dicks!
If you aren't too busy, go look up all the board members of all the Federal Reserve branches and all the other boards they serve on.
We didn't fall. We were pushed. By trusted allies. Just like the first and only true German Democratic Republic. And the best, Czar Alexandre II, who, inspired by the American Experiment, freed more slaves than any freedom fighting bankster ever lied about. Ever. Learn from the fate of the family of Czar Nicholas. Know Leopold II of Belgium. Know what George Washington did.
DYOH while you still can. Don't sleep. The parasitic races descend. They look more like gargoyles than humans. Just like Yellen. Like Bernanke. Summers. Volcker has always been a spy.
Like Sharpton.
Leave no records of inventions and discoveries for them to loot and claim rights to. Keep it close. Don't give up.
The first few times, enemy in the field is just as scared as you will be, the first time. Preparation is not everything; half the time, they run away. You can't win if you don't show. If they don't run away, you kill them, so they don't come back. If you run they'll kill you. I could say more, but that would be a gift to them. Get your head in the game. Get out there and do your best.
The pols are the enemy, not the pawns.
I am sure we can field a better representative than what the establishment offers. I am certain that we are better than the MSM would have you believe. I know. I've been where they don't go.
FUCK ISRAEL and all the pimps, pornographers, rapists, child molesters and killers they shield and export.
The Jesus story predates the Talmud. These aren't the hebrews of the bible.
Word of advice to any politician, judge or lawyer who takes up the cause: first protect your extended family. Call up all *trusted* local militia. As you already know they will Kennedy your ass. Twice.
With the Pope's approval.
The founding fathers did it anyway. If you can't step up, get out of the way. Remember, before we broke free, the Guelph-Rothschilds claimed this land, and us, as property, and before them, the Pope did. With racially ambiguous slavery and rape. To the death. The "American Nations" maps are bullshit. DYH, easy to prove.
America is for us. Not for the mental cripples being pushed onto us from all over the world. Cut the funding for this travesty. The incoming criminals don't give a shit. Shoot to kill.
Eric Holder mocked us all. Fuck you, DC.
I see you.