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Where Does The Market Go From Here: Two Opposing Views
Yesterday's market tumble finally brought the S&P and Nasdaq alongside the Dow Jones into correction territory, sending the broader index down 11% from its highs, even as a vast majority of S&P constituents already preceded the index and are either in correction or in bear market territory. And yet, following today's latest central bank intervention, this time in the long overdue Chinese interest rate cut (which will hardly have a lasting impact on either the economy or stock markets), the S&P correction may prove to be short lived: S&P is poised to open about 3-4% higher, delivering the latest "Bullard" moment to the S&P, this time courtesy of China.
Still, the question remains: was that it for the long overdue correction, and what comes next.
One suggestion comes from Goldman, which looks at the today's market and the raging EM crisis, and compares the S&P to the last Asian crisis in 1998, which it hopes will serve as the anchor correlation pair until the end of the year.
This is what Goldman's David Kostin says:
S&P 500 has corrected for the first time in three years, declining by 11% from its May record high. Concern about China economic growth was the immediate catalyst for the correction. We expect the US economy will avoid contagion and continue to expand. S&P 500 will rise by 11% to reach 2100 at year-end. Such a rebound would echo the trading pattern exhibited in 1998 when US equities rallied and largely ignored the Asian financial crisis.
Some more details from Goldman:
The S&P 500 retreated by 10% during the past seven days and has dropped by 11% since reaching an all-time high in May. Weakness across emerging markets is the leading culprit. Last week China’s flash PMI registered its lowest reading during the last six years leading investors to expect that the PBoC would cut interest rates. When this failed to materialize, the Shanghai Composite index fell by 9% on Monday. The Shanghai index has plummeted by 38% since June.
We believe the US economy will avoid recession in 2016. However, investors are concerned that the drop in commodity prices during the past year, the nearly 40% collapse in China equity prices during the past two months, and economic and FX weakness across many emerging markets will serve as a drag on US growth. The risk of potential contagion from a slowdown in China has prompted an 11% correction in the S&P 500 index for the first time since 2012.
A similar correction occurred in 1998 before the market rebounded. S&P 500 plunged by 14% during August 1998 before rallying by 29% during the last four months of the year. Admittedly, it was a different time and place in that emerging markets contributed a smaller share of global GDP than today, the US was in the midst of what was later to become the Tech bubble, and the Fed cut interest rates 3 times in response to financial markets that were reeling from Russia’s default on its sovereign debt and the collapse of the Long-term Capital Management (LTCM) hedge fund.
Ultimately, the US economy was relatively unaffected by overseas financial market gyrations in 1998 and we believe a similar situation will occur in 2015. Our analysis of the geographic revenue exposure of S&P 500 constituents reveals that the US accounts for 67% of aggregate sales. Approximately 8% of revenues stemmed from the Asia-Pacific region with 1% disclosed as coming specifically from Japan and 2% from China. From an economics perspective, US exports account for roughly 13% of total US GDP, which includes 5% to emerging markets and less than 1% to China.
Goldman's optimism is, as usual, contagious. There are however a few problems with it. As Kostin himself admits, "between July and August 1998, the S&P 500 fell by 19% amid fears of financial meltdown in Asia and Russia. The rout in the US market ended when the Fed intervened with three interest rate cuts."
The problem is that not only is the Fed not going to cut rates three times, or even once, but is about to hike.
The other problem is that when it comes to predicting the future, lately Goldman has been, in a word, lousy: recall from July 8, when the Chinese stock market started its dead cat bounce only to crash in the past month and a half. From Bloomberg on July 7:
Goldman Sachs Says There’s No China Stock Bubble, Sees Rally
Kinger Lau, the bank’s China strategist in Hong Kong, predicts the large-cap CSI 300 Index will rally 27 percent from Tuesday’s close over the next 12 months as government support measures boost investor confidence and monetary easing spurs economic growth. Leveraged positions aren’t big enough to trigger a market collapse, Lau says, and valuations have room to climb.
Goldman Sachs is sticking with its optimistic forecast in the face of record foreign outflows, the biggest-ever selloff by Chinese margin traders and a chorus of bubble warnings from international peers. The call hinges on the success of unprecedented government efforts to revive confidence among individual investors who watched equity values tumble by $3.2 trillion over the past three weeks.
“It’s not in a bubble yet,” Lau said in an interview. “China’s government has a lot of tools to support the market.”
With the SHCOMP crashing and the market rising, then collapsing since Goldman's "assessment" it appears the Chinese government was all but out of tools, and Goldman may have been a little too aggressive with its Chinese optimism (unless of course it was merely looking for muppets to dump its Chinese exposure to).
So if we ignore Goldman and its latent optimistic bias (especially since Goldman is well-known to do the opposite of what it recommends, in which case we agree with it wholeheartedly), here is a less euphoric, and more tempered perspective on what may happen next, courtesy of Doug Kass:
Here's my view of the possible scenarios ahead, which form the basis of my fair-market-value calculation:
- Scenario #1: Economic Acceleration Above Consensus (probability: 10%).Characteristics: 3% real U.S. GDP growth, 2% to 3% inflation and 8% to 12% profit growth. Outcome: Stocks climb 7.5% over the next 12 to 18 months and my S&P 500 target is 2245.
- Scenario #2: Status Quo (probability: 25%). Characteristics: 2% to +3% real U.S. GDP growth, 1.5% to 2% inflation and 5% to 9% profit growth. Outcome: Stocks climb 5% over the next 12 to 18 months and my S&P 500 target is 2195.
- Scenario #3: Muddle Along (probability: 25%). Characteristics: 2% real U.S. GDP growth, 1.5% inflation and 3% to 5% profit growth. Outcome: Stocks gain 0% to 5% over the next 12 to 18 months and my S&P 500 target is 2140.
- Scenario #4: A Garden Variety Recession (probability: 25%). Characteristics: Negative real U.S. GDP growth, less than 0.5% inflation and a decline in profits. Outcome: Stocks drop 13% to 17% over the next 12 to 18 months and my S&P 500 target is 1775.
- Scenario #5: A Deep Recession (probability: 15%). Characteristics: Negative real US GDP growth, deflation and a large drop in profits. Outcome: Stocks drop by more than 20% over the next 12 to 18 months and my S&P 500 target is 1625.
When I combine the above scenarios' probabilities against my S&P targets for each, I come to an S&P 500 fair-market value of about 1990 (vs. the roughly 1945 the futures are showing right now).
So one expectation fo 2100, another of 1990, and yet the final word belongs to Janet Yellen: should she proceed with a rate hike as the Fed has long hinted, both of the above recommendations will likely be scrapped and what happens will be something totally different and unexpected. And the biggest irony is that as US stocks are set to soar, the probability of a Fed rate hike gets that much more likely, thus undoing the very reason why stocks were soaring in the first place.
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Both points of views are making the assumption that we have a market...., which we don't. So both point are null and void.
Expect a rip your face off rally followed by the big dump
http://www.goldsqueeze.com/analysis/the-worst-thing-that-can-happen-in-t...
No.
Expect this dead kitty bounce to last through today or tomorrow
Followed by a massive epic biblical crushing drop that scares the total shit out of everybody.
Fixed it.
>DOW finish green
>DOW finish red
It's Tuesday. Market finishes up today and down tomorrow. That's how it works.
It's a Equity Crash Up, it all up from here.
Solent green day is also Tuesday.
You're right!
http://www.johnsuder.com/daily/2013/02/tuesday-is-soylent-green-day
Has the Fed announced QE4 yet? No? Then stay the hell outta the market until they do.
We are in a fucking liquidity trap and have been for years now. Nothing eases the pain in a liquidity trap other than more liquidity. Every time you let off the monetary gas pedal things slow down and start sliding backwards.
Always good to give the tree a good shaking occasionally to get all the weak players out........works even better when there's no liquidity.
Yep. Forget the fucking fundamentals. Forget trading against HFT bots. If the fed keeps printing, all assets get bid. If they stop and raise rates, all assets correct. It's really that simple.
After the crash you can use fundamentals to pick thru the ruins.
Beware. Liquidity trap
And why shouldn't it go up, everything is fixed. housing and manufacturing is booming unemployment is down there is no wars or threat of war the oil market is healthy, Greece is fixed the eurozone and Asia are doing better. And the coming rate hike and stronger dollar (NOT). Did I miss anything?
Only if you live in the Bizzaro world
I didn't check either green or red as I truly don't know and I think it best to wait a month or two and see where it ends up and how it flowed.
Too many 'experts' and opinions, either pro or con and I don't trust any of them as I realize they do not know any more than I do about anything past now.
2015 is nothing like 1997, so the article is invalid. This is 2008 on steroids.
The crash is underway. All the FED can do is try to punish shorts with occasional sharp upticks.
The periphery has crashed and the wave is moving to the center.
Falcon +1. Stocks fall behind bonds and currencies, agree this is 2008 on steroids. The lose swinging beams on the way down will knock a few 'Joes' to their doom.
No.
nobody knows, that's the premise of the headline, there's no answer, no reason, because as the first comment said, there is no real market.
There's no real Market because the goals of a market that's based on fiat, creating something from nothing, are not possible, unless your God.
Funny we're so damn smart we can mathematically take a basket ball and turn it inside out without cutting it open. We can calculate unfathomable things but cant explain the most basic, like what a barrel of oil will cost tomorrow or why the market inexplicably goes down one day and up the next.
While knowledge has expanded at ever increasing speed we still stumble on the most basic subjects of science like gravity. Defining it's origin requires we understand something from nothing and without a God that's not possible.
Science cannot explain something from nothing. But it's the central theme of our time in every aspect of our lives.
We have no creator, no responsibility, and no real assets. We've become what we asked for. College kids living large on student loans, trendy couples living on credit cards, the poor living on other peoples wealth and bankers laughing at the muppets as they plot the next scheme to steal from them.
Usury is an evil scheme to skim off the productivity of others, getting something for nothing.
Our financial system has become a behemoth sucking up the productivity of the people, taking an ever increasing piece of the pie. Layer after layer of middle men who want to live off the producer/consumer, something for nothing, claiming their purpose is to prevent crashes and smooth the markets, while destroying the wealth of those who worked for it, and living in a separate win win world!
Rather then live peacefully off the sweat of our own brow we've created a financial system that we put our trust in to bring us paradise, our god.
All the talking heads and financial experts preach the faith with unison - hang in there, trust in the markets, the dollar is almighty, the Fed will save us, blah blah blah they cry to the alleged Godless masses as they worship at the alter of their propaganda machines, ever kept at their side.
It would be hilarious if not so sad!
It's impossible to sustain and it will fail spectacularly in a mass of war and suffering, the price we'll pay for living a lie!
We allowed these Evil snakes to corrupt our entire country out of convenience, out of greed, out of rebellion to God, who warned us to choose good and not evil, life and not death. We've become a bastion of secularism and worshipers of money. It's our own damn fault that America will soon fall!
we will finish green today, Id think. Following the worst 3 day streak in history on the dow, Id be surprised if it didnt finish up. Doesn't mean the bull is back, though.
I'd have to say Monday will be the closing low for the week.......that drop did enough damage to confidence which will halt any rapid rallies shortly thereafter.
Tomorrow?
Next week?
Next month?
Next year?
Next decaded?
Next century......................it will be higher
Next century there will be no markets. The word 'market' will not exist in the official language of earth: 'UN-speak'
Bodega
Bohica.
FIFY
What I was thinking too Dr. The market will do what TPTB tell it to do and when to do it. This is about complete control of everything and everyone.
If you can't sell, then there is no reason to buy in the first place. Doesn't matter if it keeps going up.
Took 3 days to sell for me
As long as USSA has the moast/biggest bombs all the rigs get rigged in their favor.
It's going down..
Faster than a waxed lead brick through greased hands.
You're a fool if you stay invested in this market.
Why didn't both "views" just say "we have no fucking idea" and just leave it at. Tea leaves reading would be more accurate than this chartist bullshit at this point.
The only question anyone trading or invested in this insanity should be asking themselves is "can an exogenous event overwhelm the ability of central banks to constantly intervene and manipulate these markets?". Everything else is noise.
To manipulate, or not to manipulate; that is the question.
I dont think that's the question.
The Truth!? You can't tell the truth! When things get this bad, you have to LIE!
I was telling a bunch of people just a few days ago that the problem with "qualified people" in general is their reluctance to say, "I don't know". In fact, in science and medicine jargon is often used to hide their ignorance. Why would finance be any different?
It's quite a steep decline in the markets and most guys are using it as a basis for disproving the omnipotence of central banksters. What if this too is planned? I can see two advantanges for the Fed to have a sharp decline, especially in the EMs. China's ambitions to get the RMB included in the SDR is instantly gone + The fantasy of a rate hike in September will be understood/condoned when it does not occur.
If it really is beyond the central banksters' control, then my guess based on the last decade of movements is a negative trend for the next 2+ years that wipes off more than 50% of the values of equities (See 2007 to 2009). But that's a silly guess which does not take into account all the added crap of debt bubbles, main street declines, stagnant economies, and the divergence of the petrodollar. It is looking really dire out there. So dire that I reckon Vicky Nuland's thugs will start a fresh war in the Ukraine, Syria, Japan or China to bolster the USD (Always in demand when the bombs start dropping). They'll have to start a major one fairly soon to divert the people from looking out their windows to see how really shit their world has become while Dancing with Bruce Jenner's genitals was on the air.
Do you guys think I should get an RV while credit is still flowing? Serious question
Personally I would wait if you can, rate increases aside used RV's should be real cheap in the next 2 years or so.........keep your powder dry in the meantime.
Get a used armored truck.
There are likely a few low mile MRAPs you could buy off your local municipality
The local municipality might need them though though for urban pacification operations sometime soon.
MRAPs, just another versatile tool for modern living...
Or you could hijack one.
One will be in your neighborhood soon.
Yea but I have 38 acres for free to put it on.....not sure if society will make it 2 years....like I said I want to use borrowed money for this so if the credit freezes it will be hard to get a nice one
Other than being relatively self contained, most RV s that I've been around have non standard fixtures, poor insulation and do not stand up well beyond the two week trip per year.
But it is a plan.
On the other hand used RVs might be in big demand as primary dwellings.
I'm looking hard at them as well...theres some decent older models out there with less than 100k miles and if a guy is a half assed mechanic, that may be an option.
Good thing is Mrs Clade is ready to unload all this shit and roll all gypsy style for our one final adventure together....as mentioned by Mtl4,, save up some cash and be ready to pull the trigger when some poor working bastard has to cover their 'margin calls' Theres gonna be a lot of them in the next month I figure, once they see whats hitting....good luck and report back and I will do likewise....heading for the LCS for a bulk bag o silver...
Sounds good, I am thinking about a travel trailer to hook up to my f150....I have a place to put it already....you know beat the rush and all. Thinking ahead is smart.
If you get a TT, get an airstream. Trust me on this.
THey are giving out 240 month loans for RV's....wow
Knew a guy that bought an old school bus for about 10k. Motor was good on it. He spent about 10k on fixing up the inside like an rv. It was larger and more secure than an rv though, IMO. Now he has a sweet rig for only 20k.
thought about this.....too much. I think it is the escape hatch to let air out of any thought of raising rates, a well-played excuse to say, "not now!", look what happened to the market. On the other hand, it amazes me how much energy Trump projects (right or wrong), and how sluggish the other candidates are in return. PC, is to not be PC (how ironic).
An excellent diagnosis Doctor
Executive summary. The market will be up, sideways, or down. Probability= 100%. You heard it here first.
Agreed. The main difference between now and 1998 is, in 1998 the stock market actually functioned like a free market. Additionally the US government did not have over 18 trillion in debt that followed a 5 year bull run. Either QE4 is unleashed or US stock indices will collapse by the end of September.
until proven otherwise the goldman fed is the market
Michael Hudson, the author of Killing the Host: How Financial Parasites and Debt Destroy Global Economy, says the stock market crash on Monday has very little to do with China and all to do with shortermism and buybacks of corporations inflating their own stocks
The EM crisis will not go away and that will prove to be contagious. We may get a respite, but the trajectory is pretty much cast in stone. The ""social"" collapse continues unabated.
What was it Jared Diamond said in his book, Collapse? The only advantage the elites will have is that they will be the last to starve.
Prepare now,,,
;-D
Somebody is bleeding from the arse, or just about to, from oil and
currency derivatives.When the counterparty death watch starts, credit will freeze again.
Arse bleeding will be showing by Thursday/Friday
Stock up on pop corn for then
Long 'rhoid tubes.
Long Kotex
Yeah that's the way I see it rally into Thursday then kaboom , a rush to short term bonds. ThenThat goes kaboom. Game over
The market will have no certain value. It will continue jumping up and down faster and with bigger amplitude, until we are ready to accept a new system such as a single global currency.
I thought its not about markets anymore, all about currency wars?
The guy cant do basic percentage math, 7.5% rise gets us to 2245?, and he is calling stocks.... Only in todays world.
in with SPY puts this morning.. looking for intraday low/retest so this is a day trade.
We believe the US economy will avoid recession in 2016
By every investor taking large quantites of lithium followed by a 1/5 of their favorite alcoholic beverage 3 times daily!...
Fixed it!
The economy and any growth? I think the economy is a 747 overloaded with debt waiting for V1, and coming to the end of the runway.
Rotate dammit, rotate!
What are these markets and growth they speak of?
I think the collapse the last few days was a test the Central banks used to see just how fragile the stockmarket is. Also they wanted to see how far Gold would rally without or with minimal intervention. They found out and started intervening again.
May very well be; good comment because it is thought provoking. I have noticed the PPT (Plunge Protection Team) is still out in moderately high force; this market wants to go down. Eventually; they run out of people to beat and are left eating themselves.
Yesterday was NOT a correction. Down at least 30% is a correction.
Nope, it wasn't. It was the tremor before the earthquake!!!
What little I have in the market said it was a 'bitch slap'.
Just the first of many outer bands to hit beforee the big cat 5 storm comes ashore.
I taking smack.
I predict the market will go up....................... Or down.
There is a long way to go until Markets are aligned with both Physical reality and the concurrent Psychic reality. Take Whites Law as a measure start at 1984 through today, go back to 1984 then you can see where things will settle out.
+1M
Essentially, the beginning of the great credit cycle and 'deficits don't matter'...
Wow, the author really goes out on a limb here predicting that the economy will either get better, worse, or stay the same.
I will simplify:
1) One- third probability the market substantially corrects further by year end.
2) One-third probability the market will increase to new highs via rigging.
3) One-third chance the market gyrates sideways though the end of the year.
4) 100% chance that one of the above is correct and he is speaking of the market; not the economy. 100% chance the economy deteriorates for the middle-class and improves for the elitist.
Poor Goldman...still dreaming of Greenspan Puts that can never be again.
Where does the market go from here? To the right...
I favor the controlled descent, with the PPT doing everything to prevent a margin call snowball/avalanche effect.
No safe passage for this one and I think everyone will have to take their lumps. So how do you like your castor oil? Spoonful by spoonful or just gulp down the whole bottle and be done it?
Can I take it rectally?
Try San Francisco; it is the preferred method.
Kinda redundant, it'll get there anyway.
Up and down, in no particular order ?
/s
And only the over-nighters know with 100% accuracy; may the Lord curse them.
The Fed and CBs have been All In for a while now. Why would they not try to protect what they have gained so far by printing moar and being the buyer of last resort as usual? This game can be played for quite a while longer. Remember, US inflation is still pretty low - there's lots more money that can be printed yet... QE4 on the way!
Reminds me of additive Russian Roulette. Spin, click, add one more bullet, repeat.
I agree with this, for both obvious and obscure reasons.
On the obscure side, I've noted before that the banksters' game is to make sure every country in the world is so hopelessly in paper debt to them that they can foreclose on the whole planet. It's tempting to think that we're there, but we aren't quite yet. The human race is still demonstrating that it has a bit of fight left in it. The banksters are cowards, like all rapists, and want their victim to be utterly helpless before they spread her legs and jam it deep.
As a side note - they will NOT succeed in establishing themselves as gods over the rabble for eternity, or even for more than a generation. Nature will not stand still for it. However, being narcissistic psychopaths, they've convinced themselves that there is nothing that can stand against them. Most of us alive today will not be around to see it, but the entire House of Rothschild will be hunted down and exterminated like the flea-bitten diseased rats they are. 100% certainty.
In the meantime, they are playing the obvious and visible game of exchanging fiat for real wealth, and they want to keep that going as long as possible. So yeah, I think we're in for a short-term roller coaster, and just about the time everyone is convinced that the cars are going to derail, it will start grinding, then racing higher. One last big push, to suck the rest of the middle and upper-middle classes in. Then, we will get the coyote-off-the-cliff moment.
Our logic is to be illogical -Janet Yellen
PS
That part about the explosives not being real is of course "a lie"...
In short
Up if the fuckers print
Down if the Fuckers don't.
Class dismissed.
It is absurd for any analyst to look at technicals, history from before 2009, earnings, economic indicators, or anything else. Like you said, all you can do is guess whether and when they print.
Idiot, the market is not a reflection of the economy, the economy sucks, the data bears this out, no matter how it's massaged, revised or propagandized.
As Doc and ND have pointed out eloquently and repeatedly, there is no market....only a casino, where the .01% are the house, only their rules and really bad odds.
Market is stronger than gold right now, it went down yesterday and today. Not a lot, but a good bit of it's recent gains are chopped off.
Did you BTFD. Its FED software stupid.
From Investopedia. Definition of a Market
A medium that allows buyers and sellers of a specific good or service to interact in order to facilitate an exchange. The price that individuals pay during the transaction may be determined by a number of factors, but price is often determined by the forces of supply and demand.
Anybody seen one oh these lately? BTFDNot by Yellen by Fischer and his NEW words are below.
https://www.kansascityfed.org/publications/research/escp
The 2015 Economic Symposium, "Inflation Dynamics and Monetary Policy," will take place Aug. 27-29, 2015. (The program will be available at 6 p.m., MT, Aug. 27, 2015).
"Such a rebound would echo the trading pattern exhibited in 1998 when US equities rallied and largely ignored the Asian financial crisis."
In October 1998, Greenspan dropped the FED rate to 4.75, from 5.25. This is not 1998.
I've been following Doug Kass for many years...he is not always right but he has been correct so many times that I pay close attention when he expresses an opinion.
By the way-market direction is caused many times by liquidity or lack off. Pay attention to volume...
Mark Möbius, the emerging markets guru of Templeton fame, just recently retired. He was a pioneer at actually visiting emerging markets and looking at companies to find 'winners'. Most other firms just bought the big utility companies in emerging markets. I am sure this rigged market, which heeds not any on-the-ground research, helped Möbius make his decision.
"Goldman Sachs Says There’s No China Stock Bubble"
That is because it is deflating.
The experts and analysts won't know what a real market looks like until the rug is pulled out from underneath the $UST and its proxy, the $USD. And how that is going to happen is anyone's guess, but I'm fairly certain the U.S. has made enough 'enemies' through its foreign policy adventures, that a 'plan' of sorts is well enough under way.
Both views sound Bullish to me since we know stawk prices, like house prices, can never drop.
The Fed central bankers won't let them correct no matter how horrible the fundamentals and joblessness.
I believe we can have the best case scenario listed above and still have stocks drop 20%.
There is nothing magical about 3+% growth that will levitate stocks. Because US has offshored so much of its manufacturing base that strong growth in US does not feedback upon itself because so much of the growth is lost to imports.
My bet is still that Fed will allow stocks to drop as replacement for raising interest rates. They will of course act to avoid chinese problems spilling into US market and causing a global crash. But once Chinese market reachs bottum I would suggest not counting upon Fed support. A 30% drop in US stocks is my guess on how low Fed will allow market to go before it is forced to reenter market.
Re-enter the market? They regularly buy stocks and have today. Central banks around the world. Look at the BIS (Bank of Int'l Settlements) and see how far and wide the tentacles reach; it is global including Russia and China. All of this is an illusion or delusion depending on what side of the fence you are on. The world we live in is surreal and manufactured in almost every aspect of our lives. It begs the question; what is the purpose, for their must be a purpose, for man is different than all the other creatures.
the devil's tail, once you get hold of it you never want to leave it.
Its like holding a croc by its tail.
Sex, money and power are three addictions that only end up in one place : cheating, speed dating or assassinating mates truth.
Man's difference to other animals lies in the fact he has memory; other animals cheat and kill but they don't remember their acts.
Man can never forget his acts. Involution is a haunting trait amongst humans and it leads to guilt and fear (out, out, damn spottedness)--convolution to madness-- as we cannot accept to stay in void of denial's limbo for long, we suffer neurosis : it always ends in corruption, then uncontrollable eruption of self destruction; bimbofuckolution's vengeful sword is a self fulfilling prophecy.
The death of Sardanapalus by Delacroix is a good tableau of that.
https://fr.wikipedia.org/wiki/La_Mort_de_Sardanapale
QE/ZIRP is now becoming the death wish of Sardanapalus of Pax Americana's world.
As I recall (Questionable, as it was long ago) from my Economics 101 class, 2% growth in GDP can be directly attributed to technological and productivity advances.
If this is true, anything below 2% is negative growth and anything over 2% is positive.
The take away, the economy is and will be going nowhere for a while, save for a downtrend.
It ain't over until the issues that brought us down show serious signs of improvement.
Until then, everything else is noise and technical trading.
We are going much, much lower from these ridiculous, pumped-up, euphoric, on drugs, levels to where the assinine jerks behind this massive charade will be doing us all a favor and either commit hari kari en masse by jumping out of their high rise penthouses or getting real jobs where they may be qualified; flipping burgers, pouring coffee or working as undertakers and garbage collectors, which would be unlikely given their humongous egos!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Really insane analysis. There has been no real growth in the US since 2008 and all stated growth has been 100% due to Fed liquidity (inflation). All this Fed crap about raising rates is just that because it reduces that liquidity and if they do it takes us back to 2008 without a lifeboat.
There are 30 trillion of hot money liquidity desperately looking for markets to make profit, like there are 9 million bicycles in Beijing.
There should in fact be no problem to find growth in EM with energy at these levels. But energy is a fool's game as its gone lame in Shale's shame and Saud's blame of ISIS left untamed. It could burst its skin at the slighest tinder of true growth's explosion; a brake to all steady state growth expectations today. Coal is the name of man's asphyxiation. We are truly in stop n go on this front.
But additionally, the ongoing QE print at ZIRP for 5 years has apparantly created so much leveraged easy money as debt that this hangover has now fed an overblown fiat bubble that checkmates any attempt to kick start real growth.
Cos M0 is 3% of the M2/M3 printed by the banks where all the collateral junk lies. WE have liquidity but we have no good collateral; aka its all structural the real problem and thus liquidity hates to fly to weak structures of the money web. Money velocity is low and market volatility is high.
There is as a result NO FAITH left in the ability of capitalism's supply demand dialectics to create a steady state upward movement. Whole EM systems are being dragged down by debt's dead weight and market's carry trade death hold via currency wars.
Without faith Lady Lagarde's famous last words on Greece applies to the global system : "No woman no cry as long as we don't bring down debt in Athens. We have to get better structure for markets before we get lift off."
Athens is now global capital. What happens in Athens happens on WS, as WS is like that birdcage in Peking, all alit but full of holes like a floating Titanic; madly addicted beyond reason to fiat's onward 'print and speculate in Casino' march.
They should build a matador's statue of Yanis next to that bull in NY.
Cos he said it loud n clear for the world to hear. Even Lady Lagarde lost her cool.
Olé!
So...
To paraphrase the OT.
Goldman is way, way short all this bullshit.
OT: With windows 8 ZH became unreadable with ads and running scripts and locking up or reloading. Installed AdBlocker Plus and things are much better.
> 25,000 caps by next Friday
> 50,000 kippahs on September 15
Why ask?
Nothing is real.
THERE ARE ALWAYS two opposing viewpoints.
The market goes UP.
Or the market goes DOWN.
People can have a million theories, but it either goes UP or DOWN.
The question you are really asking is this ...
CAN THE CENTRAL BANKS CREATE A FANTASY WORLD where valuations have absolutely no relationship to fundamentals?
And the answer is ... they can do it for a short time, but in the long-term ... NO!!! They cannot.
WHY???
Because fantasy valuations (for stocks)will not put people in real jobs, they will not sell iPhones, and they will not pay off a mortgage. People have to WORK to get those things. And real jobs only come from Competitive Business, Better Ideas, and Productive Investment - things that the Central Banks do not control.
Muddy thinking. The words "short term" and and and "long term", have no specificititty. The short term could well be a few minutes using a base standard of a universe of one day. Or it could, in geologic time, mean about 200 million years.
Ditto w/ long term.
What's your 20?
We are speculating about the actions of an organized crime family - as such, who knows "what happens next" ... Yellen probably knows, but she's not going to tell you.
This bull market was never much based on fundamentals to begin with so it doesn't need a worsening of fundamentals to bring it to an end.
- GDP: one of the slowest recoveries on record even with mind boggling levels of stimulus
- Employment: part time workers and low participation rate - no real recovery
- Corporate profits: EPS growth faked through massive share buybacks using record bond issuance (at artificially low rates) to create illusion of growth
It was 'do whatever it takes' central bank policy that gave investors confidence. Now China has proven central bankers are not gods after all, every investor in the world will be thinking more about taking profits than makin profits. Just that thought process is enough to tip the scales the other way.
Some of it is surely heading to Cuba.
Jeesh, how long have you been around?
The market, from here, from there, from anywhere, will fluctuate.
It will go wherever the hell it wants to go...the masses are subsisting on massive doses of purple koolaid and sleep-walking through Potemkin villages while their Masters rob them blind....And there AIN'T nothing you can do about it. Protect yourself, you know how....
My call is stocks up, bonds/notes down, gold and silver down too short term then all down as it implodes with metals and miners recovering first but going sharply lower before they do.
I feel they will at least take em back up to and tag 2025 in the spoos, potentially even another all time high or few before its really on but not markedly higher from current all time highs and I don't think this time we will bang around up top for a year, I think we have already done most of that already. At this point I put seeing 2200+ at around 0.01% even though current market price is trading a close of this year over 2200 @ 3.73% probability in ES right this second I feel VOL is overblown as that comes down so will the probability of reaching that point unless price continues up 3%+ per day in the majors...
Here's my sneaking fear.
What if yesterday's 11th hour "comeback" was the PPT trying to get the barbell back up to green...and that was as far as they could push?
You think they left it under the high tide line for the sake of not wanting it to be too obvious? I don't think so; nobody believes this shit show anyway.
I think the fucks wanted to end in the green but couldn't make the nut.
I think they just saw the limits of their control.
I pick Scenario #5 but i'm an optomist.
"Economic Acceleration Above Consensus (probability: 10%)"
Goose lays golden egg (probability: 99%)
delete
Proof lies in the Pudding. GS has made wrong calls. Kudos to the likes of them (eg Deutsche, Citi, UBS & Others), in their Spins to support their own positions leading to demise in objective analyses. Go and drill down on the baths taken by their carry trades and the derivatives on their books viz China. Amazing that they still have clients burning monies in their furnaces.