'Still' Safe On The Sidelines - 501 Days And Counting
Submitted by David Stockman via Contra Corner blog,
On December 28 we laid out the reason why the Wall Street casino should be avoided at all hazards in a post entitled “Safe On the Sidelines - 405 Days And Counting.” We referred to the fact that the S&P 500 had first crossed that day’s close at 2052 in November 2014, and had vibrated sideways ever since.
We are still counting. After this week’s carnage the number has risen to 501 days, but our belief that the stock market casino has just begun its descent has only been further reinforced.
We are now witnessing the collision of a lifetime. The Fed and the other central banks are out of dry powder - stranded on the zero bound and impaled upon a $19 trillion/10X eruption of their collective balance sheets. At the same time, after two decades of runaway credit expansion and bubble finance speculation the inexorable global deflation is now gathering visible steam.
On top of that the fundamental mechanic of the Fed’s phony bull market is rapidly breaking down. That is, the buy-the-dip run of more than six years is over and done.
The remaining Cool-Aid drinkers are getting punished time after time as they buy the short lived spasms of a dying bull——-33 false starts since the market stopped rising at the end of QE a year ago October. Presently the flagellations will stop, however, as the fast money pivots like it always does and stampedes to the sell side of the market.
Yesterday the stock market had is worst annual open in decades, and for good reason. Overnight there was one more indication that the great Red Ponzi of China is heading for a crash landing.
Yet the $30 trillion debt mountain of China - standing 60X taller than it did only two decades ago - is the lynch bin of the entire credit-bloated and malinvestment-ridden GDP of the planet. As China succumbs to the end of its credit bubble, the economic shock waves cascade across the global economy. It is no accident, for example, that South Korea’s exports are now down 15% on a Y/Y basis or that Brazil is plunging into a near depression.
As we have also insisted, the idea that the US economy has decoupled from the deflationary tides washing through the global economy is just plain Wall Street poppycock.
And today we got one more piece of evidence to that end. In the very quarter that the Fed finally got around to a pinprick increase in the money market rate after 84 months on the zero bound, the Atlanta Fed projected GDP growth of just 0.7% for the 4th quarter based on the most recent economic releases.

In terms of the fundamental economic and financial rot now coming to the visible surface, the analysis we presented last week is even more timely now.
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Are You Non-White Israeli?
Israeli Arabs Removed From Flight at Demand of Jewish Passengers
The Israeli Arabs constituted a security risk, said Jewish passengers, who prevented the flight from taking off by standing in the aisles.
Rina Rozenberg Jan 05, 2016 6:29 PM
An Aegean Airlines plane on the ground in Athens.Wikimedia Commons
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Israeli passengers on a recent Aegean Airlines flight from Greece to Israel forced the cabin crew to remove two Israeli Arabs from the flight before allowing it to take off, according to a report by Israel Radio.
The incident occurred at Athens airport on Monday night, when Jewish Israeli passengers decided that the two Israeli Arab passengers on the flight constituted a security risk. After bringing their concern to the attention of the crew, they prevented the flight from taking off by standing in the aisles.
The two Israeli Arabs finally acceded to crew requests that they disembark, in return for a hotel room and compensation.
According to the airline, “an initially small group” of passengers “very vocally and persistently” demanded that two Israeli Arab citizens be “checked for security issues.”
With the flight unable to take off, the captain called the airport police, who checked the “documents and identities” of the two passengers and found nothing amiss.
But by then, “a much larger group of passengers” had begun protesting the presence of the two Israeli Arabs, “despite the assurances given by the crew, according to Aegean Airlines.”
The flight was delayed by more than an hour-and-a-half until the two Israeli Arab passengers agreed to disembark. Even after that, the group of passengers insisted that the crew conduct an additional security check, causing the captain to warn them that they would be forcibly removed from the plane without compensation.
At that point, the passengers took their seats and the plane took off for Tel Aviv.
"We again thank the two Israeli passengers who agreed to disembark for their understanding and collaboration and we apologize for the whole episode, which was indeed extremely unfortunate,” the Aegean Airlines spokesman said.
MK Michal Rozin (Meretz) called for an urgent meeting of the Economic Affairs Committee to discuss the incident.
"The State of Israel has a responsibility to its citizens," Rozin argued. "I can't be that a commercial company, which has signed aviation agreements with Israel, allows itself to disembark passengers based on their physical appearance at the demands of (other) passengers."
Rozin continued, placing blame for the incident on government leaders, saying that "the prime minister and his ministers sow fear and hate through slander and incitement, and this is the result. The government must understand that marking Israeli-Arab citizens as potential terrorists leads to the loss of morals and values that endangers our future as a society."
read more: http://www.haaretz.com/israel-news/1.695633
You would be surprised at what can happen given the devolution of humans that has occured. Jews, behaving like Nazis...
...oh the irony. Yes, moral hazard is a real motherfucker.
thusly named zionazis.
How the fuck does this idiotic comment have anything to do with the original post, huh shit for brains? Get a fucking life for gods sake.
This guy called it too:
https://www.linkedin.com/pulse/truly-big-shorts-john-m-cunningham?trk=pu...
Great read ... Thanks
Brave call. Chances are just as good, if not better, that all the CBs are going to go full-Zimbabwe and print MOAR. In which case, the stock market casino has just begun its ascent...
Good point. If the fiat currency has become or is becoming bastardized and made worthless, people would run for any "hard assets." Don't know why stocks wouldn't qualify as one of them. You and I might not do that but that doesn't mean millions of other Americans or even Europeans won't.
By the way, I have to share that I know a Federal Reserve bank auditor. He travels around the country auditing member banks. We had a conversation at a wedding about a year or two ago. I used the phrase "fiat currency" and he never heard of the phrase. Never heard of the book, "The Creature from Jekyll Island." I think he's worked there at least 20 years, maybe longer.
Did you explain that they call it FIAT money because it depreciates like a rusty Italian car?
+++++
I am interested in why the Atlanta Fed is being allowed to be so "truthy"...
They are still overestimating the real GDP, but we all know this is a "mark to fantasy" world now.
What's going on down south...
A new constitutional congress...
okay, trying to be optimistic.
Dang, I'd like to get me some of that Zimbabwe stuff when it gets more reasonable. I remember having to change object definitions in a large data warehouse to handle that currency somewhere around 2008 - data loads were blowing up when trying to convert from dollars - I think we had to go to doubles? Sad.
Lay me off and cut me my 401K and Profit Sharing checks before this thing blows up! I can find a new job but don’t know where to find the 10 years of hard earned money siphoned away from my paychecks!
Sadly, I think what you just said is going to happen to alot of people.
They're out of dry powder, stocked up with millions of rounds of hollow points and trying to use an event to trigger a total unlawful takeover of the corporate employees in the failed "Federal Corporation" they fraudulently call a "Country" known as the United States.
I don't consent criminals. Surrender you may find mercy at your final judgement.
Money on the sidelines? What happen when too much money moves to the sidelines? Anytime money pools, something comes after it. People are more aware of losses and know (after 2008) to protect themselves but is the sidelines real protection?
How much is too much money on the sidelines? Break-the-buck, 30 day freeze, just what will happen when the pool gets too large? That has not been learned….yet as there are new SEC rules effective soon.