If Credit Is Right, The S&P Is Facing A 40% Crash

Tyler Durden's picture

...and credit is always right in the end!

1,100 is the target...


High Yield bond yields and Leveraged Loan prices are at their worst since 2009 as it seems the hosepipe of QE3 liquidity (its the flow not the stock, stupid) is slowly unwound from a buybacks-are-over equity market.

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holdbuysell's picture

Of course, there's the overshoot to account for as well.

Back to 666.

qweston content's picture

My gmail has 666 unread emails

hedgeless_horseman's picture



...and credit is always right in the end!

That was back before all the bond vigilantes were drowned in a tsunami of liquidity.

Now, the political risk of the money printers going full-er retarded-er-er is omnipresent (negative interest rates for fuck's sake).

Just look at this afternoon's Super-V Bounce, on a repeat and obvious bullshit lie on hitting support and after the NY oil pit closed.

It is really is just a crooked casino where the only thing sure, "in the end," is that the banks get bailed out.

Soul Glow's picture


Did anyone see Bank of America was down almost 7% today?

jvetter713's picture

I sure did.  Cititurd had an equally nice day as well.

Stainless Steel Rat's picture
Stainless Steel Rat (not verified) jvetter713 Feb 12, 2016 12:26 AM

FINZ was up 8% today... :-)

matermaker's picture

jack s .. you're such a typical suburban texas blow hard... good reason i left my birth state.  It is true that the reason why DB and others are screaming bloody murder for the FED to go negative is because they can't pass the negative rates they are experiencing onto their customers until everyone is on the same plane.  The FED has no interest in going there.  Glance over the OCC's latest quarter report on the derivatives of the 5 biggest banks in the US.  It's like a paltry 357 million.  Off Sheet D's you say?  Who cares.  That's like a bet without a reciept and the US is the only game paying interest on the reserve currency.

Oil is no different than the Baltic Dry, which is even worse off.  They are both merely relfections of debt and credit contractions.

Is there really any point in bitching about the markets being crooked casinos?  Al Capone told us that way back when.  There is no way to have a good ole fashioned war, these days.  Though, it's fairly easy to downsize the populus via attrition.  What did you think was going to happen at 8 or 9 billion folks?  Utopia and smores?   Hush, stand back and let what needs to happen, happen.

newmacroman's picture

Humanity's Paradox as I call it.

If Humanity is to survive, it must be continually trying to destroy itself (just not wholly through a nuclear holocaust). Like a Pine forest needing a fire to rejuvinate itself.

Yeah, a little hard to wrap one's head around that.

Onward Georgia Guidestones!

matermaker's picture

Funny how most don't realize that their modern priestly class have changed their minds from an ever expanding everything to a new need to contract.

Twee Surgeon's picture

Don't be such an Idiot, get yourself a bit of Google Earth, this planet could support 100 times it's population but I doubt you have ever put your hands in the soil and planted a Spinach and tended it, the future population projections are for AFRICA, all other population projections are Declining,see Europe,Japan, China, Declining.

This planet requires proper farming and a trade system, Earth is this Galaxies Hawaii, but you insist that all inventions are done, too crowded, you are a city kid, i guess. A pessimist , Earth is not phased.

I could make Nevada bloom if the Federal gov would do the honorable thing for humanity, Hara Kiri, I think it's called, the ticks.

new game's picture


therover's picture

Earth is this solar system's Hawaii.

There are millions of Hawaii's in the Milky Way. Too bad (or possibly good thing) we can't get to them. 

fishbum2's picture

Nope,wrong math!  The total gross derivative holdings of the top 4 banks in the US is $166 TRILLION! The banks will say the net is much, much smaller but when your counterparty can't write the check, your gross becomes your net. 

See table # 5 in this report : http://www.occ.gov/topics/capital-markets/financial-markets/trading/deri...

And if you're math challenged, a million million is a trillion, Chart 5 is in millions.

Chad_the_short_seller's picture
Chad_the_short_seller (not verified) hedgeless_horseman Feb 12, 2016 9:11 AM

Do you remember how many bullshit rumors we had back in 08 in lehman and all the banks that were going under? Every day there was a bogus buyout rumor. The end result? They all melted to the ground. Get long term puts and hold them until/unless QE4 is unleashed. 

Pool Shark's picture



It's the Devil's area code...


ebworthen's picture

Exactly.  S&P won't be close to true valuation until 666 is reached or breached!

__Usury__'s picture
__Usury__ (not verified) ebworthen Feb 12, 2016 6:10 AM

666 should at Least be tested.........to see if it holds

JerrySpringer B All Over This Shiznit's picture

oh good to know... the crash gotta happen now...I'm superstitious also...my emails talk to me in numbers too!

The Merovingian's picture

Nothing from nothing is still nothing. Which is precisely what the Sheeple will be left with when this finally rolls over ..... Presuming, of course they aren't already there that is ..

matermaker's picture

no creation of debt and there is no creation of money no creation of money no creation of expansion... no expansion and there is contraction... but you say that like it's a bad thing.

iinthesky's picture

I asked rhetorically yesterday..  Why must the economy perpetually grow? I remembered the answer just now... Interest! 

Yen Cross's picture


  You might want to add a few sigmas Tyler. Bankers are known to " baffle with bullshit" until their books are open during Senate hearings.


matermaker's picture

baffling with BS is the name of the game, yen.   A make believe commodity that rules your life is a tough illusion to maintain, for long.

Osmium's picture

No way the market crashes.  We are at full employment.  Bitchez!

offwirenews's picture

Looks like japan just pulled a full retard "rumor-ramp" (yes, you can use that phrase), mirroring the US today.

jimcg's picture

Aside from the index, isn't the vast majority of the S&P 500 already 20 - 50% off their highs?

Soul Glow's picture

We are entering bear teritory, following the rest of the world.

Eireann go Brach's picture

I really want to be able to tell everyone, The crash happened on Obama's watch!

starman's picture

Yellen's going to have to double he's depends! 

One And Only's picture

Is credit right?



Fed cuts rates to 0 launches QE 4. 

Or negative interest rates?

Or maybe some new shit...negative interest rate derivatives squared with an inverse coupon spread collateralized against a pool of JGBs.

It's all fucked. No one knows what the fuck these people are thinking. Meanwhile I want to make a trade in size and some fucking HFT front runs my order and pushes the prices up before I buy it.

This whole thing is FUCKED. You're all fucked.

Soul Glow's picture

Your situation is being implemented by the BoJ and ECB and it isn't playing out well for them.

For awhile ZIRP was bullish because it meant there were no bonds to buy, so investors were lead into stocks, but now there is a loss of confidence in the central banks authority.  This is leading to a falling stock market.

DonutBoy's picture

No my friend - I am fine.  I had to sit quietly while my associates babbled on about their market returns.  I bought my metals.  I bought my puts and paid the price to roll them forward.  Over two years now.  My accontant told me I was a fool.  It's payday.  Trillions of dollars of bad debt will rise in the Pacific like a tsunami and blow 10's of trillions of derivatives down.  QE4 cannnot save it now.

One And Only's picture

I'm sorry for you.

You should have purchased OTM CALLs on financials today.

DonutBoy's picture

Well, we'll see.  The bankruptcies should have occurred in 2008 and 2009.  They did not.  The Fed ransacked the toolshed to prevent it.  Now perhaps 1/5 of DM sovereign bonds trade at negative interest rates.  Do you think that might be a bubble?  Where do they go from here before everyone gets the joke?

One And Only's picture

FED goes back to 0 and reintroduces QE.

That's my opinion.

I'm buying all banks. 

The guy from JPM is going to do his gold thing. We'll see how it works. I think it doesn't work well.

Soul Glow's picture

From here 40% is right on.

Wahooo's picture

Economy is chugging along just fine. We have an African-American in the white house.

Vlad the Inhaler's picture

I wonder what happens if we have a big gap down at the open tomorrow and SP500 starts off below 1812 right off the bat...

Peter Pan's picture

I think there might be a bounce following some kind of cease fire in the Middle East.

agNau's picture

We merely wait til every last dollar is extinguished.

Salsipuedes's picture

Credit´s tight but I still give this guy some. I think it goes to the heart of it... the Golden Muzzle....

https://www.youtube.com/watch?v=JCdUqZfbZGc It´s being supressed by the PTB. It must be good!

Salsipuedes's picture

What´s wrong you two? Too comfortable with the "Golden Muzzle" or you just hate Mozart?

devo's picture

I've never understood the "flow" comment. Anyone care to explain without being a lunatic/freak/dickhead about it? Thanks! Is Tyler saying expanding credit to pump into the markets is all that matters? Is this what is meant by "flow"?

Twee Surgeon's picture

Well said devo. The arcane concepts of finance are the same as or equal too Lawyers and Doctors Latin fixation, the secret and private and clever realm of those who somehow knew how to get in the game.

ZH should consider doing an idiots guide to the various concepts of high finance, Hedgeless Horseman, Yen Cross and Knuckles are three of the smart guy's I follow a lot as they clearly know their industries, but the finer points are Mysterious. The smartest guys I can find on the net's, so I prick up my ears and listen. A million more just like me I suspect.

Get every Joe Six pack in the country talking about the Municiple Bond market situation in real terms, Who is Solvent? who is broke dick? Give Joe Six pacl a little real world info in simple English, Doom Porn is better than the NFL and will take down the fraudulent system.

What Retirement funds really are holding, Calpers for example, City of Chicago, for example, This fraud must be put out and broken before the face of every simple man, in simple English, to make the needed changes. Let your local Sherrif know he ain't retiring at fifty because the money is gone, that might make them think.

A Credit Default Swap is an Insurance policy on a Mortgage or other Financial instrument? as I understand it so far, and Deutchesbank is how much bankrupt a long time ago?

That debt lives or it does not, there is law, or there is not, how many TRILLION $.

I can build a house from Chimney Cap to Leach field and think my self no lesser man for misunderstanding the finer concepts of Finance, Wall Street and the crazy ideas about what labor, production, asset, product, IS.

Let's have a party and build Honesty and Scaffolds.



Are you scraping the resin off the rim of your bowl and infusing it with the powder from Afghanistan? Your euphoric state has overcome all sense of reason. Go easy on it and whatever you do stay clear of

Going Loco's picture

I think the Tyler thesis is that the system needs expanding credit (debt). Simplest presentaton of the thesis is Martenson's Crash Course. The deflation which set in when everything went tits up in 2008 had to be fought with expanding credit and that could only come from one place because households were unable to borrow much more. Note "expanding" not "expanded". If the only thing keeping the wheels turning is expansion of credit (debt) then it doesn't matter how much has already been created up to yesterday because more will be needed today. Therefore it is the flow of new money that matters, not the stock of what has already been created. This goes to the heart of what ZH is (always has been) about - it's the system that's rotten, it cannot function properly any longer, it just lurches from one extreme to another.

DirkDiggler11's picture

Loco: Good reference, Martenson's Crash course does a solid job of laying out the need for credit expansion and the role of fiat currency in an easier to understand language.

Afrika was the Rothchild's last hope at continuing the exponential credit Ponzi, and we all know how it ends when you loan Afrikans money.


Embedded advertisements suck.

When you loan to the africans they feel the need to send you emails seeking help to move the money out of africa. Scams like the crash course or the boombust-ninnycoin.