"Complacency" Has Never Been Higher

Tyler Durden's picture

While Put-Call ratios, VIX curves, and Fear-Greed Indicators are better known, the so-called "Complacency" Index - comparing real profitability of companies to their risk - has never been more complacent. In fact, markets are more 'exuberant' than at the peak in 2000 and 2007...

As Bloomberg's Christopher Langner notes, the whole world is moving together and signs of a massive bubble that spans asset classes are becoming clearer.

Historically, very high correlations are associated either with a panic or a bubble.

 

 

 

Extreme asset inflation tends to reach fever pitch partly because of what scholars call positive feedback, or where exuberance and herd mentality feed further investment.Some of the biggest bubbles of the past century were marked by this spillover to all asset classes.

 

But once one market pops, the rest deflate as well.

There are clear marks of a bubble in the current market.

Perhaps the best indicator is the so-called complacency index, which relates enterprise value (dictated by market prices for a company's debt and stock), Ebit (a measure of actual profitability) and the Chicago Board Options Exchange's Volatility Index, or VIX.

 

The ratio between these three hasn't been this high since just before the 2008 credit crisis -- and the higher it goes, the more you should worry.

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neidermeyer's picture

I'm not complacent , I'm broke.

CJgipper's picture

Complacent or confident in fed bailouts?  History says bailouts.

Ajax_USB_Port_Repair_Service_'s picture

What I look like now is crazy!

scubapro's picture

 

 

paging Kevin Henry, paging Kevin Henry....youre needed in the fomc room stat.

 

which do they save:  stocks or treasuries?     i think treasuries,  a stock crash only makes it cheaper for them to buy it all with fresh fiat....too high tsy yeilds destroys the whole system.

venturen's picture

Kevin has a corner office at Goldman now

buzzsaw99's picture

i am long the stock market and not worried one bit. in fact, i bought the ath.  it is the fed's mission to make sure it always goes up in the long run. it isn't a market, it's free money for the billionaires and i want my piece too which i won't get if i don't buy bullshit stocks every chance i get.

CJgipper's picture

Fake it till you make it.  Money is for cronies now.  Do what they do if you want to be one of them.

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Ajax_USB_Port_Repair_Service_'s picture

I guess there's a chance that this coming Monday will be a 'holiday'. Great! Another 3-day weekend.

kliguy38's picture

Ya may wanna check that "complacency" guage at the end of taday

Yen Cross's picture

  I love it when the ES takes a good anal pounding.

Citizen_x's picture

/ES looking flaccid.  Maybe a 5% correction

is on the way.

Zero Sledge's picture

Black Mondays Matter

Make_Mine_A_Double's picture

DJ down 330 - after 3 30 ramp maybe - 40.

Miracles happen....around 3 EST Mon - Fri.

The Real Tony's picture

Isn't it amazing how the DOW always has a close 300 to 350 points lower no matter how low the index is during the day. It could be down 5,000 points at noon but always finishes down between 300 and 350 points.

Dr. Darkpool's picture

To big to fail??? Me thinks not.

Grandad Grumps's picture

I guess they have not written a noncomplacency program for price yet ... ir just not executed it.