Trader Warns "Markets Are Sleepwalking Into Disaster"

Tyler Durden's picture

U.S. equities look worryingly vulnerable, warns Bloomberg's Mark Cudmore, warning that Trump's doubling down on his hardline autocratic approach ensures that markets won’t be able to overlook the implications of his immigration order.

I apologize if this piece seems very similar to three of my last four columns, but markets are exhibiting exceptional complacency... That attitude may shift rapidly.

 

Today, futures are signaling that the S&P 500 Index may break the post-election upward trend and also fall below the 2017 volume-weighted average price of about 2,273.3. That means that on average, recent buyers are losing money while the technicals suggest holders of stocks that have made money may want to consider taking profit.

 


 

Trump’s initial order suddenly suspended the rights of a small minority of permanent residents, which was worrying enough. Firing the acting attorney general for questioning the legality of such a move just hammers home that the rules could change quickly for anyone dealing with the U.S. The established rule of law is now in doubt.

 

The problem this highlights is that it now becomes a subjective assessment of where this behavior stops. Trump’s willingness to rule by decree, without consulting government departments or stakeholders, means it’s impossible to rule out the prospect that he might seize assets or unexpectedly implement some form of capital controls. That seems drastic and far-fetched, but the actions of the last few days are also extreme, so how do investors know with confidence what the limit will be?

 

 

Equity volatility measures are near record lows which indicate that protection is under-owned. Traders have forgotten what a correction can look like and, given the level of hope and optimism out there, panic could spread quickly.

 


 

With both global growth and earnings looking positive, and the possibility of pro-growth Trump policies to come, there’s no reason -- yet -- to believe in a sustained bear market for U.S. stocks. However, the potential for a short-term shock appears to be far greater than traders are allowing for.

Notably, much has been made of the surge in macro-economic 'data' post-Trump, but as we noted previously, this stock-market-supportive surge has been driven solely by 'soft' data and not 'hard' actual economic data. What is perhaps more immediately worrying is the seasonal tendency for a post-fiscal-year surge in Economic data followed by a Q1 plunge...

 

If this happens, then Mark Cudmore's warning will very quickly be proven correct.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
yogibear's picture

Can't have it happen under a Trump admin.

evoila's picture

In other news, no shit. 

SILVERGEDDON's picture

Markets need another rainbow skittle shitting unicorn excuse for irrational exuberance. 

A real My Little Pony / Beaney Babie / K-Tel Ginsu Knife Set market 30000 motherfucker monster moment.

Time to Armageddon the FED, Donnie ? 

The Management's picture

This mutant zombie bitch market is so overdue i say fuckit lets see how far she can go before a cliff, or a wall, or an actual interest rate. When the world currency is $ its a bit harder to debase.

silverer's picture

Markets are a mirage anyway. So's the US dollar. It's about time for a market correction. Who cares why it happens? It needs to happen. Lets try reality for awhile. Then it will get better once everything shakes out and is solidly planted. Better early on in his admin than in the last year. No faking will be required.

BlueHorseShoeLovesDT's picture

There is no reality in Trumpland

mary mary's picture

"There are no monks in my band.  There are no saints in this land.

"I'll be doing all I can if I die an honest man."

Red Hot Chili Peppers

mary mary's picture

Markets are what one uses in one's attempt to not lose all his savings to inflation.  Inflation is caused by the FED.  One really has no choice.  One has to invest in something: real estate, stocks, bonds, a business of some sort.  When we say "markets", we usually mean stocks and bonds.  All "markets" have ups and downs.  It is their nature.  Putting your savings in a bank only has downs, thanks to the FED.

If one cannot stomach the ups and downs, one can use the John Vogle method, apportioning shares to a low-fee stock index fund and a low-fee bond index fund.  One could also apportion (smaller) shares to a low-fee real estate index fund and a low-fee precious metals index fund.  I like Vanguard and PIMCO.  And others.

Jack Napier's picture

You can either be your own central bank and hold tangible assets, or you can be a slave to whoever you are letting manage your money for you. There are no ups and downs when you measure your wealth in ounces, because gravity is constant.

Nobody For President's picture

The established rule of law is now in doubt.

 I quit right there.

How fucking dare you, you Blomberg asshole.

The established rule of law went down the shitter in 2008-09 and forward when not one banker went to jail for the mortgage crimes, and later interest rate fixing and, and , and...

And then there was Hillary, and her 'bad judgement' that would get any regular-type person in jail for life with the consistent mishandling of classified documents (never mind the pay for play via the Clinton Foundation).

Established rule of law my ass.

NoWayJose's picture

Speaking of 'markets' - I am seeing inflation creep into a wide variety of products. I've seen prior surges in beef, butter, orange juice or coffee that come and then fade -- but this inflation creep seems to be on a much wider set of products. It reminds me of 2007!

BigFatUglyBubble's picture

The Salvation Army prices went up...

King Tut's picture
King Tut (not verified) NoWayJose Jan 31, 2017 6:19 PM

Still paying $1.60 for gal/milk, $1 a loaf for bread,  69 cents for dz eggs, 1.99/lb chicken and $3lb for bacon. 

Anarchyteez's picture

Holy fuck! Where do you live?

Cuz here in the people's republic of wa State add 300%

BlueHorseShoeLovesDT's picture

Ha ha ha ha ha ha ha ha ha ha ha ha ha ha

I love Tuesday humor

Max Damage's picture

Apple $250 billion in cash on products made in China on massive margins. Trump might rightly say WTF!!!! Get producing in the USA and stop robbing Americans of jobs

HRH Feant's picture
HRH Feant (not verified) Jan 31, 2017 6:17 PM

Bloomberg's Crudmore: hey dude, fuck off.

At least Trump is a real patriot and not controlled by Saudi money (like Clinton) and hasn't sold US uranium to the Russians (like Clinton) and isn't shaking down anyone that "donated" to a fake foundation as a form of bribery for access to the US government (like Clinton). Thank god Clinton lost because that bitch was pedaling hard for war!

silverer's picture

I'd rather deal with the truth. At least you know when to fasten your seat belt.

silverer's picture

Oh, I'm a happy,
Been a stackin'
Been a stackin'.
You'd be happy too,
If you've been stackin'
So get a stackin',
Yeah, get crackin'

Oldwood's picture

This guy is an idiot. Trump is following the law and the Constitution. I'm so tired of this ignorant shit. It is the progressives who are trying to shut down the government. They won't even show up for votes and have been openly acting to depose Trump from office since his election.

Of course it is a foolish waste of life to point out their horrid hypocrisy, because hypocrisy is meaningless to them unless it is used as a weapon against their opponents. They will lie and distort without guilt or remorse to win. The battle is on and anyone who thinks this is just tantrums that will pass is WRONG.

Site's picture

Yah hard to imagine but you are correct. Since flyover country is already broke might as well cut off the food to the cities I suspect that might have a sudden impact.

TheRideNeverEnds's picture

Ahh yes , the bear markets of 2014 and 2015.

The market only returned 13.5% in 2014 and a paltry 1.38% in 2015. Tragedies all around.

The combined return was only 31.5% with dividends from 2014 to right now. Absolutely terrible, may as well have just burned your money for warmth.

Kefeer's picture

Buy the dip; until the globalist have other platforms in place to replace the USD platform - full steam ahead.

Don Sunset's picture

You base your assessment on sound market principles?  Or PONZI principles?

Van G's picture

Excellent article Tyler's.

 

Still the one American analyst who keep calling the short term action precisely is ShepWave

 

Here is link to their free past charts

 

https://www.facebook.com/166578775325/photos/a.10153488951800326.1073741...

LowerSlowerDelaware_LSD's picture
LowerSlowerDelaware_LSD (not verified) Van G Jan 31, 2017 9:07 PM

It is SO sad that this failed trader  - ScamWave - has to resort to spamming the  ZH comments section  to earn enough to move out of his Mom's basement.  Time stamped PROOF!...

Please don't give him the satisfaction of seeing his site hit counter go up from ZH clicks. He's not very bright, but eventually he’ll go away if his spam scam doesn't bring income from ZH.

The spammer has registered the following spam accounts on ZH to promote their scam.  Watch how he uses his multiple spam accounts to give himself thumbs ups and "talk" to himself, pretending to be multiple people praising ScamWave. - 4Xleverage, AliSONY, Babs.St.Louis, Billy G, Chi Juan, Dr.Carl, ErikE, FemDayTrader, FRLEPU, Irvingm, jasony, John Beau, KanSass, KC Spike, lostinhedge, MadhyaBharatx, Marilee, MexInvest, MikeM54, Miss Lou, Mon T, P Christmas Carole, Penny Trader, Pinky and the Brain, PUNE,  RoBERTAZ, RonnieM, RudolPHDs, Sonya B59, Stan Your Man, StevieTexie, Timming, Van G, Virginia Wooolf, wisetrader224, and xantippa

Van G's picture

Excellent article Tyler's.

 

Still the one American analyst who keep calling the short term action precisely is ShepWave

 

Here is link to their free past charts

 

https://www.facebook.com/166578775325/photos/a.10153488951800326.1073741...

LowerSlowerDelaware_LSD's picture
LowerSlowerDelaware_LSD (not verified) Van G Jan 31, 2017 9:08 PM

It is SO sad that this failed trader  - ScamWave - has to resort to spamming the  ZH comments section  to earn enough to move out of his Mom's basement.  Time stamped PROOF!...

Please don't give him the satisfaction of seeing his site hit counter go up from ZH clicks. He's not very bright, but eventually he’ll go away if his spam scam doesn't bring income from ZH.

The spammer has registered the following spam accounts on ZH to promote their scam.  Watch how he uses his multiple spam accounts to give himself thumbs ups and "talk" to himself, pretending to be multiple people praising ScamWave. - 4Xleverage, AliSONY, Babs.St.Louis, Billy G, Chi Juan, Dr.Carl, ErikE, FemDayTrader, FRLEPU, Irvingm, jasony, John Beau, KanSass, KC Spike, lostinhedge, MadhyaBharatx, Marilee, MexInvest, MikeM54, Miss Lou, Mon T, P Christmas Carole, Penny Trader, Pinky and the Brain, PUNE,  RoBERTAZ, RonnieM, RudolPHDs, Sonya B59, Stan Your Man, StevieTexie, Timming, Van G, Virginia Wooolf, wisetrader224, and xantippa

Atomizer's picture

This trader is on Meh or Heroin. He doesn't understand history in the transfer of President. If doesn't like it, we can revoke citizenship. Every riot invoked supports a logical mission. 

Before my birth, President Eisenhower created Operation Wetback. They were voluntary sent back to Mexico. If they didn't leave, captured and forced back to Beanerville. Nothing is new about this story. It happened, successful. 

Anarchyteez's picture

Flip a fucking coin. "Nobody Knows Anything," by Bob Moriarty

south40_dreams's picture

The whole world and all of its elements seem hell-bent on ending in disaster, the markets are almost lost in the noise

spekulatn's picture

Sorry Mark.....but the "markets" could give 2 fuks.

:)

 

jmack's picture

LOL, this guy is a hoot.

swizzlefoot's picture

Short all us markets,  long the eur/usd,, hoard gold, liquidate non property assets  (fancy cars), long bitcoin,  and stay calm when shit hits the fan, accumulate properties,  more gold, some foreign equities too