Biderman On The Bernanke Put, Black Swans, And The Failure Of 'Perceived Truths'

Tyler Durden's picture

The underlying premise for much of the management of other-people's-money (OPM) is that if the market drops by an appreciable amount, then Bernanke will step in and save the day. The problem with these 'perceived truths', as Charles Biderman of TrimTabs notes, is that they come-and-go; much like buy-and-hold and China-as-the-engine-of-the-world's-growth. The belief in the Bernanke Put has been around since the end of 2009 and is why the biggest holders of stocks are today mostly fully invested because they really believe that the Fed will remain the buyer of last resort. Unfortunately, as Charles points out, 'market truths always end badly' and in this case what is underlying the belief is that sooner of later the US economy will grow fast enough to allow the Fed to stop priming the pump with newly minted money into stocks; and in this case, he fears, "the headwinds are just too big and that rapid growth will not happen any time soon".

 

 

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bmusic's picture

Headwinds bitchz!

sunaJ's picture

Oh God, I just got a vision of a soused and nancing Bernank perched on a pedestal, flinging his limp body onto the mattress, in what is his command performance - while exclaiming softly to himself, tear in his eye: "it was perfect!"  As he pathetically flops on the mattress, he realizes he has stabbed himself in the stomach with his broken mirror in a fit of drunken madness.

Kitler's picture

Those aren't headwinds son, that's a Cat5 financial haboob shitstorm on the horizon.

http://www.google.ca/imgres?q=pheonix+haboob&hl=en&biw=1280&bih=661&gbv=...

Someone tell Biderman to put the crack pipe down.

Last time I checked Bernanke was still the CEO of Bankster Inc., also affectionately known as the Federal Reserve. As CEO it is his duty and obligation to effectively deliver the known universe to his shareholders who as we all know are not the citizens of the United States of America.

When the 'Black Swan' lands he will download gigabites of digital currency to his pals to valiantly 'support' asset prices and 'save' the economy yet again by avoiding a deflationary systemic crash. Stocks, commodities and net worth of those connected to the Fed spiggot will soar, and the national and consumer debt will disappear through the magic of hyperinflation.

Hell. the currency will crash so hard the USA will soon be manufacturing goods for the Chinese if he does a good enough job.

When all you have is lemons you make lemonade,

He may be evil but the man is a fucking genius.

TheFourthStooge-ing's picture

Kitler meowed:

He may be evil but the man is a fucking genius.

Don't miss this summer's surprising smash hit, the Bullshoit Ballet's presentation of Black Swan Lake, featuring the Ben Bernank as the evil sorcerer Von Rothbart.

DoChenRollingBearing's picture

+ 1

How could you get a minus one for that comment?!  I thought it was rather good!

El Oregonian's picture

What a (ha) boob. I think someone slipped one of those lemons inside your head. When everyone sees the "man behind the curtain" the gig is up my friend. Benny can blow smoke and fire but everyone knows who is pulling the levers so the dramatic effect has lost its luster. Sadly for him, most people are wise to the game thereby nullifying shock waves that at one time, reverberated throughout the markets indefinitely now have half-lifes that are becoming shorter and shorter.

bdc63's picture

 

 

FACT: Bernanke will 'stand ready' to release QE 'to infinity and beyond'

FACT: The only thing that will trigger the FED actually releasing QE will be a significant stock market dip (they give lip service to unemployment and other econ data, but they don't matter)

FACT: As long as traders/investors believe that 'liquidity" is the problem, then the Bernanke Put will work and the stock market will continue to defy gravity.

FACT: When 'the event' happens (call it a black swan if you must) that makes the investing communtiy realize this is not a liquidity problem but rather one of solvency, and that merely putting more money into circulation in a debt burdened bankrupt society won't do a darn thing to fix solvency, QE ceases to work and the Bernanke Put becomes meaningless.

mjk0259's picture

Stock market valuations are ridiculously high unless you believe ZIRP will last forever.

 

Bill D. Cat's picture

When ZIRP ends , it all ends .

Kitler's picture

ZIRP will end with a giant bang, not a whimper.

xtop23's picture

ZIRP is the Keynesian end point. It's here to stay.

Thomas's picture

Rising rates sink all boats. The dildos called pros say low rates are bullish for equities. In fact, dropping rates are bullish. Once you get to the lows, you are totally toast. All ya gots to do is look at rates at the start of the last secular bear (5%, 1966) and at the end of the secular bear (14%, 1981). 

ronin12's picture

"The dildos called pros say low rates are bullish for equities. In fact, dropping rates are bullish." -

 

YES! Same is true for real estate.

 

 

Lucius Cornelius Sulla's picture

Just look at the NIKKEI for a correlation between ZIRP and equity prices.  Not pretty.

blindfaith's picture

 

 

This is one reason why the banks don't want to lend.  Why get stuck in a no intrest loan when 12% is on the horizon.  And, when the rates begin to rise, you will see money loans become really hard to get, and real estate drop back to 1980's levels.

 

malek's picture

ZIRP?

Excuse me, but it's now all about the flow as explained repeatedly at ZH.
ZIRP alone moves nothing anymore.

Questan1913's picture

Malek,  "ZIRP alone moves nothing anymore"

Really?  You calling 400 BILLION dollars a year nothing?  Zirp has moved 400 billion dollars a year every year of its existence from the pockets of bank depositors to the pockets of JP Morgan, Citti, B of A and the rest of the banking mafioso.  That is 400 Billion dollars a year of plunder extracted from bank customers that ended up in New York and the Hamptons.  Almost half a trillion dollars every year.  It stands as one of the biggest targeted tax increases of all time; a transfer from the least economically savvy to the masters of the universe, so called. 

 

WonderDawg's picture

Agreed, but it doesn't seem to be moving markets at the moment.

malek's picture

Only more and increasingly larger QE can kick the can a little further at this point.

Stuck on Zero's picture

I suspect that Bernanke is going to hold off the big money printing binge until Obama makes some Wall Street concessions.  It's just arm twisting.  Obabm will cave and give the bankers anything they want just before the election and then the Fed will dump money from helicopters.  Obama will be reelected, the Bernake will make his bankster buddies wealthier than ever and the rest of us will be toast.

 

Stormy Weather's picture

What I'm most afraid of, is that this kind of Ben "Shalom" Bernanke and his likes will get away with it when everything collapses, by creating a war so big there will be too much confusion for people to look after them.

I hope I'm wrong and they will pay for what they did, but there is little hope. After all even if the great war is not yet there, Corzine and Bush are still running free.

Davalicious's picture

If/when currencies collapse our populations are unsustainable with simple barter. We rely on government to lube the economy with a means of exchange. People will be desperate. The government will be able to introduce a new, perhaps digital, currency they control. The Jew Filth (JF) will own most people.

James's picture

This fellow suggests they already do.

http://washingtondc.craigslist.org/doc/rnr/3082029954.html

I'm surprised it's stayed up this long.

Craig himself is a jew.

Offthebeach's picture

We, the world, could go the way of the other central planning Utopia, the USSR. Decay and collapse with decades of lost growth. Market-Ticker posts a St. Lewis Fed chart that already seems to show no real GDP growth save added debt growth since 1980. Throw in
Bush/Obama/Romney debts, Japanese type demographics in Europe/China, Boomer retirement, youth debts with no kids, and were does the real wealth come from?
Unless we all become banks and self our underwater house notes to the Bernanke at full. That would be nice. But 'taint gonna happen.

Bill D. Cat's picture

Anyone else have the vid locking up at " Truth " ?

Race Car Driver's picture

WTF flies out of his head to the left @ 00:46?

BandGap's picture

That's the perceived truth baby swan. Aren't you listening?

potlatch's picture

Lots of people have solutions, and theories, and then there are descriptions.  I prefer the descxriptions the best, because if all else fails, you can always just state some facts to yourself and go down with the ship, what what.

 

The issue is growth.  I always ask myself, "what fuckin growth?"  This is what makes me pull out my hair about Krugman: exactly what "growth" do you envision the US Government stimulating, or abetting, or clearing the way for?

 

We have everything.  Our only real cost brick wall is nothing but a money sink, though: long term health care for the Boomers...

...that we could locate on the Moon!  "Tranquility Base Homes: don't you deserve to die on the Moon?"

Profit!

slewie the pi-rat's picture

if printing money is the answer, what was that question again? 

Skateboarder's picture

The dude's from Sausalito... he definitely shops at Whole Foods....

*middle fingers up*

moonstears's picture

The question was: How do we make the filthy rich, and the political class, richer-er? I think.

blindfaith's picture

 

 

easy answer, sell them ( at fire sale, desperate to raise some cash for the deficet budget) public assests like tol roads, I95 and I395, stadiums, Yellowstone Park, the Mississippi River, Washington Monument...you know, the things we just don't need now that we have apps.

Hey, if the are doing it in Europe ( hi goldensquid) then it will happen here now that the elite have their bought and sold men in high places.

veyron's picture

How's your FB call Biderman?

Snakeeyes's picture

Don't worry. Cities are trying to screw investors be using eminent domain on mortgages for the purpose of writing down principal. US is officially lawless.

http://confoundedinterest.wordpress.com/2012/06/25/yet-another-loan-mod-program-municipal-condemnation-for-mortgage-principal-writedowns/

xela2200's picture

Nothing new. The government has been screwing people for over a hundred years under the guise of Eminent Domain.

Urban Roman's picture

Not even buy and hold!?

I'm gonna hang onto those Braniff Airlines shares, they'll really be great some day!

Bay of Pigs's picture

Reading a prepared script just doesnt cut it. Can't he just talk on his own?

He's not very convincing.

Cognitive Dissonance's picture

Let's stick a camera in your face and let you babble on. I'm sure you'll be more convincing than Biderman.

Good luck with that.

disabledvet's picture

I don't even know where to begin with this crap actually. I mean GET OFF THE WHOLE "THE FED BUY'S STOCKS" THING will ya? At best "the Fed creates confidence"...but so many other factors have to be at play it's almost like penis envy in these here parts this whole "the Fed Chairman is God" thing. If the Fed truly IS more powerful than Wall Street (and it is btw) it's only because Wall Street is so inhabited with such a mass of morons that it can make the Fed Chairman seem all powerful. Clearly however "he and his committee just use common sense." The whole "we're doing so many illegal things you better give me the CEO more money than is believable" ethos of Wall Street has led that Insane Clown Posse right where they (mostly) should be: flat broke and downsizing. (they should be in prison for life of course.) Having said that these folks at the FOMC are just reasonable people trying to keep an even keel in a financial world gone totally insane. with the End of the Euro methinks this will be the coup de grace for not only The Street but the City as well...and for some time to come. Were it to pass "a fitting end to a pathetic episode of all that is wrong with the human race."

Snidley Whipsnae's picture

The equities did not regain their highs of 1929 until ~ 1952...

The passage of a few generations will be necessary before equities will be saleable again... like the collapse of a fiat currency will cause a return to some form of hard money... then a few generations pass and all those that remember how they got screwed with fiat are gone, history is rewritten, and a new crop of fools are ready to be fleeced.

What we are witnessing now has happened in the past... just not on a global scale.

 

Lucius Cornelius Sulla's picture

Not just once, it has repeated continuously for 3000+ years!  Humanity never learns.

Turin Turambar's picture

IIRC, I heard an economist answering a question regarding the possiblity of hyperinflation, and he said that one of the reasons why we don't see so much inflation is due to the fact that only about 30% of the dollars that have been created are actually in circulation.  The remaining 70% are out of the country and held by foreign governments and such.  Things will probably be okay until some trigger event (unknown at this point) results in all of those dollars flooding back in to the US.  THEN, the crap will hit the fan.

Missiondweller's picture

Sounds about right. Its filling up the big hole left by the evaporating shadow banking system.

See Tyler's post earlier today on Shado Banking.

blueridgeviews's picture

I believe Biderman is right. The headwinds are building ex. 5 trillioin in deficit spending and we only got 1.9% GDP growth last quarter. I imagine the "real " economy has contracted about 8 %/year the past 4 years or so.

Now China/ Europe, India and JApan are all contracting. My guess is that US will be officially contracting shortly.

These are the headwinds.

Mike Cowan's picture

More useless information. Not even interesting.

Downtoolong's picture

The fallacy of the Bernanke put is that it’s only a defense in nominal terms. If and when it gets applied the Fed must print so much money to prop up the market that it still devalues your investments in real terms. It only appears to work, but, in reality doesn’t. It’s a mirage and you still lose, and of course, Wall Street wins.