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Charting The Upcoming Recession, And Is Goldman Really Predicting A 2012 Year End S&P Range Of 700 - 900?

Tyler Durden's picture




 

In his weekly chart packet, Goldman's high frequency strategist, David Kostin, who now changes his year end S&P targets almost as frequently as the firm's economic team changes its GDP forecast, once again gets decidedly fatalistic (very much like Citigroup did yesterday, and Morgan Stanley last week), and is now openly contemplating downside cases to his EPS forecast. And with 2012 EPS numbers thrown around like $91 based on what is certainly an upcoming (but for now still hypothetical) margin contraction, $82 based on a 2% drop (almost guaranteed) in GDP Y/Y, and $75 based on historical earnings plunges in a recession, it may be time to listen up, because apply a traditional contractionary multiple of about 9-10x, and you have yourself a tidy little range of 700 - 910 on the S&P in about a year, absent yet another round of fiscal and/or monetary stimulus.

Kostin on the sensitivity between GDP and EPS:

Every 50 bp shift in 2012 GDP growth rate translates into about $2 per share in 2012 EPS. For example, if the US economy stalls and registers no growth in 2012, then our EPS forecast would equal $94, about $8 below our current estimate and 2% below 2011. If US GDP contracts by 2% on a year/year basis then 2012 EPS would fall to $82 reflecting a 14% decline from 2011.

 

Many investors are surprised that the EPS sensitivity to GDP growth is not more sizeable. One explanation is that a meaningful portion of aggregate earnings is only modestly linked to GDP growth. Utilities, Telecom Services, Consumer Staples and Health Care will account for nearly 30% of 2012 EPS. We recognize that federal and state government austerity next year will likely have a negative impact on earnings for certain sub-sectors of Health Care. Information Technology, Energy, and Materials generate a large portion of their sales outside the US, in some cases more than 50%, and pricing for commodities reflects global supply and demand. These sectors account for 36% of our 2012 S&P 500 EPS.

For future gloating's sake, where is where Wall Street currently sees 2012 GDP:

One thing we can guarantee: the consensus will not be reality 16 months from now.

How about the predictive ability of margin contraction?

Every 50 bp swing in margins equates to $5 per share in S&P 500 EPS (assuming sales growth and Financials and Utilities EPS estimates are unchanged). If margins fall by 140 bp from current 8.9% then S&P 500 EPS would fall to $91, $11 or 11% below our existing 2012 EPS forecast of $102.

Note the assumptions which will never be realized if the bottom falls out.

But the bigggest bear argument is not based on predicting the future (never Goldman's strong suit, unless the firm is actually defining it courtesy of its DC based tentacles), but based on the past:

Six profit cycles since 1974 show peak-to-trough declines in S&P 500 EPS averaged 22%. Most downturns ranged from 10% to 22% although the 2009 drop hit 58% led by a 157% collapse in Financials EPS. Sector level average peak-to-trough declines ranged from 8% growth (Consumer Staples) to 56% decline (Financials). If next year S&P 500 experiences a profit cycle decline similar in magnitude to prior contractions then earnings would fall by 22% to roughly $75 in 2012. Prior downturns typically occurred over 18 months.

End result: $75 EPS x 10 Multiple = 750 for the S&P.

That distant runging noise is every Wall Street CEO calling Ben Bernanke at the same time.

Full chartology:

kickstart 8.20

 

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Sat, 08/20/2011 - 10:51 | 1580910 Ray1968
Ray1968's picture

Stay physical. Period.

Gold, Silver, Lead.

Sat, 08/20/2011 - 11:11 | 1580974 achmachat
achmachat's picture

I live in western europe. no lead here, except for hunters... 

but a good way to defend your fortress in a SHTF scenario would be with crossbows, especially if you know that "looters" will most probably not have firearms...

Sat, 08/20/2011 - 11:32 | 1581036 Sgt.Sausage
Sgt.Sausage's picture

Crossbows have their disadvantages. They have better accuracy, and more "muzzle" velocity, but when it comes to looters you'll want a regular old bow (I hear the UK has a history of making decent longbows <grin>). Looters generally come in crowds and mobs. You'll want to be able to put more rounds downrange at a faster rate than a crossbow allows. I can shoot 6 times more arrows with my recurve in a given time period than I can shoot bolts out of my crossbow. I'd ditch the crossbow and go with a regular old bow.

Sat, 08/20/2011 - 11:39 | 1581057 achmachat
achmachat's picture

i see what you mean... but this isn't a zombie movie.

I kind of think that as soon as ONE of them has a bolt through their leg, they'd start moving on to the next house.

Sat, 08/20/2011 - 13:04 | 1581309 sun tzu
sun tzu's picture

You'll need to set up an organized neighborhood defense. Once they loot the rest of your neighbors, they will be back for you. You have to sleep, go to work, get food etc. You can't sit there staring out your window forever.

Sat, 08/20/2011 - 16:45 | 1581922 Bicycle Repairman
Bicycle Repairman's picture

You guys have been watching too many zombie movies.  Put the remote down, get off your couch and get to know your neighbors.

Sat, 08/20/2011 - 17:22 | 1582020 Nate H
Nate H's picture

+~6.9billion

Sat, 08/20/2011 - 17:47 | 1582085 sun tzu
sun tzu's picture

It already happened in London and LA, you dope. It happened all across the US in the 1960's and 70's. I guess those were zombies looting the shops and neighborhoods. Perhaps you need to wake up out of your Jersey Shore and Kardashians stupor

Sat, 08/20/2011 - 17:52 | 1582107 cbxer55
cbxer55's picture

Gee! Who'd have imagined being in a stupor over Kim K's ass?  ;-)

As for Jersey Shore, I used to live there, so I'll gladly pass on the boob tube version.

Sat, 08/20/2011 - 18:20 | 1582157 Savyindallas
Savyindallas's picture

You are wrong. 28 Days, 28 weeks later, Dawn of the dead, Shawn of the dead -I have them all. And I regularly watch them , as well as Mad Max, Escape from New York, the Postman, The complete terminator series and all other post apolcalypic movies. I have them all and regularly watch them from time to time. When it all collapses, I'll be ready. I'll be one of the leaders people come to for guidance. They may elect me Mayorv-hell, they may appoint me dictator. I'll know how to handle the mobs. Piece of cake. Bring on Armeggedon.

Sat, 08/20/2011 - 13:10 | 1581328 Sudden Debt
Sudden Debt's picture

I can make you a shotgun for 10 euro on materials.

50 euro if it needs to have a chamber with 6 rounds.

 

Sat, 08/20/2011 - 13:28 | 1581401 Randy Kruger
Randy Kruger's picture

Looters won't have firearms?  Your jurisdiction doesn't have armed law enforcement?

Sat, 08/20/2011 - 12:36 | 1581200 Not For Reuse
Not For Reuse's picture

ok, the whole "Guns & Ammo" thing is flat out absurd, and needs to be addressed. The only legitimate reason to stockpile "Guns & Ammo" is if you really love shooting, just for the pure fun of it, and you're afraid you won't be able to afford as many bullets in the future.

If you actually live somewhere where you end up needing an AK47 to defend yourself on a daily basis, dude, GTFO. Move. What kind of life is that? And if you're stockpiling civilian grade weaponry as a "trade," for the love of god, think about who your trading partners are going to be. Some broke ass street thug? Some other poor fuck who can't afford to GTFO of a war zone?

Now, if you're stockpiling extremely rare collectible antique firearms, sure, that makes sense. Your trading partners will be wealthy people living in a relatively serene environment. Same category as blue chip art, investment grade wine, etc. Or if you're stockpiling the sort of military grade technology that international arms dealers deal in - and I'm talking Iron Man type shit, not your shitty loss-leader assault rifles - your trading partners will be governments or, at the very least, wannabe governments with a sufficient level of power and resources backing them up.

But the idea of stockpiling "Guns & Ammo" as a source of value retention on par with gold is probably the single most idiotic meme that continues to be perpetuated in this forum

Sat, 08/20/2011 - 13:00 | 1581300 Prometheus418
Prometheus418's picture

Not necessarily, but it depends on location.

Where I'm at, it won't be war-torn, as there just aren't enough local residents to keep up a battle for longer than a day or two, even if a battle starts.  I have enough fighting-grade ammo to ward off a home invasion or three, but the vast majority of my ammunition is steel game shot and deer hunting rounds.  There may come a time when fresh venison or a brace of rabbits might well be worth it's weight in gold, though I personally hope that is never the case.

It's the same "lead," but earmarked for a different potential use.  I see it as my source of edible meat, especially considering all the woodland in the area.  My shotgun is utilitarian, but my rifle is actually a very attractive and expensive piece of hardware, not a  shitty assault rifle (BTW, I agree with you on those things- though my outlook might be different if I lived in a large city, and was planning on pitched battle.)

 

Sat, 08/20/2011 - 15:30 | 1581779 Not For Reuse
Not For Reuse's picture

I can go along with this sentiment, but only insofar as it assumes a lifestyle preference of sourcing one's own meat indefinitely rather than relocating to a different community where the division of labor still extends to food production

Sat, 08/20/2011 - 13:15 | 1581347 sun tzu
sun tzu's picture

Tell that to the Koreans who survived the LA riots. Their guns and ammo saved their asses when the police were nowhere to be found. When your enemy has an AK-47, you need something just as powerful. There was no police presence for several days as roving gangs of thugs ruled the streets. The same thing happened in London. The same can happen anywhere. I have a couple of guns with about 400 rounds of ammo, as does everyone in my neighborhood. It's nothing strange. Why do planes have oxygen masks or cars have airbags?

Common sense will tell you who to trade with. In a SHTF scenario, what would a street thug have that I would want? Why would I even approach a street thug?

Not being able to defend your family and possessions is the most idiotic thing in the world.

Sat, 08/20/2011 - 15:11 | 1581733 Not For Reuse
Not For Reuse's picture

Tell me more about this car of yours that comes equipped with more than one airbag per passenger.

I'm saying the marginal return on "stockpiling" G&A, in your LA riots SHTF scenario, drops to about zero after your first gun. And even on your first gun, the random luck of who you encounter is far more significant to whether you live or die.

And as far as "common sense" telling you who to trade your extra G&A to, my point is that you WON'T find any good trading partners. In a SHTF scenario, the odds are pretty low that you'll run into Larry Page on the street wearing a fanny pack full of portable wealth to trade for your extra gun.

Your argument is that having an insurance policy makes you feel more comfortable than having no insurance at all, even if that insurance policy may or may not pay out. Fine. But that has nothing to do with whether G&A is on par with gold or anything else as an instrument for retaining surplus value

Sat, 08/20/2011 - 15:53 | 1581832 sun tzu
sun tzu's picture

Most cars have a front airbag and side curtain airbags. Maybe you haven't bought a car in the past few years. Besides, I don't know where I stated that cars have more than one airbag per passenger. Maybe you can point it out.

It depends on your definition of stockpiling. How about three guns and 1,000 rounds of ammo? Many homes in Montana have 10 guns and thousands of rounds. All you need to do is fire your weapon a few times and your enemy will move along to easier targets or run off like cowards.

I brought up the trade scenario in response to your ridiculous trade scenario where you walk up to a gang of street thugs to trade your guns for the food that they grew. LOL

If you have assets, you have to be able to protect them. Otherwise, what's the point of having those assets? In a scenario where gold and silver become money, then the world will be a dangerous place. The majority of people do not own gold and silver and they will be desperate. No more welfare checks will be going out to 45 million people. Do you think those people will peacefully sit at home and starve to death?

Sat, 08/20/2011 - 19:30 | 1582145 Not For Reuse
Not For Reuse's picture

If you have assets, why would you chose to keep them in a dangerous place instead of relocating them somewhere safer?

10 guns? Great. Many homes also have 10 board games and thousands of audio and video recordings laying around, which would be just as marginally valuable in a SHTF scenario. Perhaps even more so, since they provide entertainment without being consumed. I mean sure, if your passion is collecting guns, go ahead and buy as many as you afford. Some people were passionate about Beanie Babies and paid $1000's a pop. Doesn't mean they will retain any marginal value if society breaks down to the point where you're dodging bullets all day long.

I think we both agree you are unlikely to get much value by trading your G&A to street thugs while SHTF. My question is who else do you expect to be trading with, and for what sort of greater value than the same G&A would get you today?

Sat, 08/20/2011 - 21:06 | 1582524 kubrick007
kubrick007's picture

u dont get it, dumb hicks in america think that guns are like books

Sun, 08/21/2011 - 00:27 | 1582876 sun tzu
sun tzu's picture

Unlike the brilliant intellectual like you with your head stuck up your ass

Sun, 08/21/2011 - 09:38 | 1583242 RSloane
RSloane's picture

If you want to call inner city dwellers 'dumb hicks', okay.

Sun, 08/21/2011 - 00:26 | 1582875 sun tzu
sun tzu's picture

Guns will always have value, whether SHTF or not. I have two. You can choose to call 911 if someone breaks into your home. I hope you live close to a police station. Society can break down for several days. Once again, look at the LA riots and London. Those who could not defend their assets lost it all. They depended on the police just as you do

Sun, 08/21/2011 - 13:08 | 1583528 stormsailor
stormsailor's picture

in a shtf scenario,  one might want to make scarecrows out of dead bodies that have tried home invasion or looting.

 

that would keep the crows out of your cornfield for sure.

Sat, 08/20/2011 - 13:33 | 1581425 WakeUpPeeeeeople
WakeUpPeeeeeople's picture

When it comes to guns/ammo its always better to be safe than sorry. The same with keeping a few extra groceries around the house.

There were a lot of people in New Orleans/Katrina that wished they had a gun and a half dozen rds of ammo. They are dead now. Just how far off is this country from turning into a Katrina/MSY. I don't know but will be damn ready if it does. Crying and begging for one's life is not very pretty and embarrassing. 

Sat, 08/20/2011 - 13:59 | 1581515 Thomas
Thomas's picture

A couple hundred pounds of rice--a massive commitment of $100-200--is a pretty good insurance policy against interruptions that need not be apocalyptic (although they will be so without any food at all). Do my colleagues do this when I suggest it? Probably not. When I get that snarky response, "Oh. I'll come to your house!", I tell them to bring their daughters. It out snarks them. (I like to raz them about what their teenagers are up to anyway. Easy to get the skin crawling.)

Sat, 08/20/2011 - 20:57 | 1582499 YC2
YC2's picture

When people buy gold and imagine mad max fantasy scenarios where they will have hypotheticaly bought farmland and learned to farm beforehand, I often wonder if they have thought of this.  A couple large bags of rice will allow them to keep their PMs for wealth preservation in such a scenario if the global supply chain breaks down for a few months.  I cant imagine stockpiling PMs only to run out into the street to sell them if things go awry.

 

Heck, if we are fantasizing, think of what a 30 lb bag of rice will go for in junk silver coins of kugerrands in such a scenario.  Its like 20 bucks at sams club right now.

 

Also, dont forget beans to cover all the essential proteins and add some fiber.

Sat, 08/20/2011 - 22:31 | 1582671 Not For Reuse
Not For Reuse's picture

that might work if you live in India.

But in the US, it would appear that anyone who actually owns any Krugs or junk silver is either fully prepared for doomsday already or would rather shoot you dead on the spot and starve than dig up their PVC pipes at such unfavorable terms.

Maybe if you rang the right doorbell, you might be able shake out a few pieces of silver plated flatware or a 10 karat gold wedding ring from some old crippled widow whose grandchildren were all dying of hunger

Sun, 08/21/2011 - 00:33 | 1582889 sun tzu
sun tzu's picture

What about a situation like the Weimar Republic where those who held paper currency lost everything? What about a situation like Zimbabwe where a loaf of bread cost $2 trillion? The US$ can collapse without the end of the world mad max scenario. There might be riots for days or weeks, but those who are prepared will come out on top.

Too bad there are so many pussies in America who expect or "hope" that everything will turn out fine and dandy and the government will protect them and take care of them. 

Sun, 08/21/2011 - 09:39 | 1583243 RSloane
RSloane's picture

51% of all Americans are on some form of entitlement. Pussies, indeed.

Sat, 08/20/2011 - 13:56 | 1581456 cbxer55
cbxer55's picture

I recommend you read ONE SECOND AFTER, by  WIlliam R. Forstchen. It is about what becomes of the great United States after a rogue nation (North Korea, Iran?) sets off a nuclear device in outer space over central Kansas. The result is an EMP strike that completely obliterates the entire power grid of the whole U.S. for several years. No electricity, no running water, no flushing toilets, no trucks delivering supplies to your local market. Any food you have in a freezer will rot in days, and oh btw, your backup generator is not nuclear hardened, so it too will cease to function.

One second after, all vehicles cease to run, aircraft relying on fly-by-wire technology (basically all of the airliners) fall out of the sky when there controls cease to function. Anyone relying on some machine (pacemaker, dialysis, etc) will be dead in a matter of days. Same said for anyone relying on medication to keep them alive.

You think if a situation like this happened, it would be wise to fire up the barbecue and cook some red meat? Every hungry person within the range of smelling it will be breaking down your door. I honestly don't think one could have enough ammunition should something like this occur.

One Second After was cited on the floor of the Congress as a book all Americans should read. It has been discussed in the corridors of the pentagon as an accurate look at EMPs and their awesome ability to send the United States back in time 150 years.

Sure its far-fetched, but all it takes is one small nuclear missile over Kansas, and we are back in the cowboy days. It would not be pretty, that is for sure. Might want to obtain a copy of this book and give it a read.

http://www.onesecondafter.com/

Sat, 08/20/2011 - 14:03 | 1581537 Thomas
Thomas's picture

Sounded great. Just ordered it audio on Amazon. Let's hope I am not too late and there's no power! :-)

Sat, 08/20/2011 - 14:31 | 1581634 cbxer55
cbxer55's picture

And need I say it? Spread the word. The more people are aware of this, and how easily it could be accomplished, the better. On that link I provided, on the left side, there are links to information on what EMP is, and how we as a nation can somewhat prepare for it should it ever come to pass.

Pretty good information, IMHO. Of course I hope it never happens, but we have a lot of enemies who would love to see this country paralyzed. All it takes is one. No visible explosion, no flash, no radiation, and everything we take for granted is dead. SCARY!

Sat, 08/20/2011 - 15:51 | 1581827 Not For Reuse
Not For Reuse's picture

I haven't read this book, but let's say everything happens exactly as you state above. The plan is to eat all the dead bodies that keep piling up outside your door? And you can't even cook the meat? Seems like a better plan would be to GTFO ASAP with whatever set of portable objects were most useful and value-dense

Sat, 08/20/2011 - 16:20 | 1581879 cbxer55
cbxer55's picture

You should really read the book. if not that, then read some of the links that are on the link I provided, lots of information there.

No the plan is not to eat the bodies that pile up outside your door. The question is, where the fuck are you going to go? In a situation as described, there will be no place that is any better than where you are. It'll be the same from the left coast to the right. In the book, lots of folks, millions actually, take to their feet witihin a week after it happened. Walking the highways looking for food and water. You cannot drink from streams as they are where folks are pooping and pissing, so where you gonna get water to feed your bodies need while walking in 100+ weather? Where you going to get food? Its all gone bad within a couple of days. And you think the wildlife population will last long with every Tom, Dick and Harry out hunting them? In the book they were hunted to near extinction within a few months.

Its a nightmare scenario, one that hopefully never occurs. But one rogue country, or movement, capable of launching a missile from a freighter in the Gulf of Mexico, and we're there.

Sat, 08/20/2011 - 18:13 | 1582147 Not For Reuse
Not For Reuse's picture

so the parameters are 1) there is no clean ground water 2) there is no edible wildlife 3) there is no way out. I don't understand how G&A become more valuable in this scenario. Who are you trading the extra G&A to, and for what in return? Sheer luck would be so influential in determining whether any one individual lives or dies, as to make all other variables statistically irrelevant. Might as well stockpile four-leaf clovers and rabbit's feet

Sat, 08/20/2011 - 16:04 | 1581857 AmazingLarry
AmazingLarry's picture

Thank you. Thought I was the only one. Some kids never grow up - instead of GI Joe, they have 19 guns they'll never use and a pile of bullets that makes their peen feel a little longer. Grow the fuck up and get real!

 

Sun, 08/21/2011 - 00:36 | 1582893 sun tzu
sun tzu's picture

You seem obsessed with other men's peens and guns. Maybe you need to grow the fuck up and get your head out of their asses. Why do you care what other people buy?

Sat, 08/20/2011 - 16:50 | 1581944 Downgraded
Downgraded's picture

"If there's one thing this last week has taught me, it's better to have a gun and not need it than to need a gun and not have it" ~Clarence Worley (movie script by Tarantino: "True Romance")

Case closed.

Sun, 08/21/2011 - 00:37 | 1582898 sun tzu
sun tzu's picture

Some pussies are afraid of guns, so they don't want anyone to be able to defend themselves

Sat, 08/20/2011 - 13:34 | 1581410 Randy Kruger
Randy Kruger's picture

Plus:  have a rural safehouse equipped and ready, don't blab to anyone about your preps or what you own, get rid of that Facebook account, be ready to dump your personal tracking device aka cell phone.  Maybe then you won't need to use the lead.

Sat, 08/20/2011 - 18:27 | 1582175 DosZap
DosZap's picture

Ray 1968,@ 10:51,

Gold,Silver, LEAVE.

If it crashes as badly as they say, if you cannot leave,best have a place staked out FR away from the cities, and whatever it takes to survive.IMHO, anyone over the age of 55, is dead meat.........health issues will kill us off,and if it gets that bad, I prefer to go home anyway.

The NEW paradigm coming will be for the young...................

Those that are pliable, and follow orders well......and do not remember the real America, that was.

Sat, 08/20/2011 - 19:08 | 1582239 Ray1968
Ray1968's picture

I agree that the young will be the only ones that will fare well. They don't have assets that will be destroyed. They have the best asset of all: time.

This is assuming that this is only a financial crisis and not a social/economic revolution where we go into collectivism and destroy the most basic of all human freedoms. I fear that we are headed down that road. My situation does not allow me to escape to Idaho on farmable land. I can only defend starting at my front curb. I will give them HELL.

Sun, 08/21/2011 - 00:40 | 1582903 sun tzu
sun tzu's picture

If it crashes as badly as they say

Who is "they"? Nobody knows how bad it will get - from a recession, to depression, to currency collapse and anarchy. All you can do is be prepared. You might die anyway, but at least you tried and it might save your family from starving or being murdered. There will always be pussies who will roll over and let their family be killed, so they won't be happy about you defending yours.

Sun, 08/21/2011 - 09:42 | 1583249 RSloane
RSloane's picture

Yup.

Sat, 08/20/2011 - 10:54 | 1580925 ben_bernanke
ben_bernanke's picture

A recession with the TED Spread at 0.30? Unheard of. The risk of recession is lower now than it was in May of 2010. The European "crisis" is a manufactured shake-out similar in market effect to the LTCM crisis of 1998 but with even less real risk to the financial system. Look at the Euro. If things were that bad, the Euro would not be trading flat. Absolutely NOTHING supports the bearish case in reality, unless a rumor is reality.

Sat, 08/20/2011 - 10:57 | 1580942 spiral_eyes
spiral_eyes's picture

lol bernanke i really hope you're being sarcastic. quit the (selective) technical analysis and look at the underlying fundamentals, the biflation, the food and fuel squeeze, the trade deficits, the death of western manufacturing, the systemic liquidity risks, and all the keynesian liquidity traps your namesake and his fellow mathematicians can't get out of.

china, bitchez

http://azizonomics.com/2011/08/20/chinas-trillion-dollar-bluff/ 

Sat, 08/20/2011 - 11:05 | 1580963 RSloane
RSloane's picture

I'm hoping he was being sarcastic.

Sat, 08/20/2011 - 13:30 | 1581409 rocker
rocker's picture

Deleveraging is the old new word. It is far from over. Now the S&P futures went under 1200 on Aug. 8 in the morning.

This is BEAR territory now.  Technicals confirm that we are in BEAR territoy.

 

 

Sat, 08/20/2011 - 12:17 | 1581153 DormRoom
DormRoom's picture

your analysis  assumes a business-cycle-inventory recession.  This is a balance sheet recession.  It's a different beast.

Sat, 08/20/2011 - 13:38 | 1581439 rocker
rocker's picture

The banks have more crap on their balance sheets than the consumer now. Although, the consumer is still deleveraging too.

We are "Worse than Japan Now".

Sat, 08/20/2011 - 10:52 | 1580927 Caviar Emptor
Caviar Emptor's picture

As if any of this were rational. As if the numbers aren't massaged already, and will be. 

Here's the real black swan: markets crash when a ray of truth emerges from the dark pit of lies. When that day comes, duck and cover. Only gold will save you. (Ok, physical PM)

Sat, 08/20/2011 - 10:53 | 1580932 ghostzapper
ghostzapper's picture

1040 is essentially a certainty.  1010-1040 very likely.  thinking a move below that quite possible maybe to 950ish followed by a countertrend rally up to a declining 200 DMA.  from there, the big plunge to 600 and below.  we'll see.  looking to sell my SDS at 1000 or lower and then maybe consider going long strictly for a trade. 

Sat, 08/20/2011 - 10:56 | 1580938 Cult of Criminality
Cult of Criminality's picture

Psssst

 Let the lamestream know, papers in a bubble along with the pundits

Sat, 08/20/2011 - 10:56 | 1580939 CrockettAlmanac.com
CrockettAlmanac.com's picture

Ron Paul Birthday Money Bomb today!

 

http://www.ronpaul2012.com/

Sat, 08/20/2011 - 13:23 | 1581379 caerus
caerus's picture

done...happy b-day ron!

Sat, 08/20/2011 - 11:05 | 1580951 Cult of Criminality
Cult of Criminality's picture

Oh yes another addition to the metals showed up just now.....

Thanks USPS , Gainesville Coin. No problems , like clockwork

Sat, 08/20/2011 - 11:53 | 1581098 GubbermintWorker
GubbermintWorker's picture

Enjoy it, they won't be delivering precious on Saturdays for much longer!

Sat, 08/20/2011 - 11:03 | 1580956 The Turdman
The Turdman's picture

I'm really confused. Being single I go out every night and the bars are filled, mall parking lots jammed and the restaurants packed. Some of my friends are hurting a little but managing. Yet, financial armageddon is upon us, so the pundits tell me especially the Wall Street variety. Seems like they're working overtime to get Bernake to delcare QE 3, whereupon the markets will rally and life will be good. Seems all so manipulated.

Sat, 08/20/2011 - 11:06 | 1580967 RSloane
RSloane's picture

Death, taxes, QE3.

Sat, 08/20/2011 - 11:08 | 1580969 Cult of Criminality
Cult of Criminality's picture

Most do not have a clue or they have jobs Turdman

as you probably know almost fifty percent of the country that is working is supporting the other fifty percent that are not

Sat, 08/20/2011 - 11:22 | 1581012 Spastica Rex
Spastica Rex's picture

Wow, that's awesome! It's like back in the day when ~50% of the potential workforce (men) were able to provide a living for the other ~50% (women). This is even more equitable and less misogynistic! However, I thought the whole idea back in the '50s was to get women working so that business got twice the labor output for the same standard of living. This current situation seems to run counter to that?

Sat, 08/20/2011 - 23:00 | 1582731 LongBallsShortBrains
LongBallsShortBrains's picture

When the man brought home the bacon so the woman could cook it for both, the tax man didn't take a cut of it and borrow more from the future generations to keep European banks afloat "back in the day"

Sat, 08/20/2011 - 11:10 | 1580973 Spastica Rex
Spastica Rex's picture

Eat, drink, and be merry! No need to worry about the rest of that little proverb.

Sat, 08/20/2011 - 11:13 | 1580981 treemagnet
treemagnet's picture

I think the key word is "single".

Sat, 08/20/2011 - 11:15 | 1580990 dwdollar
dwdollar's picture

Where do you live?

Sat, 08/20/2011 - 13:24 | 1581388 caerus
caerus's picture

i too enjoy watching this spectacle from a barstool in texas

Sat, 08/20/2011 - 14:08 | 1581555 sun tzu
sun tzu's picture

Yes, you really are confused. Three out of every four people had a job during the great depression. It must have been wonderful times. The speakeasies were full of people. football and baseball stadiums were full of fans. Times were great.

Sat, 08/20/2011 - 11:06 | 1580966 treemagnet
treemagnet's picture

10 x earnings is too high.  This is so structural affecting every facet and level of the economy I'm gong with 7 or 8x - the downside momemtum will be like an avalanche.  Not even the then-elites will be looking to get out in front of it, especially since the social unrest adds a variable we've just simply never seen before, at least here in the US.  Without that telegraph AND someone to answer "the call", my bet is uglier and for longer.

Sat, 08/20/2011 - 11:13 | 1580982 Cult of Criminality
Cult of Criminality's picture

Think you are right about uglier and longer Treemagnet

Sat, 08/20/2011 - 11:15 | 1580987 Mugatu
Mugatu's picture

SAD NEWS: Please join me in remembering yet another great icon of the entertainment community. The Pillsbury Dough boy died yesterday of a yeast infection and traumatic complicatons from repeated pokes in the belly. He was 71. Dough boy was survived by his wife Play Dough, 3 children John Dough, Jane Dough, and Dill Dough. Plus they had one in the oven. Services were held at 3:50 pm for about 20 minutes.

Sat, 08/20/2011 - 11:16 | 1580994 Cult of Criminality
Cult of Criminality's picture

ROFL

Sat, 08/20/2011 - 13:20 | 1581370 caerus
caerus's picture

lol

Sat, 08/20/2011 - 17:23 | 1582024 Sudden Debt
Sudden Debt's picture

+1000 HAHAHAHAHAH!! :)

Sun, 08/21/2011 - 06:57 | 1583133 The Real Fake E...
The Real Fake Economy's picture

lmao

Sat, 08/20/2011 - 11:15 | 1580988 DeathCabfoKulaks
DeathCabfoKulaks's picture

In gold $, the Dow is at 5000 or thereabouts.

Time to rotate.

Sat, 08/20/2011 - 11:25 | 1581022 Yardstick of Ci...
Yardstick of Civilization's picture

That's interesting . . . so if the markets are priced in gold, you think there is a buying opportunity?

Sat, 08/20/2011 - 11:51 | 1581089 DeathCabfoKulaks
Sat, 08/20/2011 - 12:06 | 1581131 Yardstick of Ci...
Yardstick of Civilization's picture

I get the math and appreciate the chart.  What I'm trying to discern is whether you are suggesting that one should buy the Dow, short gold, or both.

From that chart, it seems that gold could rise quite a bit more (or the Dow fall quite a bit more) before a sustainable equilibrium is achieved.

Sat, 08/20/2011 - 11:17 | 1580997 scatterbrains
scatterbrains's picture

That would be about a 50% smack down off the recenet highs..  quite bullish for public employee pension funds. Plus the coming credit downgrades will make state and muni bonds soar just like treasuries right ? wont they guys ?

 

 

Sat, 08/20/2011 - 11:20 | 1581006 Cman5000
Cman5000's picture

I think as far as people going out eating people won't give that up. But most people i know are cutting back on all the other shit they buy TVs etc etc ... But people live pay check to pay check blow all there money at the bar life is good nothing will happen. Then oh shit is does ...

Sat, 08/20/2011 - 11:21 | 1581009 NervousRex
NervousRex's picture

That's one helluva yeats infection.

Sat, 08/20/2011 - 11:24 | 1581015 Cult of Criminality
Cult of Criminality's picture

Smackdown Bitchez !

Ok Zerohedge let me have fun, now must go.

Good day to all

Sat, 08/20/2011 - 11:24 | 1581020 RideTheWave
RideTheWave's picture

Here is my call. Something that has never happened with any precedent relative to history which is just how Mr. Market likes to fuck everyone. I have been doing a lot of research and what my conclusion is as follows:

- We have been in a cyclical bull market since November 2008 or March 2009 depending on your point of the cylical low.

- Per Zeal Intelligence cyclical bulls go from 30 to 36 months in length which take us to about the end of the year to early spring.

- Zeal also suggested that  bear markets start with 20% correction at which point you short all rallies to the declining 200 DMA (the "slope of hope" as it were vs. the rising 200 DMA "wall of worry").

- We are 2% from 20% so in all likeihood you would go to "slop of hope" short mode thereafter....

- Well here's the rub....in 1987 and 1998 we had 2 periods of corrections within a cyclical bull where the correction did exceed 20% only to see the primary uptrend of the preceding cyclical bull resume

- I am sure no one saw that coming then and no one will see this coming now which is that the market will, as Tyler suggests, fall to sub 1000, which is a 30% correction and then via the biggest bailout you have ever seen plus QE (call it the white swan) return to going bull mode not only exceeding the break-down of 1250 and then besting the 2007 SP500 1550 highs....all on the back of a broken dollar of course.....now that has NO PRECEDENT...but if we are going with central planning and market manipulation on full blast...it so easily could happen now.....

- This my friends is an example, should it happen, of how a Mr. Market can fuck both bears and bulls alike......I am shorting into "no QE until sub 1000 SP500" and then I am going long until hyperinflation is obvious.....

- According to "Nial Ferguson" in "When Money Dies" referencing Weimar, there was unbelievable stock market before it cost you all your stock gains to buy bread...we are either there now...or after what I believe in my forecast above to come....

Sat, 08/20/2011 - 11:59 | 1581111 treemagnet
treemagnet's picture

Those were markets, this is a ponzi.  Technicals will only tell you where you've been.  Just my humble opinion.

Sat, 08/20/2011 - 12:24 | 1581173 RideTheWave
RideTheWave's picture

Exactly. That's why looking back to the past to predict the future in this period is a flawed argument. You will see a 30% + correction and then a return to the "cyclical" bull market. Never happened before but these are uncharted times and waters. So why wouldn't it be that way. 

Sat, 08/20/2011 - 14:17 | 1581591 sun tzu
sun tzu's picture

Why would it be that way? Why not a 50% down then a 300% rally? It's never happened that way either. 

Sat, 08/20/2011 - 12:26 | 1581179 A Man without Q...
A Man without Qualities's picture

The problem with more stimulus is it seems that the benefit of surprise has been lost.  What I mean by that is you need to stimulate to create demand pull reflation, which lifts consumption, jobs and income, which then lifts asset prices and commodity prices.  As long as you can keep ahead of the rising tide of costs, you will be ok.

What it seems is that QE has been seen through, and more stimulus will lead to a sharp rise in commodities and raw materials costs, but fails to put more money in people's pockets, therefore causing cost push inflation, and leads to stagnation.

With the S&P at 1550, where would crude prices be?  This is my concern - further monetary stimulus runs the risk of stagflation, as it cannot create jobs or help the fact that the consumer is debt saturated.  

Sat, 08/20/2011 - 14:19 | 1581599 sun tzu
sun tzu's picture

Not only that, but QE causes input prices to increase, which kills any economic recovery. Benny can deny it all he wants, but Brent crude was at $33 and spiked up to $108 after all the printing. Lower oil prices is like a huge tax cut for businesses and individuals.

Sat, 08/20/2011 - 11:26 | 1581025 DeathCabfoKulaks
DeathCabfoKulaks's picture

"10 times earnings is too high"

10% return is too high?

Sat, 08/20/2011 - 14:44 | 1581670 sun tzu
sun tzu's picture

You must mean 10% return is too low. 

It can be too low when you factor in the risk and taxes.

Sat, 08/20/2011 - 11:55 | 1581100 The Turdman
The Turdman's picture

The key word is "single," and knowing full well that I'll get bombarded by comments, I live in Boulder, Colorado. However, what I stated was based upon traveling around the country. I travel 10 months and hang two. For example, I went to Portland, Oregon, to visit my son, which to me looks like a rather poor city with tons of vagrants and unsold condo's. However, when I take my kid out to eat, the restaurants are packed, even on a Monday or Tuesday. And they're not cheap, generally pricier than Boulder and so what I see is different than what I hear from the pundits. Just an observation, that's all.

 

Sat, 08/20/2011 - 13:26 | 1581395 caerus
caerus's picture

you're right...the pundits are morons

Sat, 08/20/2011 - 14:22 | 1581609 sun tzu
sun tzu's picture

You're talking about the restuarants that survived and the people who still have jobs. How many have shut down? You don't know. How many people are staying home because they don't have jobs or enough money to go out? You don't know. The speakeasies were full during the great depression. 

Sat, 08/20/2011 - 12:27 | 1581178 FoieGras
FoieGras's picture

75x13.5 = 1012. Sounds more like it. Wouldn't be surprised to get a 10% relief rally here that gets everyone excited again and then we drop to 1000 by Jan/Feb.

Sat, 08/20/2011 - 12:56 | 1581287 IMA5U
IMA5U's picture

obama doesn't mind the market crashing

 

his goal is to gain power and a crisis like this to grow government can't be wasted

Sat, 08/20/2011 - 13:53 | 1581493 prophet
prophet's picture

Its a complete obamanation.

Sat, 08/20/2011 - 14:18 | 1581597 IMA5U
IMA5U's picture

lolol  that's right!

Sat, 08/20/2011 - 15:24 | 1581764 buzzsaw99
buzzsaw99's picture

only the manipulators at the fed & jpm know for certain where stock prices are going.

Sat, 08/20/2011 - 17:41 | 1582071 Yen Cross
Yen Cross's picture

Some day? I can be the ( Poster Child) 

 

   Did anyone catch the H/S on equity trades?

Sat, 08/20/2011 - 17:54 | 1582112 dcb
dcb's picture

my charting has an entry point on the s and p of about 1000.  also the s and p is never going to trqade at 10X,

Sat, 08/20/2011 - 20:57 | 1582503 3rivers
3rivers's picture

Iran and North Korea would never set off a bomb over the US because they need us.  We are the Great Boogieman.  An American would be the most likely to set off such a bomb. 

Sat, 08/20/2011 - 21:04 | 1582521 kubrick007
kubrick007's picture

zerohedge has gone to shit. since when did all the dumb hicks show up? used to be about making money, hedging, etc, now all it is every other day is about everyone's stupid gun collection. 

 

u think this country went to crap because the bankers? yea right, it went to shit because all that is left is a bunch of dumb hicks with guns. 

Sun, 08/21/2011 - 00:43 | 1582910 sun tzu
sun tzu's picture

Yup a bunch of dumb hicks with guns caused this whole mess with trillions in bad debt and quadrillions in derivatives. Now go fuck your mother again, retard pussy

Sun, 08/21/2011 - 09:47 | 1583256 RSloane
RSloane's picture

I'm going to take a wild guess and say he doesn't own any guns and doesn't want anyone else to.  Gee, who or what does that sound like?

Sat, 08/20/2011 - 22:54 | 1582717 Mister Minsk
Mister Minsk's picture

GS is a filthy parasite.

Sun, 08/21/2011 - 03:11 | 1583046 luciusfargo
luciusfargo's picture

For future mocking's sake, who predicted 3.2% for 2012?

Sun, 08/21/2011 - 07:39 | 1583161 trampstamp
trampstamp's picture

How can this be when we have an election year coming up?

Sun, 08/21/2011 - 23:48 | 1584971 time123
time123's picture

I do not think it will get that bad to get down to S&P 500 at 700 level. But I will not be surprised to see it at 850 sometime this fall, only to turn out to be yet another buying opportunity of a lifetime.

 

time123

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