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David Rosenberg Explains What (If Anything) The Bulls Are Seeing

Tyler Durden's picture


While we have long asserted that any attempt to be bullish this market (and economy) by necessity should at least involve the thought experiment of eliminating such pro forma crutches as trillions in excess liquidity from the Fed, not to mention direct and indirect intervention by the central planners in virtually all asset classes, which in turn drives frequent periods of brief decoupling between various geographies and asset classes (which always converge) and thus economic performance (because as Bernanke will tell you gladly, the economy is the market), an exercise which would expose a hollow facade, a broken market and an economy in shambles, in never hurts to ask just what, if anything, do the bulls "see" and how do they spin a convincing case that attempts to sucker in others into the great ponzi either voluntarily, or like in China, at gun point. Alas, our imagination is lacking for an exercise such as this, but luckily David Rosenberg has dedicated his entire letter to clients from this morning precisely to answer this question. So for anyone who is wondering just what it is that those who have supposedly "climbed the wall of worry" see, here is your answer.

From David Rosenberg at Gluskin Sheff

It never hurts to keep an open mind — I say that as I debate Wells Capital's famously bullish strategist Jim Paulsen at a CFA event — and tip your hat to the other side of the argument.

When asked if there is anything — even one thing! — that I can identify that is market-positive, what would it be?

Well, it's certainly not any shift in view over the economy. The leading indicators of activity are not behaving nearly as well as the coincident or lagging indicators have been of late. Indeed, averaging out the wiggles and real GDP growth, at best, was 1.7% in 2011, far short of the 3% advance reading in 2010. And we head into 2012 with many imbalances yet to be fully addressed and a variety of headwinds, none stronger than the looming hit to exports, manufacturing activity and profits from even a mild European recession

What has changed is valuation and the high-bar regarding investor expectations.

Let me explain.

The story for 2011 was one of P/E multiple contraction as risk aversion set in. The year ended with operating EPS growth in high-single-digit terrain, which was slower than the string of double-digit gains since the profit recovery began nearly three years ago, but positive nonetheless. What held the market back was the multiple, which contracted roughly 3 points on the year — and remember: every multiple point equates to nearly a 10-point shift in the S&P 500. This often counts more than earnings do when formatting your targets for the year. In the end it is the direction and the multiple that investors were willing to pay for that caused so many pundits to be so wrong last year.

So we have a situation now where the trailing P/E ratio is sitting at 13x. That may not be a classic trough by any means, but only 20% of the time in the past quarter century has the multiple been this low. Okay — something to consider.

Now, trailing P/E is the proverbial "bird in the hand" whereas forward multiples are "hit and miss" and subject to the vagaries of analyst earnings estimates, which have been declining in dribs and drabs for the past three-to-six months. But as it now stands, on this basis, the multiple is now just a snick below 12x. In the past quarter century, we only saw one other time when it was this low on a one-year "forward" basis, and it was the first quarter of 1988. A year later, the S&P 500 rallied 15%. Not my call, but something to at least mull over and debate.

Now we must keep in mind that valuation is not a timing device. If all you did was focus on such metrics, you would have missed out on the final three years of the late-1990s tech boom. That said, a respect of valuations will also help keep you out of trouble, as we saw following the tech wreck and the bust of the housing and credit bubble seven years hence.

But we do understand that P/E ratios at current low levels do serve up a certain degree of confidence (a source of some comfort, if you will) that there is some downside protection to the overall market here. While I'm still on the cautious side, I do see the case for why the floor may be higher than it was before. Of course, that is due to valuation metrics. The key going forward will be how earnings perform — and I'm not expecting any growth this year. In fact, we could see a contraction, based on where margins are (60-year highs) and the impact of slower global growth and the stronger U.S. dollar on foreign-sourced revenues (40% of the pie).

The next question is whether the P/E multiple can expand in 2012. As was the case in 2011, in a year when profit growth was positive but the broad market flat, the multiple may yet again hang in the balance.

Well, it may pay to assess what the factors were in 2011 that caused the P/E multiple to shrink. I can think of a few. The ECB pulled a 2008-style bonehead move and raised rates to combat inflation (surreal). China was draining liquidity as it moved to rein in a potentially destabilizing uptrend in inflation — with its stock market and the emerging market space taking it on the chin. All the while, the Fed more or less stood on the sidelines for much of the year, notwithstanding Operation Twist and the verbal pledge to keep the funds rate at the floor through to mid-2013 at the earliest.

If we look at what could possibly go right, we have the Chinese central bank now easing policy — that is a shift from a year ago. If inflation there falls further, which has already slowed from the 6.5% peak to sub-5% (we get the key December CPI data-point later this week), then the latitude for more policy stimulus will become even greater. This is why the Chinese stock market has rallied more than 6% in the past four days — it is sniffing something out here. Remember that Chinese stocks lead commodities. Furthermore, the Canadian stock market, which turned in a rare underperformance last year relative to the U.S., has about half its market capitalization in basic materials.

We also have the ECB, with a new chief, not only cutting rates but in some sense going even further than the Fed did. Perhaps not in the way of non-sterilized purchases of government bonds, but the move toward lending to the banks for three-year terms with the junkiest of collateral (one-third more products that the banks can now put up on the central bank balance sheet) has dramatically reduced tail-risks (a French bank or two would have gone down absent this ECB intervention) and we see that now in terms of Libor rates easing.

Furthermore, Eurozone politicians were completely in denial this time last year, believing that the problems would stay "contained" to Greece. Over the last few months of 2011, a view was building in the markets that either Germany was going to exit the euro area or kick Greece out. So far, neither seems likely.

Merkel and Sarkozy seem dedicated on using the crisis as a way to foster more integration — with a common fiscal policy — not less. Of course, it remains to be seen how many of the other members will opt for German-style austerity at a time of intensifying recession pressures. But this is a problem of their own making since it was their decision to load up on debt to fund their welfare states, and the move to fiscal probity is probably the lowest cost strategy for them (us too). And Merkel came right out and said earlier this week that Germany wants Greece to remain in. a sea of uncertainty, at least we have more clarity now that the Eurozone experiment is about to disintegrate in a destabilizing fashion.

Finally, based on the latest comments from two Fed bank presidents (Dudley and Williams) there seems to be some momentum building for a QE3 program out of the Fed.

What is different about 2012 is that while there are many headwinds, global policy is moving into a higher gear. We have no doubts that the beta-junkies will go to town on the prospect of a "coordinated" global stimulus cycle. This is what the market has been feeding on repeatedly since the March 2009 lows. It's called government mixed juice.

What also is different is the level of expectations. We went into 2011 with everyone geared up for 3% real U.S. GDP growth and we will be lucky to get 1.7% when the final results for the year come in. Now the consensus is much closer to 2%. While growth may in fact come in softer than that, we do start the year with more realistic expectations than was the case 12 months ago. The next few weeks will be key as Q4 earnings come out. Keep in mind that the bottom-up estimates right now have penned in a sequential quarter-on-quarter contraction, which has only happened 2% in the past 25 years outside of recessions. There may still be one, but it didn't start in Q4 of 2011.

Meanwhile, the survey data continue to flash a green light. The NFIB small business sentiment index improved in December for the fourth month in a row to 93.8 from 92 in November. This is the best reading in 10 months, though the components were not universally positive.
For example, the job openings subindex dipped to 15 from 16. Hiring plans also dipped one point to 6. Moreover, the index assessing whether small businesses added jobs in the past three months edged down to 1 from 2 in November, not exactly in line with those booming results from the ADP survey.

Capex spending plans stagnated at 24. The good news for bonds at least was the subdued inflation readings. The index measuring pricing power stayed at zero and the percent raising wages was stuck at 10. Even better were the forward-looking "planned" figures. Intentions to raise prices dipped from 15 to 14 and plans to boost wages slipped to 5 from 9 to stand at the lowest level since last January. In fact, the share of respondents citing inflation as their top worry fell from 6% to 5% (it has been sliced in half since last May) — it hasn't been this low since early last year.

A bright spot was in the credit measures; the thaw continues as the index measuring how tough it is to secure financing receded from 10 to 8 in December — the lowest since June 2008. One of the most acute concerns evident in the survey are taxes, with the share saying this is first and foremost on their minds rising to 21% from 19% in November and 16% three months ago. Just wait until the realization sets in that President Obanna is going to remain in the White House and the Bush-era tax cuts go the way of the Do-Do bird by the end of 2012 (not to mention the health care tax on "high-income" earners).

The JOLTS data (Job Opening and Labor Turnover Survey) more or less confirmed that the labour market has less pep in it than many believe (but consistent with the aforementioned NFIB employment readings). Job openings actually declined 63k in November on top of a 153k plunge the prior month. Hirings did rebound 107k but that only recouped the like-sized decline in October. Finally, firings came to 96k and belie the recent downtrend we have seen in the jobless claims numbers.


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Wed, 01/11/2012 - 17:01 | 2055980 spastic_colon
spastic_colon's picture

I like reading David even if he is mostly wrong about the market directions, he should stop using real facts and figures since they no longer matter

Wed, 01/11/2012 - 18:32 | 2056324 DavidPierre
DavidPierre's picture

Damned if you do...

Greece, which is a time bomb set to ignite the nuclear system itself, but seems to have been "forgotten about" where market participants are concerned. Their short term debt is trading at interest rates between 300-400%. They are flat assed broke and the market has already deemed them so.

The problem is twofold, first the market IS paying attention to because it is Euro negative which temporarily points the finger away from the U.S.

 If Greece really does "technically" default, the Eurozone is toast which it is anyway with Italy, Spain, Portugal... they will all default. The Euro was clearly not well thought out politically or financially.

Secondly and most importantly, which of course is not gatting much press are all the CDS insurance that has been sold. Greece CANNOT be allowed to technically default and trigger the "insurance" payouts. Were this to happen, there could be 5, 10, 20 defaults by "insurers" just like AIG who cannot pay.

If the CDS is not triggered should have already triggered at least 10 months ago during the first bailout... then the owners of CDS, many who have "hedged" their portfolios with this bogus insurance will not be paid. Many institutions will become insolvent if they are not already... by the simple fact that they own Greek debt that has dropped already 80+% in value with no compensation on the other side where they expected their CDS "insurance" to pay.


For that matter, how funny is it that the U.S. which IS the reserve currency has CDS in the $ Trillions written against debt.

Greece alone will blow the system. Look at the U.S. ... exponential overkill. The "writers" of Greek CDS do not have the capital to pay on a default and the suckers who relied on the CDS payments need them to be made whole.

Can you say "damned if you do and damned if you don't"?

This is just one more black and white example as to why "mathematically" it is over and has been since late 2008 when central banks and treasuries decided to borrow, print and "save the world" for the time being.

How long is "the time being"? 

 The only correct move is not to play the game.

Wed, 01/11/2012 - 19:04 | 2056462 kaiserhoff
kaiserhoff's picture

Fine summary.  I've been saying for a couple of years now, that some risks are simply not insurable, because if anyone has a claim, essentially everyone has a claim.  It isn't only systemic risk, it is systemic mutually assured destruction..., coming soon to banks and nations near you.

Arbitrage as a form of Russian Roulette, Go Figure.

Wed, 01/11/2012 - 22:22 | 2057060 jeff montanye
jeff montanye's picture

one might also quibble with the seeming comprehensiveness of a 25 year chart of trailing eps.  seen in a larger context,, the period seems to have relatively high ratios and does contain the highest on record.  as well, as 2008-2009 demonstrated, ratios can go up in recessions even if prices go down.  

Thu, 01/12/2012 - 03:52 | 2057535 BadKiTTy
BadKiTTy's picture

Good one Jeff. Picking 25 years is too small a window to look at where things could go. After the 29 crash PE's got to about 5. Huntsman had to review his model to include data from the depression in order to give him a better data set. Recency and availability effects mean we tend to only look at what is 'near' and memorable. I bet most of the BSD's on wall street are in their 30's and 40's so their whole world is bubble land.


Thu, 01/12/2012 - 08:35 | 2057726 economics1996
economics1996's picture

Excellent.  Impressive.  The comments on ZH are incredibly insightful.  Thanks David.

Wed, 01/11/2012 - 19:34 | 2056583 s2man
s2man's picture

I'm the only +1?  David just eloquently described the dominoes falling.  Maybe it was too long for most to read...

Thu, 01/12/2012 - 08:31 | 2057730 economics1996
economics1996's picture

I was negative 30 yesterday.

Wed, 01/11/2012 - 19:57 | 2056635 Sheikh Dani
Sheikh Dani's picture

Nice post David!

Wed, 01/11/2012 - 20:52 | 2056788 hettygreen
hettygreen's picture

'The only correct move is not to play the game.'

This is the best advice I have read in a very long time. Eventually there will be a tipping point when a critical mass of people accept this, pick up their marbles (if they have any left), and go home. I joined the exodus of the rational (or broke) in the first week of October last and I won't be coming back. 

Thu, 01/12/2012 - 04:56 | 2057578 AldousHuxley
AldousHuxley's picture

Iran decided to not to play the petrodollar game anymore. You will see what happens....

Wed, 01/11/2012 - 21:28 | 2056923 disabledvet
disabledvet's picture

this is a "fine summary" indeed. of course the USA did pay the CDS...back in 2008. Just ask Hank Greenberg. The US taxpayer had to spend tens of billions just so his company could be made whole with Goldman Sachs. In Europe we're talking an actual country...and Europe will not pay??!! I know if i were a holder i'd be apoplectic! Anywho..."they're sovereigns for a reason"...and one of those reasons? "they don't have to pay." C'est la vie. I would not hold my breath that this will change...we are told "we will know" of course.

Thu, 01/12/2012 - 01:20 | 2057398 DavidPierre
DavidPierre's picture

Gerald Celente...

...Ranting ... Frothing at the mouth for 20 minutes.

No eye strain like I got from reading Rosie.


Thu, 01/12/2012 - 01:14 | 2057408 Oh regional Indian
Oh regional Indian's picture

The only correct move is not to play the game.

Sage advice for the times DP.


Thu, 01/12/2012 - 02:15 | 2057457 DavidPierre
DavidPierre's picture


An old Chilcoton rancher I knew up in the high country told me a long time ago...

"Mess with the bull and you get the horn."

A sign on the dirt road into the valley that you would like...

Wed, 01/11/2012 - 22:50 | 2057144 Reese Bobby
Reese Bobby's picture

I declare you a "Full-Retard."  Rosie called the Treasury rally duration play when ZH was mocking him on the topic.  And he has still been consistently bullish on PM's.  I bet you choke on Theta for a living Sparky.  Because you obviously know nothing about financial markets or David Rosenberg.  And no need to thank me for being more gentle than necessary.


"Man, just cause it's a theme song don't make it not true"

Thu, 01/12/2012 - 01:42 | 2057444 philipat
philipat's picture

"even if he is mostly wrong about the market directions"

In fairness, I dispute that. He guided clients into Treasuries over the past 2 years which was not a bad place to be.

Wed, 01/11/2012 - 17:02 | 2055994 Comay Mierda
Comay Mierda's picture

two words - dollar destruction.  SPX will only crash if priced in gold.

Wed, 01/11/2012 - 17:14 | 2056060 GMadScientist
GMadScientist's picture

And fiat (ya know, the stuff they give you when you sell your equities) will only be worth having when the SPX crashes.

It's like trying to piss with morning wood.


Wed, 01/11/2012 - 17:36 | 2056152 SimpleandConfused
SimpleandConfused's picture

The secret is to master the hand stand!  Then, no problems with bladder depletion when the urethra is a bit stiff.

Maybe that is the secret to making money these days; learn to stand on one's head while knee deep in fecal matter?

Wed, 01/11/2012 - 17:52 | 2056190 MillionDollarBonus_
MillionDollarBonus_'s picture

It’s time for downtrodden equity investors to get organized. The sluggish pace of this economic recovery is very concerning, and I personally believe that there is the very real possibility of a double dip recession. It is out of deep concern for the health of the American economy and its loyal investors that I propose the creation “The American Union of Equity Investors”. This union will be open to any and all investors in US and global equities, from analysts at top tier investment banks to independent value investors. The Union will be focused primarily on lobbying for more fiscal and monetary easing but it will also work to promote public awareness of the need for monetary and fiscal stimulus.  Don’t forget, this is YOUR Federal Reserve and it is up to everyone to make sure that Bernanke is serving YOU.

Wed, 01/11/2012 - 18:02 | 2056206 SMG
SMG's picture

 "Don’t forget, this is YOUR Federal Reserve"

If by that you mean the Rockefeller's and the Rothschild's Federal Reserve?  Then you're finally right for a change.

Wed, 01/11/2012 - 18:44 | 2056379 LawsofPhysics
LawsofPhysics's picture

Don't forget the Windsors.  Besides we do we need to pay the Fed at all when the treasury can coin our own money?  Seems rather stupid.

Wed, 01/11/2012 - 18:46 | 2056387 Canaduh
Canaduh's picture

No, the fed is owned by shareholders, who have never been disclosed (though it is pretty easy to guess)

Wed, 01/11/2012 - 18:54 | 2056416 LawsofPhysics
LawsofPhysics's picture

"who have never been disclosed"  - So unless anyone can buy those shares, you have no fucking point.

Wed, 01/11/2012 - 19:15 | 2056487 Canaduh
Canaduh's picture

No, my point is that no one can claim to know who owns the fed, and if they did, there would be no way to verify it.

I don't know how that was not clear to you, unless you're a fucking moron.

Wed, 01/11/2012 - 23:42 | 2057248 baby_BLYTHE
baby_BLYTHE's picture

repost, but relevant: Who owns the Federal Reserve?


It reveals the linear connection between the Rothschilds and the Bank of England, and the London banking houseswhich ultimately control the Federal Reserve Banks through their stockholdings of bank stock and their subsidiary firms in New York. The two principal Rothschild representatives in New York, J. P. Morgan Co., and Kuhn,Loeb & Co. were the firms which set up the Jekyll Island Conference at which the Federal Reserve Act was drafted, who directed the subsequent successful campaign to have the plan enacted into law by Congress, and who purchased the controlling amounts of stock in the Federal Reserve Bank of New York in 1914. These firms had their principal officers appointed to the Federal Reserve Board of Governors and the Federal Advisory Council in 1914. In 1914 a few families (blood or business related) owning controlling stock in existing banks (such as in New York City) caused those banks to purchase controlling shares in the Federal Reserve regional banks. Examination of the charts and text in the House Banking Committee Staff Report of August, 1976 and the current stockholders list of the 12 regional Federal Reserve Banks show this same family control.

Thu, 01/12/2012 - 00:20 | 2057317 WonderDawg
WonderDawg's picture

You are a fucking idiot. Just because YOU don't know who owns the Fed, doesn't mean other people don't know. Check out BB's link, it spells it out quite clearly.

Do a little research before you open your mouth and you'll be less likely to get bitch slapped with the truth.

Thu, 01/12/2012 - 02:38 | 2057498 Non Passaran
Non Passaran's picture

Haha, excellent, thanks for replying on behalf of many a reader here!

Thu, 01/12/2012 - 01:05 | 2057389 Calmyourself
Calmyourself's picture

Thanks MDB big green for ya!  Much better effort than your last couple, satire but not too much.

Wed, 01/11/2012 - 18:38 | 2056349 bankonthebust
bankonthebust's picture

I hit the green arrow for ya. That made me laugh. I like to laugh.


Wed, 01/11/2012 - 19:07 | 2056470 NotApplicable
NotApplicable's picture

Why, he's even proposing solutions now.

Serious troll, ftw!

Wed, 01/11/2012 - 18:41 | 2056362 SheepDog-One
SheepDog-One's picture

'Bernanke is serving YOU!'....a big shit sandwich.

Wed, 01/11/2012 - 23:53 | 2057268 francis_sawyer
francis_sawyer's picture

The BULLS see exactly what the doctor that does your colonoscopy sees...

Nothing much else to see when your head is buried that far up your a55

Wed, 01/11/2012 - 22:20 | 2057053 euphoria
euphoria's picture

MDB: You sure are one dedicated troll

Wed, 01/11/2012 - 18:42 | 2056296 ArgentoFisico
ArgentoFisico's picture

Little Panic in half of the EU: The german bullion sellers (the best ones, as VAT is much lower there) have already finished their "quotas" of silver, platinum and palladium they can ship to other EU countries... as of january 10 !?!!!!!

Take a look of the type of message they mail you when you try to buy from their online shops:

Wed, 01/11/2012 - 17:03 | 2055996 Sudden Debt
Sudden Debt's picture

If I close my eyes and press my eyes with my thumbs, I see breasts surrounded by stars!

Wed, 01/11/2012 - 17:12 | 2056048 Cpl Hicks
Cpl Hicks's picture

I'm going to try that but with breasts pressed against my eyes.

Wonder what I'll see, or feel?

Wed, 01/11/2012 - 17:37 | 2056154 cossack55
cossack55's picture

Thumbs....with chewed nails.

Wed, 01/11/2012 - 23:57 | 2057276 RockyRacoon
Wed, 01/11/2012 - 17:14 | 2056058 SilverIsKing
SilverIsKing's picture

What do you see when you don't close your eyes and you press your eyes with your thumbs?


Wed, 01/11/2012 - 17:22 | 2056093 GMadScientist
GMadScientist's picture

An ophthalmologist.

Wed, 01/11/2012 - 17:38 | 2056156 moonman
moonman's picture

Leprechauns riding skittle shitting unicorns

Wed, 01/11/2012 - 17:41 | 2056165 Yen Cross
Yen Cross's picture

 That was rich! +1

Wed, 01/11/2012 - 17:21 | 2056088 GMadScientist
GMadScientist's picture

I'd rather open em and surround myself with stars' breasts.


Wed, 01/11/2012 - 18:11 | 2056242 Jolly.Roger
Jolly.Roger's picture


Wed, 01/11/2012 - 18:25 | 2056289 Cheesy Bastard
Cheesy Bastard's picture

No, it doesn't.  Clambake?

Wed, 01/11/2012 - 17:06 | 2056012 Yen Cross
Yen Cross's picture

" DANTES INFERNO " , comes to mind. These ass hat traders are tying to " out perform" , yesterdays PONZI guidance, that get's lowered on a whim! 

  What about debt /GDP? What about swaps > LTRO EFSF IMF OIS? This picnic Just gets more " MUS- TURD" / lack of  " KET-SUP"!!!

Wed, 01/11/2012 - 18:43 | 2056370 SheepDog-One
SheepDog-One's picture

Everyone is now 'bullish' simply based upon the assumption the FED will step in and bail out their bets! And thats ALL!

Thu, 01/12/2012 - 03:47 | 2057534 snowbaall
snowbaall's picture

The bulls are bullish because they know Ben Bernanke will bail them out.

Fortunately, Bernanke's ass smells like roses.

Without QE, the markets would be at zero.

Plus we'd be paying less than a buck for a gallon of gas.

The deflationary pressures are that extreme.

Wed, 01/11/2012 - 17:07 | 2056025 alien-IQ
alien-IQ's picture

what's a fair PE multiple for a bankrupt nation?

Wed, 01/11/2012 - 17:13 | 2056052 Prairie Fire
Prairie Fire's picture

probably 13-15x

Wed, 01/11/2012 - 19:23 | 2056542 Rainman
Rainman's picture

Make it as fair as you like...with or without FAS 157

Wed, 01/11/2012 - 19:28 | 2056564 kaiserhoff
kaiserhoff's picture

How quickly we forget.  That WAS a tipping point.

Wed, 01/11/2012 - 17:10 | 2056037 slaughterer
slaughterer's picture

The above is coming from someone who was gloating just a few months ago that he was "99% certain" we were heading for a double-dip recession.  

Wed, 01/11/2012 - 18:40 | 2056197 Zero Govt
Zero Govt's picture

God bless the economics profession ...blowing with the wind since 1,000 BC, never seeing the hurricane about to hit until it blows away their consensus averaging charts

Wed, 01/11/2012 - 18:44 | 2056376 SheepDog-One
SheepDog-One's picture

Right, we didnt get the recession, we just skipped right over that and went to 100% debt/GDP depression bankruptcy. 

Wed, 01/11/2012 - 19:04 | 2056458 Imminent Crucible
Imminent Crucible's picture

I think Rosenberg is still 95% certain we're heading for recession. His comments were directed toward the markets, not the economy. He was asking the rhetorical question, "Is there anything positive we can say about markets?"
His conclusion: "Well, P/E's have been lower, but they're not insanely optimistic any more."

That's hardly a reversal of his position.

Wed, 01/11/2012 - 17:10 | 2056039 Prairie Fire
Prairie Fire's picture

I'm selectively bullish on a few cdn companies. Even some tsx-v. The american situation is different. There's something about all these data points that doesn't translate into real life. All I can see in 2012 is Obama sucking the aids infected cocks of about 40 million welfare idiot assholes until they come votes on his face. Interesting times down there. When you watch those videos of black snap card holding inbred fanatical consumers stomping each other to get at a new pair of air jordan 'nigger up' shoes it's hard to feel any sympathy for them. In the end you just know Obama will get down on his hands and knees and personally suck and fuck these people like they've never been fucked before. And before the door closes behind him at the whitehouse he'll kick them out without even letting them shower. I don't know what happens to all of you guys that don't let Obama suck you off. Maybe you'll all get a consolation teddy bear or a cupcake. It's a tough one.

The only 'long term investment' I'm making is in Saskatechewan. Regina and Moose Jaw to be specific.


Wed, 01/11/2012 - 17:17 | 2056072 Yen Cross
Yen Cross's picture

Wecome to China! Better yet!   ( Welcome to the #'s game).   What doesn't work this week, will be up/down graded next week, to fit within a profile. 

   The TRUE unemployment rate in the United States is 18 %.

Thu, 01/12/2012 - 01:55 | 2057458 prains
prains's picture

prairie i don't think i'm alone in saying Rankin Inlet sounds more like your speed, seriously please consider a permanent move there, the fresh air will do you good.

Wed, 01/11/2012 - 17:13 | 2056055 i root for that...
i root for that fat jersey governor's picture

he is hedging his "reputation" here in case something happends contradicting to what he said earlier.

Wed, 01/11/2012 - 17:16 | 2056068 Mugatu
Mugatu's picture

Market has consistently confounded bulls and bears.  Everytime everyone gets bullish, the market gets slammed, and everytime everyone gets bearish and the market goes up.  

I sense that the vast majority of the investment community is jumping on the bull train right now.  That means we have less than 2 weeks left in this up move.  

This market is like the Seinfeld episode where George finally tires of everything going wrong and decides to do the exact opposite and magically his life flourishes.  Just when you feel a bullish feeling coming over you, sell short. 

Wed, 01/11/2012 - 17:18 | 2056076 Yen Cross
Yen Cross's picture

Hence the  Aud/Usd. The bath water is getting luke warm though!

Wed, 01/11/2012 - 17:23 | 2056094 dcb
dcb's picture

I think the analysis is wrong. I think it's hft money end of repo 105 , and the hft's want to bring in the dumb money. I have no problem buying at all but I like a good entry point, and four weeks of up, well above and good entry trend point isn't something I am going to follow. I've done that before dn when the boys sell off I get screwed. So I'm let some stuff ride, and wait things out. in the past montyh emerging markets have gone from 36.50, to 39.50 today.  that's a good gain for the time. plus we had a huge ass gap in emerging markets up that should fill. the s and p 500 god only knows, because it's so fucked up. the rest of the world sell off three to four days, and the s and p doesn't even do a day? Huh. Please. David is old fashioned, and like most pundits wants to use logic, but tha't now what runs the market anymore.

plus the market is heading almost vertcal, which is also

Wed, 01/11/2012 - 17:24 | 2056100 Yen Cross
Yen Cross's picture

 Bill gross? The Iguana of the bond world is discussing ( high risk) ?

Wed, 01/11/2012 - 17:26 | 2056112 Chappy
Chappy's picture

Doesn't anyone take profits anymore?  You would think there woiuld be some selling pressure at some point.

Wed, 01/11/2012 - 17:28 | 2056123 alien-IQ
alien-IQ's picture

Selling gets you placed on the terrorist watch list. Most people trying to avoid that.

Wed, 01/11/2012 - 17:49 | 2056185 Yen Cross
Yen Cross's picture

FUCK THAT SHIT! Be your own man, and read between the lines!  All these guys coming home from war want FREEDOM! The public supports them!  American Spring!!!

Wed, 01/11/2012 - 17:46 | 2056178 Yen Cross
Yen Cross's picture

 It's hard to set a " Stop Loss" , On " Nest Eggs"!

Wed, 01/11/2012 - 19:13 | 2056497 AbelCatalyst
AbelCatalyst's picture

Look at the daily volumes and run for the hills.

Pricing happens on the fringes and can be manipulated to some degree (it's like someone coming into a neighborhood and over paying for a mc mansion - all the house prices go up but the gain is a mirage).

HFTs are doing the same thing but the core is hollowing out - volumes are dropping, which means liquidity is drying up, which means the fringe buying is reaching its limits, which means the endgame is upon us...

Watch the volumes it will tell us everything we need to know!!

Wed, 01/11/2012 - 22:26 | 2057071 Ned Zeppelin
Ned Zeppelin's picture

>75% of market volume is computers batting the ball back and forth waiting for a human to be dumb enough to ask for a game. The smart people are long gone. The half a brain people are also finally gone. Money trapped, forgotten or merely neglected and languishing in equity allocations in 401ks is the only thing resembling a human presence in the market.

Wed, 01/11/2012 - 17:31 | 2056130 Hober Mallow
Hober Mallow's picture

P/Es are low because the market knows thay are artificially-fiscally propped, with no substantial deleveraging going on, temporary in their nature. Actually P/Es will become exceptionally high at current prices once the house of cards implodes, which will happen later this year.

Wed, 01/11/2012 - 18:23 | 2056287 kaiserhoff
kaiserhoff's picture

Yes.  What would P/Es look like with normal interest rates and wage pressure?  Wait until Obummer Care takes another chunk out of everyone's ass.

Wed, 01/11/2012 - 17:31 | 2056133 TheSilverJournal
TheSilverJournal's picture

It seems like the market is ramping on QE3 hopes. The incoming Fed Presidents are setting a dovish tone.

 The New FOMC members are Cleveland Fed President Sandra Pinalto, Richmond Fed President Jefferey Lacker, Atlanta Fed President Dennis P. Lockhart, and San Francisco Fed President John C. Williams. Lacker holds hawkish views, while the other three, Lockhart, Williams, and Pinalto are doves.

Recently, Williams and Pinalto seemed in favor of more easing. Neither explicitly said that the Fed needs to buy more bonds to push the central bank’s balance sheet beyond the nearly $3 trillion in securities it currently holds. But both made clear that they supported the Fed’s prior attempts to juice the economy and that the employment picture will take years to fix.

The first test of the new mix of FOMC voting members will be in two weeks. Ultra low 0% rates have already been promised until mid 2013 and operation twist is also in progress. With tightening being out of the question, we will have wait to see if the new board sees further easing as a solution to speed up the economy.

Wed, 01/11/2012 - 17:33 | 2056136 Dr. Engali
Dr. Engali's picture

So if the Hedge just turned 3 and Tyler has been a member for 2 years and 33 weeks, who or what filled that gap for the other 19 weeks ?

Wed, 01/11/2012 - 17:36 | 2056151 Irish66
Irish66's picture

that didn't occur to you 2 days ago?

Wed, 01/11/2012 - 18:07 | 2056229 Dr. Engali
Dr. Engali's picture

I never paid attention to Tyler's profile.

Wed, 01/11/2012 - 18:54 | 2056406 slewie the pi-rat
slewie the pi-rat's picture

it's a great read! 

Read Books Online Free: Fight Club

rosie is good here, and uses 'flashing green light' for the bullishness of TPTB to feed the markets "government mixed juice" as silver is bid $30.02!

take yer silver and flee!!!  flee!!!

Wed, 01/11/2012 - 18:59 | 2056428 Contra_Man
Contra_Man's picture

Thought he and ZeroHedge was bought and recently purchased by the My mistake. lol

Wed, 01/11/2012 - 20:02 | 2056659 Schmuck Raker
Schmuck Raker's picture

That's funny. Don't know why somebody junked you.


@Dr :ZH started out on a different server thingy, I imagine that's got something to do with it.

Wed, 01/11/2012 - 18:27 | 2056306 baby_BLYTHE
baby_BLYTHE's picture

3 years counting the blogspot site preceding this one

Wed, 01/11/2012 - 17:34 | 2056143 RSDallas
RSDallas's picture

I think David just made a call to the upside.  Interesting.  I just got back from Home Depot where I had a hard time finding a parking space.  It was like a zoo, in the middle of the day on a on a Wed.  Go figure.  Who knows maybe those dollars are beginning to trickle through the mainstream economy?  Hold your breath and squeeze tight. 

Wed, 01/11/2012 - 17:49 | 2056187 oddjob
oddjob's picture

Most likely its gift return traffic.

Wed, 01/11/2012 - 17:52 | 2056193 Yen Cross
Yen Cross's picture

 I assume your comment is based on " Beige Book"?

Wed, 01/11/2012 - 18:11 | 2056243 RSDallas
RSDallas's picture

No sir, it wasn't returns.  I have no doubt that we have and are facing some severe structural issues relating to our economy.  I have wondered though, from time to time, if the main stream media and certain blogo spheres haven't been overstating how strained the consumer actually is, despite the unemployment numbers.  The reason I say this is that the malls, restaurants (fast food and sit down), home improvement stores, liquor stores, wall-mart stores, target stores, to name a few seem to always be busy here in Dallas, Texas. 

Wed, 01/11/2012 - 19:59 | 2056641 bnbdnb
bnbdnb's picture

I didnt even get all the way to the end of your comment and I had already concluded you lived in the south central part of the USA.

Wed, 01/11/2012 - 23:03 | 2057179 RiverRoad
RiverRoad's picture

It's all those folks not paying mortgages anymore who are keeping the economy going, god-bless 'em.

Wed, 01/11/2012 - 18:06 | 2056228 RobD
RobD's picture

Try stopping by at 6am when they open. Used to be you would see 4 or 5 contractors gearing up for the day, all lined up at the contractor checkout, now most of the time I'm the only one there.

Wed, 01/11/2012 - 18:47 | 2056389 SheepDog-One
SheepDog-One's picture

Really? Im across the street from an HD, I count 23 cars.

Wed, 01/11/2012 - 19:02 | 2056449 KingdomKum
KingdomKum's picture

All 23 belonging to employees  .  .  .  

Wed, 01/11/2012 - 21:11 | 2056858 Schmuck Raker
Schmuck Raker's picture

"I think David just made a call to the upside."


Read it more carefully, rather than skimming.

Wed, 01/11/2012 - 22:32 | 2057086 donsluck
donsluck's picture

It's the liquidity of a nation of squatters.

Wed, 01/11/2012 - 18:39 | 2056225 Contra_Man
Contra_Man's picture

Markets Aren't Allowed To Be Markets. 

  Never before have we been faked out by creative mis-accounting to a level like this in modern financial history.  The fake "E" in the fake P/E Ratios are/is an imaginary illusion for us all (not) to see... until one fine day when all "seems" swell.

     Why even bother to play in this sandbox you ask?

Wed, 01/11/2012 - 18:07 | 2056230 yogibear
yogibear's picture

The Bernake and the fed's aim is to keep the increasing bullish attitude going forward. Just loads of public pension funds counting on 8% annual returns for their survival. Burnanke and the fed will do everything possible to keep everything inflated.

Wed, 01/11/2012 - 21:10 | 2056850 Bear
Bear's picture

I think that everything (history, current trends, BB statements, dovish FED) all point this way but I think that the FED will make one more push before QE3 to prove to the world that it is indeed a creditable institution before it prints us into oblivion. One more dip then off to the races with spigots open wide to 'prevent serious deflation'. Buy AU on the next serious FED-inspired selloff ... it will be the last.

Wed, 01/11/2012 - 18:22 | 2056285 rsnoble
rsnoble's picture

LMAO, SPY 110 million today?  The PPT can easily manipulate a market at these levels.  It will take much higher volume to get a selloff of course everyone here probably knows that.  So who's gona start the selling and get yelled at by the FED??  My opinion is this will collapse upon itself when one of the main players holding this overpriced piece of shit in thin air realizes just how fucked things are and decides to get out first to protect their own sorry asses.  Then it's a stampede.  Right now I think Ben has several men in black heavily armed at the back door entrance of every big institution.

Wed, 01/11/2012 - 18:23 | 2056288 rsnoble
rsnoble's picture

Oh and btw many people say there is still no PPT.  Even though it's mainstream news now. LMAO.

Wed, 01/11/2012 - 18:38 | 2056319 Contra_Man
Contra_Man's picture

PPT is now under the NY FED's ESF (Emergency Stability Fund) - the Plutocrats' hedge fund of choice don't ya know...

Dictatorial Power Without Oversight

Wed, 01/11/2012 - 22:33 | 2057094 donsluck
donsluck's picture

Is there any other kind?

Wed, 01/11/2012 - 18:35 | 2056335 RiverRoad
RiverRoad's picture

The staring contest in Europe boils down to the Tobin Tax yea or nay.  That would solve the Euro sovereigns' problems big time, maybe even keep their heads on their shoulders.  So how bad do things have to get in the UK before they cave?  And will all this play out in time for Obummer's reelection? 

Wed, 01/11/2012 - 18:43 | 2056369 gmak
gmak's picture

It seems to me that P/E multiples can only expand if credit can expand.

Wed, 01/11/2012 - 19:01 | 2056444 Contra_Man
Contra_Man's picture

until a debt ceiling is reached, one day.

Wed, 01/11/2012 - 19:15 | 2056509 Sweet Chicken
Sweet Chicken's picture

Can someone please suggest a good book to help me teach my friend about the eventual and inevitable collapse of all FIAT currencies to have ever existed?!?! He simply feels that all the economic gurus and talking heads and YES the Bernanke coudldn't possibly causing something like this or worse PLANNING it.

Serious suggestions only please.

Wed, 01/11/2012 - 20:18 | 2056673 RiverRoad
RiverRoad's picture

Seriously.  Try the Bible:  "The last shall be first and the first shall be last."  Happens all throughout history.

Wed, 01/11/2012 - 20:50 | 2056779 jimmyjames
jimmyjames's picture

Can someone please suggest a good book to help me teach my friend about the eventual and inevitable collapse of all FIAT currencies to have ever existed?!?!


Gold wars--Ferdinand Lips..

Thu, 01/12/2012 - 02:54 | 2057514 dalkrin
dalkrin's picture

Fiat money inflation in France - Andrew Dickson White

When Money Dies - Adam Fergusson

Currency Wars - James Rickards

Thu, 01/12/2012 - 10:07 | 2058001 Sweet Chicken
Sweet Chicken's picture

Thank you!!!!

Wed, 01/11/2012 - 19:26 | 2056549 RobotTrader
RobotTrader's picture

Best to teach your friend how to read the tape instead.


U.S. Dollar still going up, Treasuries still well bid, commodity prices subdued, and stocks continue grinding up higher.

Poor Rosie was caught flat-flooted again.

Every day, he stares at the monitor and scratches his head.

"How did I get it so wrong?"


Thu, 01/12/2012 - 00:40 | 2057327 ebworthen
ebworthen's picture

RobotTrader - I was wondering where you were, thought you would be up top.

Yes, dollar up, Treasuries well bid, etc.

Why?  Euroinfluenzazostergurddebtcontagion.

Euro down = Dollar up (run for Uncle Ben's rolled bills log fort!).

Greek, Italian, French bonds up/German, U.S. bonds down (% wise, hide that cash where there are no barbers of Seville!)

Gold Up (the one, the only, true asset valued by all cultures for millennium upon millennium).

Low volume Equity fluffing and asset stashing ("What the hell?  Let's bid 'em up and see what happens?).

Sure, buy Technology stocks, at least until right before HP, Dell, Intel, TI, Corning earnings come out.

Sure, buy Financials, just dump them before Greece defaults and the HFT algos do a "Ctrl $XXX$" at 27% profit levels in the blink of an eye.

Chipotle!  Oh yeah man, and Starbucks and Apple, just run before earnings in Q3 or debt ceiling debate #3 or Romney/Obama fireside chats.



Thu, 01/12/2012 - 00:43 | 2057357 AC_Doctor
AC_Doctor's picture

I knew that RoboRoach would scurry from his cracks to post in the name of insanity...

Wed, 01/11/2012 - 19:26 | 2056554 chump666
chump666's picture

It's not that bullish out there.

Wed, 01/11/2012 - 20:02 | 2056651 RiverRoad
RiverRoad's picture

'Specially not after the Goldman croupiers grab all the chips off the table....

Wed, 01/11/2012 - 20:05 | 2056671 chump666
chump666's picture

check news feeds. Japan...speechless

2359 GMT [Dow Jones] Japan's November current account surplus falls a steep 85.5% from a year earlier to Y138.5 billion yen, worse than a 74% decline tipped in a poll by Dow Jones and Nikkei.

Forget EZ debt crisis...Japan will be headline news now.

Asia markets neg on this

Thu, 01/12/2012 - 00:46 | 2057361 AC_Doctor
AC_Doctor's picture

There are huge amounts of downside in the Chinese, Canadian and Aussie real estate bubbles.  The whole world is going to feel intense and prolonged pain and suffering.

Wed, 01/11/2012 - 19:33 | 2056575 chump666
chump666's picture

...cause a perfect storm will hit credit markets once War + US credit down grade + Greece leaving the EU + spring riots in EZ + oil inflation destroying company profits.  could all happen at once

and China...must not forget them.


Wed, 01/11/2012 - 19:48 | 2056619 s2man
s2man's picture

I'll disagree with the housing and credit markets going bust.  Look at any credit chart and see we have not reduced credit, but mearly stopped increasing it.  They are still being held up by the equity, USD and TSY bubbles.  Once those bubbles lose their bouyancy, they will all sink.

And then, as all rush to gold for safety, we will see the biggest, baddest bubble ever.  Enjoy the ride.

Wed, 01/11/2012 - 19:50 | 2056624 lemosbrasil
lemosbrasil's picture

There is a similar wedge pattern in dec-jan/2010 and now dec-jan/2012. In this case, whats gonna happens is a hard fall between 8 and 20%

The movement of VIX with MACD  and RSI DOWN divergences reinforces this scenario. VIX is on the hard support and Dow is on the hard resistance.

See here:

Wed, 01/11/2012 - 20:12 | 2056657 deflator
deflator's picture

The bulls say, "everything is working as it should" and anything you say to the contrary needs to be marginalized. As long as the bulls are, "somewhat insulated" from the general bottom up decline then everything is working as it should.

 Central planning is great if you are in the, "somewhat insulated" crowd and a bitch if you are in the marginalized one. I like to listen to mainstream media on both TV and AM radio as I am somewhat masochist(I have to be to keep seeking the truth everyday as painful as it is) and I heard yesterday that the only reason young people support Ron Paul is because he supports the legalization of marijuana. Clearly an overt marginalization of both Ron Paul and any young person that supports him.


Wed, 01/11/2012 - 20:16 | 2056700 RiverRoad
RiverRoad's picture

What the "somewhat insulated" crowd is saying is going to come back and bite them in the butt; Independents are the majority in this country.  Romney/Dewey phooey.  We're headed for a Truman-esque election.  Go Ron Paul.

Wed, 01/11/2012 - 20:22 | 2056714 deflator
deflator's picture

 The, "somewhat insulated" crowd is somewhat insulated because they are connected to the government, the Treasury or the Federal Reserve one way or another. How are they going to be bitten in the butt?  Anyone solely relying on the private sector for a living is completely uninsulated and generally on the losing end of those trades the bulls are so triumphant about.

 I can answer my own questions btw.

Wed, 01/11/2012 - 22:42 | 2057128 RiverRoad
RiverRoad's picture

Fear not, Deflator.  The irony is that the marginalized have the numbers in this game which is about to be played out; they just don't know it yet.  Stay tuned to the MSM; they bear watching.

Wed, 01/11/2012 - 20:22 | 2056709 banksterhater
banksterhater's picture

He's using "OPERATING" ? THAT IS LEGAL FRAUD ACCOUNTING, I'm done reading any of this asswipe's crap. He's been going downhill for a year.


Rosebud- use the CRESTMONT P/E= close to 20 now, hist ave= 15.

Wed, 01/11/2012 - 20:25 | 2056718 Yen Cross
Yen Cross's picture

 Larry Kudlow is " Killing Himself" . The 4.2 Trillion has been ~ flowed into banks that lended the $ to CORPS> Hence the Emerging Markets! The next tranche ( QE-3) will flow into the same equity markets!


Wed, 01/11/2012 - 20:30 | 2056736 deflator
deflator's picture

 The Bullz are patting  themselves on the back about how successful QE2 was and how much interest the U.S. government has collected from the Federal reserve from the bonds they bought? wtf? Isn't that deflationary? huh? The U.S. government is "making money"? and everything is working as it should?

Wed, 01/11/2012 - 21:14 | 2056876 Cone of Uncertainty
Cone of Uncertainty's picture

Hey bulls, check out the Baltic Dry Index you dumb fucks:

-5% and collapsing like a mofo.

Thu, 01/12/2012 - 00:07 | 2057294 Yen Cross
Yen Cross's picture

 Been there done that! A smart Boy YOU ARE THOUGH! tHE BALTIC DRY TENDS TO LAG! 

  I hope this portal helps you. I'm giving you a "Jump Start".

Wed, 01/11/2012 - 21:23 | 2056905 adr
adr's picture

The average earnings multiple is worthless. You have very few corporations fairly valued. There are thousands of corps one month away from bankruptcy and quite a few trading at stratosperic valuations. The market is trying to tell us we would be better off with one corporation per sector. Apple for tech, Google for search, Facebook for social, Walmart for retail, McDs for fast food, BAC for banks, etc. Everything would be so simple. Either that or it is totally realistic to give a corporation losing millions a $2 billion market cap with no hope of profit ever.

Wed, 01/11/2012 - 22:33 | 2057095 lunaticfringe
lunaticfringe's picture

No more sweating for me bitchezz. I am turning in Corzine if he doesn't declare the 1.2 billion he stole from MF Global investors as 2011 income.

Wed, 01/11/2012 - 23:26 | 2057222 Bear
Bear's picture

Good move you'll get that 10% finders fee!!

Wed, 01/11/2012 - 22:56 | 2057163 GnomeAlone
GnomeAlone's picture

quack quack

Wed, 01/11/2012 - 23:48 | 2057263 AC_Doctor
AC_Doctor's picture

Any way to short the huge bubble called the Canadian real estate market?

Thu, 01/12/2012 - 00:10 | 2057300 Yen Cross
Yen Cross's picture

 Canada / Australia   Imagine that one?  That's right up there with KIWI/ Aussie

Thu, 01/12/2012 - 00:38 | 2057344 ebworthen
ebworthen's picture

The flippant answer would be to invest in Detroit.

You could short the Canadian banks and Pension funds as I remember Leo saying they were both hip deep, but timing is everything and I'd hate to see the Bernank burn you on that by bailing out Canada in some way when he bails the U.S. market with his buckets of taxpayer cash (yes, more).

Thu, 01/12/2012 - 00:49 | 2057365 Gamma735
Gamma735's picture

Everything that has a beginning has an end.

Thu, 01/12/2012 - 01:06 | 2057385 Yen Cross
Yen Cross's picture

 Ffresh off the press! Hildebrand is hosting a EU get together.      Sarkozy & Strauss-Kahn are guest speakers.

   Merkel and Lagarde are "Tasting"the wine...


    The theme is Berlusconi "bunga bunga"!!!!

Thu, 01/12/2012 - 01:21 | 2057416 KickIce
KickIce's picture

They're counting on the printing press to go (remain in) into overdrive.

Thu, 01/12/2012 - 01:32 | 2057431 chump666
chump666's picture

Alright it's all f*cking Europe next 5hrs or so.  Auctions Italy and Spain...ECB hands tied on the rate cut, otherwise Germany will take a dump on Greece.  Markets are dying to sell short, Chinese inflation/stagflation nightmare on.  Wall Street sets the bull traps.

bets on the PIIGS yields blow out next 10hrs.

And i buy some vodka on Friday night, Polish I might add...damn fine.

Thu, 01/12/2012 - 01:42 | 2057442 steveo
steveo's picture

FREE SALE TITS ok got your attention yet
FREE!   BPT great analysis!

Thu, 01/12/2012 - 05:32 | 2057603 I got the Bull ...
I got the Bull by The Horns - HELP's picture

P/E mean nothing, only when an economy is improving. I don't see firm proof - yet.

As this Bull states:

"The key going forward will be how earnings perform"


And Operating, excludes the abnormals and extraordinaries. In this economy, anything is possible.

Thu, 01/12/2012 - 06:40 | 2057636 I am Jobe
I am Jobe's picture

China Snubs Geithner on Iran Oil, Japan May Cut

How can USA have someone like Timmy the Taxcheat in the position like the UST? Dumb and stupid.

Thu, 01/12/2012 - 07:30 | 2057657 I am Jobe
I am Jobe's picture

IMF executive Lipton sees no hard landing for China
Buy the junk Sheeples of USA. Yeap stack em high and fill your life's with crap.

Do NOT follow this link or you will be banned from the site!