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IceCap Asset Management: The Tip Of The Iceberg... Is Straight Ahead; Here Is What Lurks Below The Surface

Tyler Durden's picture


From IceCap Asset Management's most recent monthly letter:

October 2011 - The Tip Of The Iceberg

It’s certainly not lost on us that IceCap’s corporate logo is an iceberg. Besides being a cool logo we do feel the iceberg is a perfect mirror of global investment markets. On the surface, attractive opportunities will always exist and appear achievable for everyone. However the real risks within the market are normally underneath the surface and should they tilt the market in one direction or another, financial markets, just like the iceberg can be turned upside down.

How exactly is the global iceberg looking today? Are the risks above water as many of the big bank investment advisors proclaim or are they below the surface? At IceCap we are confident that one day soon, we will wake up to see the most spectacular investment opportunities of our lifetime, until that day however we must remain very mindful of the risks below the surface.


We have to say, the continuous unbridled enthusiastic cheerleading for the stock market to go higher has us puzzled. Yet, many of investment leaders from the big box banks and mainstream media continue to shout about buying the dip, proclaiming stocks are cheap as well as touting the merits of the one-size-fits-all balanced fund for every investor for every occasion. While we genuinely believe that today this view will lead many to financial despair, it’s important to recognise why this view is shared by the hands that hold the savings for many people in the World. For starters, many of the industry’s largest players simply do not have the product available nor the expertise available to properly guide the average person during these dramatic economic times. Either the cognizance to understand the realities of 0% interest rates, money printing, and a risk free investing game for banks is missing, or they firmly believe actions by central banks and governments will save us all.


Our chart on page 2 shows the most significant risks for financial markets today. As we plunge deeper into each risk, we’ll explore the likely outcome and how we expect financial markets to perform.

On the other hand, considering that in 2008 all major countries showed no hesitation whatsoever with pushing the average investor and tax payer under the bus, in return for saving their beloved banks – expecting a similar response this time around, maybe isn’t that crazy after all.

If this is the view and reason for the super-enthusiastic bulls, then we see your point. The slightest potential for a solution to Europe will certainly provide markets with joy for a few minutes. Then, once this joy wears off you can prepare for America’s venture into LSAP (which we discuss on page 8), which is certain to launch stocks into outer space.

Should neither of these developments occur, then we’ll need to see dramatic improvements in the global economy and funding markets for banks before the next bull market resumes.

The question we do ask however, is how long, economically, and politically can the bailouts continue? From a pure mathematical perspective, the exact point in time when there really is too much debt has already passed for some and is on the horizon for others. Meanwhile, from a pure social perspective the exact point in time when people finally shout “we can’t take this anymore” has certainly arrived in Athens and Rome. And unless the perceived inequalities improve, suspect social unrest will likely grow further – maybe even onto Wall Street.

Much more inside the full letter (pdf)



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Mon, 10/24/2011 - 19:41 | 1806411 yabyum
yabyum's picture

Deck chairs for all!

Mon, 10/24/2011 - 19:45 | 1806420 Mactheknife
Mactheknife's picture

Hmmmm....I wonder which HFT bot is going to blink first and start the upcoming dump?

Mon, 10/24/2011 - 19:57 | 1806457 anony
anony's picture

I'm not as in wonderment about which one, but WHEN it begins the dump.

My Shorts are strangling my ballsack.

Mon, 10/24/2011 - 20:12 | 1806497 Herd Redirectio...
Herd Redirection Committee's picture

Aaah yes, "leverage induced testicular trauma", I believe it is called.

Check out the latest from the Capital Research Institue "On Behalf of the 99%":

"...the media for the most part is completely in the dark, at best, or complicit, at worst.

The point being, people don’t really know WHAT they want, in terms of reform.  Thats why the ‘Change’ gimmick worked so well for Obama.  Because people KNOW they want change, they just want someone to tell them what will be changed, and why that will be better.  Herman Cain’s 9-9-9 plan is the exact same.  People aren’t worried about the specifics, they just know they want change.   Well, I am here to help steer the herd a little, as it were.

What is needed is the banning of usury, an end to the Federal Reserve System, and a return to Sound Money, for starters."

Mon, 10/24/2011 - 20:59 | 1806615 Ahmeexnal
Ahmeexnal's picture

give the sheeple "abortion rights", "the right to live beyond your means", "legalized drugs", "dancing with the starz" and they care not who issues their money nor who rapes them for generations without end.


but fear not my little padawans, for that huge iceberg will soon melt thanks to Al Gore's "glob-AL WAR-ming".

maybe he meant...GLOBAL WARMONGERING!

Mon, 10/24/2011 - 22:04 | 1806819 Everyman
Everyman's picture

Boy I hate it when this guy is right!  But you are correct.


"Please nothing with substancial values or endeabours for me. please."


When they said "Tune In Turn ON and Drop Out", they weren't talking about Dancing with the Stars!!


Whqat a weird strange country we live in.  Strange and wonderful would be good, but just strange and mediocre.......

Tue, 10/25/2011 - 05:48 | 1807360 the tower
the tower's picture

I never understood how a guy like Al Gore can be on the board of Apple and therefore be co-responsible for producing one of the most polluting phones.. can't change battery, can't change memory, devices are not repaired but thrown away... that sorta tells you he's full of shit, right?

Global warming is just a fact though, every idiot can understand that, what bothers me is the people that want to make money out of it, and not solving it.

Tue, 10/25/2011 - 07:11 | 1807426 jeff montanye
jeff montanye's picture

yeah.  make them have those babies and jail all those getting high on non-booze.  that's got to help.   and it's sure to save money.  jedi master.

Mon, 10/24/2011 - 20:20 | 1806519 tkoski6600
tkoski6600's picture

My nuts are feeling the squeeze of the noose, as well.  But I have begun doubling down with extra cash I saved.  My fear is that cash will run out before the market decides to turn!

Mon, 10/24/2011 - 20:39 | 1806575 mtomato2
mtomato2's picture

"The markets can stay irrational longer than you can stay solvent."

Believe it.

Mon, 10/24/2011 - 21:11 | 1806678 Mactheknife
Mactheknife's picture

That 1258-60 S&P is some major resistance...with this lite volume...ain't gonna happen.

Mon, 10/24/2011 - 22:05 | 1806823 Everyman
Everyman's picture

Fat lady has been singing her lungs out and there are helluva lotta forks.


But the HFTs and thelying media and theat Fucking Cramer BUY BUY BUY!!!!

Mon, 10/24/2011 - 20:07 | 1806490 Hugh G Rection
Hugh G Rection's picture

silver lifeboat, bitchez

Mon, 10/24/2011 - 20:12 | 1806499 Long-John-Silver
Long-John-Silver's picture

and Gold life jackets.

Mon, 10/24/2011 - 22:55 | 1806951 The Heart
The Heart's picture

And Platinum panties for those whose ball sacks are uptight.

Mon, 10/24/2011 - 20:26 | 1806536 knukles
knukles's picture

Might be especially appropriate what with the Vatican's (Yes, that same Vatican, oh history of men, sola fida, usury and the twin taxes to the king and heaven, that Vatican.) newly found interest in the Financial Well Being of the Peasantry whom she so effectively enslaved for centuries.

And no, this is not meant as an anti-religious statement... for matters of faith are best left to the individual alone.  But best church remain aloof from finances just as science and state from religion... all's so much better when one remaining focused upon one's own fucking knitting.
This is a frormula for ensured social upheval.  Bring in the "Church".
Funnily enough, given the spiritual progression from sin through guilt, salvation, redemption, attonement, and forgiveness culminating in freedom, is this not an underhanded way for an element of the Illuminati to seek redemption by seemingly siding with the peasantry whilst assuring a seat at the throne of the New World Order?  And I'm not even a conspiracist...

Everything in its final analysis is nipping at the throats of the middle classes.  The "we's" of the world.  Nothing is as it seems.

Careful, Alice.  That Rabbit Hole is Mighty Deep©

Mon, 10/24/2011 - 20:41 | 1806579 mtomato2
mtomato2's picture

I've always liked you, Knuck.  Now I like you even more.


Mon, 10/24/2011 - 21:27 | 1806727 Use of Weapons
Use of Weapons's picture

If we say that we have no sin, we deceive ourselves, and the truth is not in us...If we confess our sins, he is faithful and just to forgive us our sins, and to cleanse us from all unrighteousness...If we say that we have not sinned, we make him a liar, and his word is not in us.

The Vatican is enacting a doctrine that it should have given up. It managed to break these basic rules many times over, not least in the whole 'fucking small boys and knowing about it', but moving priests / bishops to different dioceses. As such, it has broken the mandate it was given, and has given itself to the opposition; not even the opposition that counts, but boring spreadsheets and profit. It is lost.

Sum quod sum - And the Angels & Devils I have met are too focused on staying here, and enjoying their roles. None could engage, and all too full of their mission and purpose to join a war so long in coming...and as such, all become human as the time comes. Wings fall, and we cry into the abyss.

Mon, 10/24/2011 - 23:00 | 1806961 merizobeach
merizobeach's picture

I hope the Vatican goes all-in to the derivatives market.

Mon, 10/24/2011 - 22:40 | 1806892 LongSoupLine
LongSoupLine's picture

I sense we may be "overanalyzing" this whole Vatican statement.  Perahaps they're just doing "God's work" and saying Goldman needs to run everything on a "central basis".  If that's the case, it's a non-event since that's what's happening already.

Tue, 10/25/2011 - 07:05 | 1807419 infinity8
infinity8's picture

the vatican's "justice and peace department" - hilarious. J.F.C.

Mon, 10/24/2011 - 20:11 | 1806495 Long-John-Silver
Long-John-Silver's picture

Deck chairs for all!


Lets just hope the cushions can also be used as flotation devices.

Mon, 10/24/2011 - 20:17 | 1806513 yabyum
yabyum's picture

But, Damn that water is cold!

Mon, 10/24/2011 - 20:25 | 1806535 Zero Govt
Zero Govt's picture

hitch the cushions to Bernankes, Trichets and Mervyn Kings puckered gobs, those central bankster windbags have been blowing bubbles for 4 years may as well do something useful with 'em 

Mon, 10/24/2011 - 19:43 | 1806414 Bumblebee Tuna
Bumblebee Tuna's picture

My grandfather always told me if we dug a hole right through the earth, we'd end up in China.  I guess that same logic works for icebergs.

Mon, 10/24/2011 - 19:50 | 1806435 Mr.Sono
Mr.Sono's picture

thats a big ass iceberg.

Mon, 10/24/2011 - 22:29 | 1806877 harlanaladd
harlanaladd's picture

And they forgot one item that belongs underwater:  US mortgages.

Mon, 10/24/2011 - 19:58 | 1806437 X.inf.capt
X.inf.capt's picture

good call, tyler...

yep, one icebreg, straight ahead....

they see it...

BofA moving assets to be covered by the FDIC...

3 month tresury yields at 0.00%...

the vatican calling for a world bank...

fed is out of bullets...


they see it, its coming within hours, at the latest, days, maybe a few...


Mon, 10/24/2011 - 20:06 | 1806485 Herd Redirectio...
Herd Redirection Committee's picture

The Vatican... Geez, when Organized Crime is calling for the Centralization of power, that must mean they have all the dominoes in place, i.e. all their people occupy the top positions currently.

Mon, 10/24/2011 - 22:25 | 1806867 I did it by Occident
I did it by Occident's picture

"BofA moving assets to be covered by the FDIC..."


what's that called, moral hazard induced risk transfer?  or socialism for the rich, capitalism for the rest.  something like that.

Mon, 10/24/2011 - 19:51 | 1806438 topcallingtroll
topcallingtroll's picture

Famy French I believe it was...too lazy too look it up, but for the average investor a passive, efficient portfolio with historical volatility within the range where you can sleep at night is the best way to go. Check out dimensional funds if they are still around and read about their portfolio construction.

If you are a doomer hedge it with 10 to 15 percent gold.

Nobody knows what is going to happen, not even doomers. Real alpha is so rare it is best not to bother looking for it.

What if europe has a century of shell gas?
What if the usa achieves conventional energy independence with oil and gas fracturing in ten years?

Mon, 10/24/2011 - 19:58 | 1806458 Temporalist
Temporalist's picture

What if you everyone won the lottery?  What if people's tears turned into diamonds?

Mon, 10/24/2011 - 20:02 | 1806472 Rynak
Rynak's picture

pink unicorn vomit projectile

Mon, 10/24/2011 - 20:23 | 1806527 HD
HD's picture

"What if people's tears turned into diamonds?"

Well, prozac sales would drop like a rock, and onion sales would soar...

Mon, 10/24/2011 - 20:41 | 1806581 topcallingtroll
topcallingtroll's picture

What if?

Are there any doomers out there who believe there is zero chance of avoiding a major crash in the next twenty years?

Some people are speculating with their portfolio it is 100 percent certainty that a horrific crash will happen in the next ten years.

Mon, 10/24/2011 - 21:13 | 1806685 technovelist
technovelist's picture

Me, me, call on me!

Yes, there is zero chance of avoiding a major crash in the next 20 years.

Wait. Was that supposed to be a rhetorical question?

Mon, 10/24/2011 - 22:08 | 1806831 Everyman
Everyman's picture

What question?  That was a "statement int he form of a question".


Give me lying bankers for $100, Alex!

Mon, 10/24/2011 - 22:48 | 1806929 DoChenRollingBearing
DoChenRollingBearing's picture

Excellent post top!

Tue, 10/25/2011 - 00:25 | 1807113 GoinFawr
GoinFawr's picture

I know! (!?)


Woody Harrelson: "This... this feels weird; are you sure this is legal?"

Tommy Lee Jones: "I dunno... it's fun though isn't it?"

Mon, 10/24/2011 - 19:56 | 1806453 Uncle Sam
Uncle Sam's picture

Here's an interesting take on an EU pre-approved list of banks that will be allowed to fail, and those that won't:

We need Reggie to get the list! (Or maybe he already has it . . . Sometimes he's late to the party, but history has shown the party doesn't start until he gets there!)

Hedge the unknown, created by the uncaring, planning the unthinkable, accordingly.

Mon, 10/24/2011 - 20:00 | 1806463 SwingForce
SwingForce's picture



Tomorrow, Russell 2000 goes up another 3.25%        U R an ASOL !

Mon, 10/24/2011 - 20:01 | 1806469 Use of Weapons
Use of Weapons's picture

No mention of Cthulhu.




Mon, 10/24/2011 - 20:03 | 1806476 PaperBear
PaperBear's picture

The ideal analogy.

Mon, 10/24/2011 - 23:37 | 1806483 Stuck on Zero
Stuck on Zero's picture

Interesting thing about the iceberg in the illustration.  It is unstable as shown.  It will roll over on to its side.  Simple theory on flotation and stability that anyone into ship design will notice.  Is this an omen?

Mon, 10/24/2011 - 20:11 | 1806494 Matt1973
Matt1973's picture

Every talking head is sounding the "all clear" alarm....must be time to get short 

Mon, 10/24/2011 - 20:17 | 1806512 Matt1973
Matt1973's picture

Plausible technical comp to 07-08?


Mon, 10/24/2011 - 20:24 | 1806534 Matt1973
Matt1973's picture

[Still talking to myself]...will the Greek default be the catalist, or will it be "Wednesday's meeting"....evetually Greece defaults...doesn't pay any of its debt...then other PIIGS say "me too".....

Mon, 10/24/2011 - 20:13 | 1806501 Bill D. Cat
Bill D. Cat's picture

I'm a little fuzzy on this " no risk " concept .

Mon, 10/24/2011 - 20:33 | 1806554 knukles
knukles's picture

Try a 3 day treasury bill at -0.003%.

No fucking risk, your money back just about as best of anything guaranteed to do.  No volatility.  
So you get to pay for it. 
You buy the bill at a premium and get par back.
Simplicity incarnate.

Mon, 10/24/2011 - 20:15 | 1806506 deebee
deebee's picture

but look at the pretty blue sky above...

Mon, 10/24/2011 - 20:24 | 1806529 drivenZ
drivenZ's picture

occupy wallstreet? really? you could buy off occupy wallstreet with what goldman makes(used to make) in an hour. hardly a problem. I do like their conclusion though, basically wait out the ridiculousness of the current market. sounds like a good plan to me, if you can't beat em, sure as hell don't join em.  

Mon, 10/24/2011 - 20:25 | 1806537 LawsofPhysics
LawsofPhysics's picture

I like these guys, but even this firm believes that there "will be a solution" and like so many they remain stuck to old GDP models that require infinite growth in a finite world. All things physical people, especially energy, everything else will be noise, no matter how rich everyone is about to become. Sucks really, life used to interesting with everyone competing and real winners and losers and reasponsible behavior was rewarded. In any case, the competition made it worth it. Boring world indeed.

Mon, 10/24/2011 - 20:31 | 1806549 Youri Carma
Youri Carma's picture

Quote from piece above: "The question we do ask however, is how long, economically, and politically can the bailouts continue?

From a pure mathematical perspective, the exact point in time when there really is too much debt has already passed for some and is on the horizon for others."


Exactly! That's why we must: FORCE MAJEURE! – Call Void All Bankster Bogus Derivative Debts!

Because paying off these trough fraud induced debts have become a technical and practical impossibility .

Mon, 10/24/2011 - 21:31 | 1806753 erg
erg's picture

The fiscal equivalent of a weapon of mass destruction. 500 trillion - 1.5 quadrillion. Beyond ridiculous numbers. The world's combined GDP many years over.

Mon, 10/24/2011 - 20:45 | 1806587 chump666
chump666's picture

China lurking at the bottom.  My guess China is actually crashing now, just hard to price it with PBoC and govt having massive FX firepower.   That will be the real shock to the system once the Chinese start to panic and sell everything..

Also the occupy wall street movement is going to get bigger and bigger, globally.

Mon, 10/24/2011 - 21:05 | 1806660 erg
erg's picture

Sounds like a drink of the future.

Yeah...I'll have an implosion on the rocks with a twist.

Mon, 10/24/2011 - 21:07 | 1806671 GrinandBearit
GrinandBearit's picture

The part below the water line should be 10 times the size of the visible part.

Mon, 10/24/2011 - 21:42 | 1806778 Mark123
Mark123's picture

We should have an assinine headline award.... one of the latest from AP:



How about engine of weath re-distribution (Robin Hood in reverse)

Mon, 10/24/2011 - 21:44 | 1806780 Hephasteus
Hephasteus's picture

Who cares if you have customers or income. Just IPO your way to payroll and research and hookers and mal investment.

Mon, 10/24/2011 - 21:54 | 1806803 erg
erg's picture

Ah yes. Dennis Moore. (John Cleese)

Mon, 10/24/2011 - 22:16 | 1806844 chump666
chump666's picture

It begins:

* 0201 GMT [Dow Jones] The private lending crisis in Wenzhou could push the central government to roll out more supportive measures to help small and medium enterprises and ease credit supply in the fourth quarter, Bank of America-Merrill Lynch economists say in a note. The State Council rolled out a number of measures to support SMEs last week, but given September's low M1 growth of 8.9% and M2 growth of 13.0% on-year, "we think there is room for Beijing to ease credit supply in 4Q11 compared to 3Q11," the house says. It notes signs of similar disruption to private lending markets in the city of Ordos in Inner Mongolia, though Wenzhou and Ordos are not representative of China. "Chances of a nation-wide liquidity squeeze are extremely small as Wenzhou and Ordos are unique and the Chinese government is decisive in containing the crisis."


Mon, 10/24/2011 - 22:27 | 1806869 Solid
Solid's picture

That was great erg!

Tue, 10/25/2011 - 00:01 | 1807083 williambanzai7
williambanzai7's picture



Tue, 10/25/2011 - 01:11 | 1807172 Ahmeexnal
Ahmeexnal's picture

I see a juggling panda in that iceberg.

And a couple of 38DD breasts.

Tue, 10/25/2011 - 02:04 | 1807205 GoinFawr
GoinFawr's picture

Hmmm... Ya, juggling with one paw?

Tue, 10/25/2011 - 05:18 | 1807344 Cult of Criminality
Cult of Criminality's picture

My dog was ...until I bought him dog boots because the shit is getting so high on the planet...really I did.

I see he will soon need a boat and shitsuit protection.

Tue, 10/25/2011 - 08:18 | 1807555 ljag
ljag's picture

Since we now know that perception is, in fact, reality, isn't it obvious to all that 'they' are occupuying the wrong place. I am firmly convinced that if 'we' hold the reins of the media, 'we' can convince the sheeple to contemplate whether or not so-and-so should be hung or stoned to death....given ONLY those two choices. Within 6 months, 'we' could have every banker, corporate leader and politician BEGGING 'us' to spare them this fate. All problems would be solved rather Occupy The Media is the new battlecry!

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