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Peak Complacency And Peak Leverage

Tyler Durden's picture





 

Despite all the chatter about negative sentiment, and its all priced in, we couldn't help but notice three little signals of concern with regard the real state of people's perceptions of risk. The implied volatility of the S&P 500 is at or near its lowest in the last two years; the difference between the implied volatility of the S&P 500 (forward-looking) and the realized volatility (backward-looking) is its lowest in almost nine months - and at or near the peak complacency levels of last summer; and lastly the size of debt balances in margin accounts at broker-dealers indicates that leverage is at or near its 2008 and 2011 peak levels. Seems like this will not end well, but then again - Ben's got your back and it's all priced in.

 

Complacency:

 

and Leverage:

 


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Fri, 07/20/2012 - 13:52 | Link to Comment fireangelmaverick
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Peak Complacency And Peak Leverage versus Peak Printing. This is going to be Epic!
Fri, 07/20/2012 - 14:11 | Link to Comment dereksatkinson
dereksatkinson's picture

COT report shows where the speculators are. 

Fri, 07/20/2012 - 14:33 | Link to Comment fireangelmaverick
fireangelmaverick's picture

I feel a Peter Jackson Trilogy coming.

Lord of the Printing : The Fellowship of the Bankers

Lord of the Printing: The Two Flations

Lord of the Printing: The Return of the Gold backed Currency.

 

Fri, 07/20/2012 - 21:56 | Link to Comment Herd Redirectio...
Herd Redirection Committee's picture

Peak US Dollar World Reserve Currency

Regarding LOTR, what about a standalone sequel: "The Knobhead" (not sure who plays Geithner)

Fri, 07/20/2012 - 14:35 | Link to Comment hedgehog9999
hedgehog9999's picture

No Peak Printing as of yet..... economy and markets need to hit the dumpster in this climate of increasing oil and food prices without QEIII , that will hold the manipulators hands for a while..............

Fri, 07/20/2012 - 13:53 | Link to Comment otto skorzeny
otto skorzeny's picture

Dear God-I don't ask you for much-BUT WHEN SHOULD I BUY TVIX?

Fri, 07/20/2012 - 13:58 | Link to Comment hedgehog9999
hedgehog9999's picture

Fucking Yesterday, TVIX hit a low...

Here is my parable from another thread on the blatant manipulation of the last few days:

They is a combination of Central banks and their banking agents. It is not really that hard, all you have to do is target an instrument or two where everything flows from, eg the VIX futures, the $USD futures and the SPX futures. Since you don't care about making or losing money, just putting a constant bid or sell of small size (to minimize cost) on the market you are supporting, you just do it overwhelming every sale or buy that comes your way.....of course , this only works when the selling or buying pressure no matter how strong is relatively contained.

Picture a strong dike on a dam where there is a few holes and superman is working overtime plugging any leaks that come along, now imagine these leaks keep increasing in frequency and strength, superman now needs a helper which he does not have, now picture if you will black kryptonite which is oil increasing in price like crazy and food prices going through the roof threatening chaos in a few countries, the kriptonyte will weaken Superman and eventually the dike will collapase giving way to a major flood forcing everyone to bail out thus increasing the flow of water.

The flow is so strong that at some point (with a weakened  Superman's help) the flow goes backwards , much like a Tsunami clearing the beach prior to the next bigger wave which comes roaring right after, at this point Superman's efforts are pointless as he's too weak to do anything at that point.

There you have it in layman's terms.......

By the time it is all said and done the SPX should be limping around 1100 if we are lucky..... 

 

Fri, 07/20/2012 - 14:00 | Link to Comment The Big Ching-aso
The Big Ching-aso's picture

 

 

I feel like Barney has my back.

Fri, 07/20/2012 - 14:03 | Link to Comment Dr. Engali
Dr. Engali's picture

Yeah you better watch that.Word has it he has heavy investments in Pfizer.

Fri, 07/20/2012 - 14:58 | Link to Comment mirac
mirac's picture

does Phizer own KY JELLY?

Fri, 07/20/2012 - 15:32 | Link to Comment Dr. Engali
Dr. Engali's picture

Viagra. It wouldn't urprise me if he was heavily invested in J&J too.

Fri, 07/20/2012 - 17:00 | Link to Comment Tijuana Donkey Show
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Frank? You better not, he's a married man.

Fri, 07/20/2012 - 14:00 | Link to Comment Dr. Engali
Dr. Engali's picture

July 27th my son.

Fri, 07/20/2012 - 14:01 | Link to Comment otto skorzeny
otto skorzeny's picture

why then?

Fri, 07/20/2012 - 14:00 | Link to Comment magpie
magpie's picture

Doesn't the saying go if you ask for the price...you can't afford it ?

Fri, 07/20/2012 - 14:06 | Link to Comment indianajohns04
indianajohns04's picture

The decay on TVIX is too great and the market is too irrational for it to be a good play ever. (Anyway UVXY actually tracks what it's supposed to as opposed to TVIX and it's ginormous premium over NAV.)

Fri, 07/20/2012 - 14:15 | Link to Comment Al Huxley
Al Huxley's picture

I think maybe you're looking at it the wrong way - probably looking at the price range and saying 'well it was over 100 last August's crash and it's 3.46 now, so if the market tanks again it will go back to 100'.  The appropriate way to look at is it to say 'I can't fucking believe that they've cooked up an instrument so blatantly fraudulent that it could go from over 100 to less than 4 and to have declined almost 50% since March, even though the underlying index it purports to track has actually risen in that period.  What an outstanding example of blatant fraud on the part of the FIs that cook this shit up, midway carnies, street thieves and crack dealers have a stronger moral and ethical code than these fuckers'.

Fri, 07/20/2012 - 17:28 | Link to Comment I should be working
I should be working's picture

Betting on volitility is a fool's game. I have seen so many people recommend it since March or was it February?

Sat, 07/21/2012 - 06:31 | Link to Comment Colonial Intent
Colonial Intent's picture

To use a name that was a nazi war criminal wanted for murdering  american prisoners in ww2 is really sick dude.

Fri, 07/20/2012 - 13:55 | Link to Comment Piranha
Piranha's picture

Now let us have peak volatility

Fri, 07/20/2012 - 13:56 | Link to Comment mrktwtch2
mrktwtch2's picture

never touch tvix..its only good for a one day pop or 2 at most the daily decay kills it..its is good to short though..

Fri, 07/20/2012 - 13:58 | Link to Comment otto skorzeny
otto skorzeny's picture

VXX or which one?

Fri, 07/20/2012 - 14:02 | Link to Comment timbo_em
timbo_em's picture

I just bought me some of that volatility this morning. Let's see what this summer has to offer.

Fri, 07/20/2012 - 14:05 | Link to Comment rsnoble
rsnoble's picture

In the money from a few moments ago on calls taking advantage of the Fed's big green fuck stick. Not sure if we'll get the float up all afternoon or not we'll see. It wouldn't be surprising. Low volume=easy manipulation.

Fri, 07/20/2012 - 14:08 | Link to Comment geewhiz190
geewhiz190's picture

corporate preferreds and munis are being called at record amounts.  new issue borderline junk debt is being engorged by the public at a rate i've never seen in over 30 years at the trade to replace what was called.  the mad dash into paper of dubious quality with maturites in the next century with yields at all time all time record lows...when this thing breaks it's going to be a real mess.  it's nuts

Fri, 07/20/2012 - 14:09 | Link to Comment _ConanTheLibert...
_ConanTheLibertarian_'s picture

Peak Banksters YEAH

Fri, 07/20/2012 - 14:08 | Link to Comment Xibalba
Xibalba's picture

why the hell is Tracebook green?? 

Fri, 07/20/2012 - 14:10 | Link to Comment Alex Kintner
Alex Kintner's picture

Trees will always grow higher.  America will always win their wars. Microsoft will always make a profit. Always...

Fri, 07/20/2012 - 14:12 | Link to Comment pleseus
pleseus's picture

Time to buy volatility. Summer rally in equities is over. Reality now sets in. Coming Food price spike will limit the amount of QE the world does. Markets will not like no QE in the near term.

Fri, 07/20/2012 - 15:05 | Link to Comment Village Smithy
Village Smithy's picture

While leverage may be at peak levels, how much more is available and how much Euro money will flow in. If this market doesn't do anything to scare people soon then we may have a ways to go up yet. Compared to Europe today isn't scaring anyone, so far anyways.

Fri, 07/20/2012 - 14:14 | Link to Comment Temporalist
Temporalist's picture

Re Batman movie shootings:

 

BAM!  POW!  ZING!

 

...too soon?

Fri, 07/20/2012 - 14:16 | Link to Comment Al Huxley
Al Huxley's picture

Yes, way too soon.

Fri, 07/20/2012 - 14:17 | Link to Comment Squid Vicious
Squid Vicious's picture

sad news, but the bright side is that it most likely didn't cull the best and brightest - midnight showing of garbage du jour....

Fri, 07/20/2012 - 14:20 | Link to Comment otto skorzeny
otto skorzeny's picture

ironic-people that pay to watch mindless violence are themselves the victims of mindless violence

Fri, 07/20/2012 - 14:21 | Link to Comment Temporalist
Temporalist's picture

Peak stupidity

Fri, 07/20/2012 - 14:20 | Link to Comment Yen Cross
Yen Cross's picture

 How can you have complacency without participation? Thats rather Oxymoronic!  Can someone please redirect that ( CNBS),Mandy  to the " RED LIGHT" district!

Fri, 07/20/2012 - 14:19 | Link to Comment Meesohaawnee
Meesohaawnee's picture

Peak Manipulaton

Peak Algos.

Peak Fraud.

Fri, 07/20/2012 - 14:31 | Link to Comment yogibear
yogibear's picture

Nothing like a lot of fear to cange that. Time for Goldman to do their dirty work and rake in the money before the year's end.

Fri, 07/20/2012 - 14:36 | Link to Comment no life
no life's picture

Zero-sum game, pal..

Fri, 07/20/2012 - 14:39 | Link to Comment ebworthen
ebworthen's picture

Calm before the storm.

Fri, 07/20/2012 - 14:41 | Link to Comment ThunderingTurd
ThunderingTurd's picture

Peak fixed income prob desk employment

Fri, 07/20/2012 - 15:29 | Link to Comment Hype Alert
Hype Alert's picture

What's to worry about?  If things are bad, Ben will print.  If things are good, Ben will print.  Inflation or he'll be replaced.  Now, why is that?

Peak Printing.

Fri, 07/20/2012 - 16:48 | Link to Comment Remington IV
Remington IV's picture

more shoe ads ???

Fri, 07/20/2012 - 18:37 | Link to Comment pragmatic hobo
pragmatic hobo's picture

peak everything!

Sat, 07/21/2012 - 12:49 | Link to Comment Grand Supercycle
Grand Supercycle's picture

As mentioned numerous times, market intervention has only postponed the inevitable.

Despite short and medium term market vacillation - the following remains a constant :

>> USDX monthly indicators [ie big picture] continue to warn of significant long term USD upside. (thus EURUSD & AUDUSD etc bearish)

>> SPX monthly indicators [ie big picture] continue to warn of significant long term downside for equities which will be worse than 2008.

http://www.zerohedge.com/news/2012-12-24/market-analysis

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