Jim Cramer

Presented with no comment...

America may be a service economy but for the sake of tomorrow's NFP let's pretend it isn't. Because if the employment component of the Non-manufacturing (i.e., Services) ISM, which at least in the pre-centrally planned times correlated with the NFP number with an R² of about 0.9, is indicative of what to expect, one can kiss any hopes of a recovery goodbye. Which, of course, is great news! It means the Fed will never pull out and never realize that it is the Fed's central planning and market manipulation that is responsible for the every deeper global economic depression which benefits only stock holders (and traders).

In the case of the five year simple moving average of US real GDP growth, or in other words - true economic growth - all one can say is "off the lows"?

As the markets elevate higher on the back of the global central bank interventions it is important to keep in context the historical tendencies of the markets over time. Here we are once again with markets, driven by inflows of liquidity from Central Banks, hitting all-time highs. Of course, the chorus of justifications have come to the forefront as to why "this time is different." The current level of overbought conditions, combined with extreme complacency, in the market leave unwitting investors in danger of a more severe correction than currently anticipated. There is virtually no “bullish” argument that will withstand real scrutiny. Yield analysis is flawed because of the artificial interest rate suppression. It is the same for equity risk premium analysis. However, because the optimistic analysis supports the underlying psychological greed - all real scrutiny that would reveal evidence to contrary is dismissed. However, it is "willful blindness" that eventually leads to a dislocation in the markets. In this regard let's review the three most common arguments used to support the current market exuberance.

Because sometimes you just have to laugh...

Just as Ben Bernanke's monetary easing program changes with the times (back then he believed it was the Stock that mattered, now it is Flow, but one thing is constant: always moar), so does his computer desktop. And while we know, tentatively, what his preferred computer space looked like three years ago, the times have changed. Behold Ben Bernanke's new and improved PC desktop...

"Earnings are the mother's milk of the stock market," is the oft-repeated anthem of a million marching lemmings; parroting the same phrase come hell or high-water in the dismal hope that they can gather moar assets-under-management, garner moar fees, and make moar TV appearances. However, as the chart below shows, we suspect perhaps given the reality of earnings expectations that the new normal mantra for stocks-for-the-long-term should be - "Central Bank liquidity is the PCP of the stock market."

Perhaps instead of "America, The Brave", a more appropriate description of what the USA has become would be (judging by the following chart) "America, The Dependent".

Erasing Friday's gains (and the well-documented VIX-driven melt-up into the close), S&P 500 futures have opened down 4.5 points (against JPY-carry for now), Treasuries are indicated 4-5bps higher in yield, and Gold is opening down 0.4%. Not in itself a large move but perhaps indicative of some concerns that Hilsenrath is on to something and the punchbowl is being ever so gradually pulled away (though, we suspect it is only a matter of time before this article is spun in a bullish light, suggesting that the Fed still does not have a firm timeline in mind, which by implication is bullish - no news is good news - and much more jawboning has to come before the real tapering talk begins). In the meantime, we are sure the clarion call to Buy-The-Feding-Dip will be heard and in the interest of balance, we offer some insight into 'valuations'.

With NYSE margin debt at extremes once again, complacency at all-time highs, valuations (across equity and credit) frothy, and the cacophony of bullish consensus momentum chasers, it seems the anti-thesis of FDR's speech appears quite appropriate...

Presented with no comment...

Update: we decided it may be an opportune time to remind readers of this particular fact... not opinion, not propaganda, not insinuation. Fact, which apparently has forced a once informative medium, and now purely propaganda infomercial, to stoop so low to be in need of trolling websites to generate incremental eyeballs.

One of the main, unintended consequences of this development to prop up markets at all costs, even if it means removing all logic and reliance on fundamental data, has been the complete evaporation of interest in any finance-related media, forcing the bulk of financial outlets to rely on such cheap gimmicks as slideshows, pictures of kittens, trolling and generally hiring liberal arts majors straight out of school to copy and paste articles while paying them minimum wage, and providing absolutely no insight (and then wondering why the Series ZZ preferred investors will never get their money back, let alone the A round). However, nowhere is this more obvious than in the relentless imploding viewership of once financial media titan, CNBC, which lately has become a sad, one-sided caricature of its once informative self, whose only agenda is to get the most marginal Joe Sixpack to dump his hard-earned cash into 100x P/E stocks, and where according to data from Nielsen Media Research, the total and demographic (25-54) viewership during the prime time segment (9:30am - 5:00 pm) just tumbled to 216K and 40K - the lowest recorded viewership since mid 2005 and sliding.

In yet another example of the massive gap between the American people's perception of what is going on around them (whether by propaganda channels or simply cognitive bias) and the actual reality, Reuters reports that while gun-related homicides are down 39% from the 1993 peak, only 12% of people believe that gun crimes have fallen. Non-fatal firearm crimes declined by 69% to 467,300 in the same period but 56% of Americans believe that gun crime is higher now than it was 20 years ago, the Pew Research Center said its poll showed. The dichotomy between record food stamp usage (and non-employment) and multi-year highs in consumer sentiment comes to mind - we wonder which is more 'real'.

The "predictive capabilities" of Deutsche Bank's amusing permabull strategist Joe LaVorgna are well known to Zero Hedge readers. Just recall that when it comes to forecasting the future, even one Groundhog Phil has a success rate of 71%, or over a standard deviation more accurate compared to Joe "Coin Toss" LaVorgna's 51%. But perhaps there is a way to harness this horrendous track record of being correct about the future precisely half the time. Indeed, as the following analysis conducted by John Lohman proves, predicting NFP payrolls based on simply extrapolating the previous month's number, or for all intents and purposes, "randomly" one month into the future and comparing it to the original actual NFP print, would have led to a smaller absolute median and average error rate than listening to LaVorgna (46 error vs Joe's 56 median error).