Will Bull Madness Continue in 2014?

Where do you think the broad averages will be trading at the end of 2014? Will stocks be in the throes of a devastating bear market?  Or will the Dow be galloping blithely higher, on its way to 20000 and beyond?  Clearly, Wall Street doesn’t seem to care whether the economy remains in a wallow. Shares have moved relentlessly higher despite the fact that GDP growth is stuck in a rut, wages are stagnant, and deflation has come to rule the budgets of states and cities, if not yet Washington. We had thought Obamacare would be the straw the breaks the camel’s back, since it represents the biggest new tax ever imposed on the American Middle class. It also comes at a time when the average American household can ill afford the 25%-or-more annual rate increases that have become a regular feature of the private insurance market.

Incredibly, however, the stock market has continued to ascend, borne aloft by strong corporate profits that have in no way benefited the labor force. Equally astounding is that consumer spending has not collapsed. We attribute this to a shadow economy that exists and flourishes beyond the range of the tax collector.  Professor Edgar Feige, using estimates of currency in circulation both in and outside of the U.S., has estimated its size at $2 trillion. If so, it would help account for the resilience of retail sales, including autos and other big-ticket items, as The Great Recession drags on.

For our part, we’ve grown tired of playing games with the bull. It has been our practice to attempt getting short at Hidden Pivot rally targets of significance. Although these targets have generally worked, accurately catching tradable tops, both pleasure and profits have been short-lived.  Indeed, targets that have taken months to reach give way not in weeks or even days, but in mere hours. This suggests that the bull market begun in March of 2009, far from tiring, is actually picking up strength.  In that regard, please note that Rick’s Picks is on record with a minimum upside projection of 17056 for the Dow — a thousand points above current levels.

Readers?

  • gary leibowitz December 2, 2013, 6:56 am

    The world governments controlled by banksters, and the elite few have devastated our life for centuries. This must stop! How utterly absurd to listen to this drivel. You see a world in chaos, while I see fabulous inventive minds expanding our knowledge of everything. So much so that the last 50 years has accelerated our growth 1000 times more than the combined growth from the last 100,000 years. The next 50 will grow 10,000 times more than all of history combined.

    Life expectancy will double, than double from that, will have almost total control of our brains function and be able to expand its capability far beyond anything imaginable today. Will have more leisurely time, with tasks being done by artificial intelligence. More time to absorb and enjoy what life has to offer. Hunger, pain, suffering will eventually be gone. All this in a dysfunctional political environment. It is ALREADY happening. How can you explain it? Surely we are doomed to revert back to serfdom.

    Does anyone dispute the constant progress towards a more humane society? A capitalist society encourages the expansion of power and with it greed, but it also encourages compassion and empathy. When one peaks the other troughs. And so it goes. You want a perfect world with perfect people? What time period, society, theory, proposal, would have such a thing. Impossible.

    Never mind! Image we had a crash of such proportions that the world markets were reeling from the impact. This took place 5 years ago. You currently carry the sign that says the “End Is Here”, while most pick themselves up and strive to improve and survive. You call that cowardly and dishonest not to concede that we are weak corrupt minded people. Look what our people have done to each and every one of us. Yes we should look but do what we have always done, focus on the future, and never concede defeat. A sorry lot you people are. You will never win. By your nature you can’t win.

    We live in a time and place that all of prior history would deem a naïve impossible dream. We have such comforts, that we can spend vast amounts of time contemplating the world around us. So what do we do with that privilege? Beg for its total destruction. Complain it isn’t already here. Make elaborate suppositions as to how it will end. Not one argument that it is worth fighting for. Not one.

  • David E December 2, 2013, 2:26 am

    I think it is called “David E’s Law.” I catch the worst of every economic event and change. Rick should be monitoring me.

  • David E December 1, 2013, 6:01 am

    I have it on authority that the whole bloody thing is going down before June 1st 2015. Why? Because that is when I’m supposed to get my first Social Security check.

    • Troll December 2, 2013, 1:47 am

      Now that is an exceptional comment, David E! This is called “Murphy’s Law.”

  • gary leibowitz November 30, 2013, 11:12 pm

    Pretty darn confused why we trample on our own. The cold hard facts are that corporations and top 5 percent of individuals have gained more power, and less taxation every single decade going back to the 70’s.

    Yet here we are looking at who has the most crumbs left over. Yes social programs are costly and government pensions are the norm. Why in the world would we fight amongst ourselves when all “you” enlightened people that have uncovered the big lie? You look to destroy your own while allowing the status quo for the people in control. Foolish and playing to their hands. Congrats!

    Yes the easy life of a teacher, sanitation worker, mass transit worker, fireman, and cop is already known. The lines to get such a cozy job was so long that they had to turn away thousands at the doorsteps. The freedom of working in a government position was also know, with no outside political pressure to bear. the pay scale was on par with private workers, and the job attrition was minor. These same jobs and huge benefits were around since Unions became accepted.

    Even if everything I just stated were true, why pick on your own NOW! Could it be that the crumbs are getting smaller? Who has the majority of our money? The groups of people that have a disproportion of crumbs thrown their way?

    5 years later as everyone here is shocked the system is surviving and the owners are thriving. 5 years later and we are still blaming our own kind. Human nature hasn’t changed a bit. Find an easy target, a weak one, and vent till the hostility goes away. During the Civil War when the wealthy could buy their way out of serving the hostility went away after we lynched some blacks. Who’s next?

    • Buster December 1, 2013, 3:21 am
      • Troll December 2, 2013, 1:57 am

        Buster, what are your thoughts on WHO will take over the government? Not on WHO you would LIKE to take over, but who you think will take over.

        What are we going to do? Hang bankers in the streets?

        A thought quite pleasant to most of you on here, I realize, but when do reality and theory collide?

        You guys think I don’t think things through … au contraire … it is many of you who are not thinking about the end result.

        All you guys want is change, giving very little thought whatsoever as to what could possibly follow.

        Change doesn’t necessarily mean, “good.”

        If you want change for the sake of it, and tell me I don’t care so long as it’s status quo, well, that’s just silly, and hardly an argument.

        The system is NOT perfect . . . it sucks, in fact.

        But I have seen nothing here that brings me any confidence that a change will be better.

        You don’t even know what will happen once we have a financial collapse.

        All I know is, that in your opinion, things are bound to improve.

        Yeah, right.

        Save that for the movies.

    • Redwilldanaher December 2, 2013, 1:56 am

      No one is shocked dunsel, they’re disgusted because unlike you they don’t condone evil.

    • Redwilldanaher December 2, 2013, 2:28 am

      Stop spewing bs and read every now ad again…

      The Other America: “Taxpayers Are The Fools… Working Is Stupid”
      Submitted by Tyler Durden on 11/30/2013 – 19:25
      While what little remains of America’s middle class is happy and eager to put in its 9-to-5 each-and-every day, an increasing number of Americans – those record 91.5 million who are no longer part of the labor force – are perfectly happy to benefit from the ever more generous hand outs of the welfare state. Prepare yourself before listening to this… calling on her self-admitted Obamaphone, Texas welfare recipient Lucy, 32, explains why “taxpayers are the fools”…

      “…To all you workers out there preaching morality about those of us who live on welfare… can you really blame us? I get to sit around all day, visit my friends, smoke weed.. and we are still gonna get paid, on time every month…”

      She intends to stay on welfare her entire life, if possible, just like her parents (and expects her kids to do the same). As we vociferously concluded previously, the tragedy of America’s welfare state is that work is punished.

      • Redwilldanaher December 2, 2013, 2:30 am

        Gotta figure a short term shakeout has to be in the on deck circle…

        http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/11/20131129_bears.png

        &&&&&&

        Amazing sentiment picture — lowest percentage of bears in more than 25 years. RA

      • Troll December 2, 2013, 2:38 am

        I am not sure if your comments were directed toward me, Red, but I will assume they are:

        I don’t condone evil.

        At the same time, I don’t condone change for the sake of it.

        If you have some legitimate, alternative plan and can tell me WHO will be in power once a financial collapse takes place . . .

        I’m all ears.

        Until then, you are merely hoping for change, with absolutely no idea with respect to the outcome.

        Say what you want about Gary (and I haven’t defended him very often) but he pretty much nailed it with his post on November 28, 2013 at 9:03

      • Redwilldanaher December 2, 2013, 4:29 am

        Yep, you both must be brilliant to subscribe to that. Obviously you are both supreme power junkies. You crave domination. People have populated the earth, surviving somehow, without the Fed, the banksters and the assorted puppets for all but the last 100 years. I think it can be managed. Nearly every thinking person that lived under totalitarianism abhors it. If you and Gary can’t see how dangerously things are trending then I have little else to say.

        I am struck by the contradictory nature of your own posts over the past month. Go back and read yourself.

        Don’t be afraid, you can conquer your stockholm syndrome.

        It really isn’t that hard to see that the law no longer matters and that there needs to be a reset that avoids the pitfalls of centralization/consolidation along with a criminal takeover of the currency and banking system.

        Seriously, if you two and the others that fall into the same traps do not “get” this, then you are utterly clueless.

        Step 1 is to admit you have a boot licking addiction.

        &&&&&

        End of thread…..
        RA

  • Rich November 30, 2013, 6:40 pm

    FWIW

    MA’s take on the markets has SPX, INDU and YM turning bearish, just when most of US tired fighting the trend

    http://armstrongeconomics.com/wp-content/uploads/2012/03/STKPGSO-11-29-2013.pdf

  • Redwilldanaher November 30, 2013, 5:34 pm

    According to state media the economy is much better tham we think.

    A friend read a story and sent me this comment that was made in response:

    $16 trillion GDP at 2.5% growth rate comes out to $400 billion in growth per year. Take away the trillion bucks the Fed is injecting and you have an economy shrinking by $600 billion (about 4%) per year – a depression. So no, the economy isn’t “much better than what we think” – it’s worse, much worse.

    The problem is that this commenter is 1 out of how many thousand????

    This economy and the propaganda that has accompanied it prove that you can fool most and do it most of the time. The few that aren’t fooled are hopelessly trapped by way of the fooled/fools…

    • Rich November 30, 2013, 6:44 pm

      Monetary Velocity (GDP to Money Stock) at new lows

      http://research.stlouisfed.org/fred2/series/MZMV?cid=32242

      • gary leibowitz November 30, 2013, 11:21 pm

        Rich what exactly does that imply? If the velocity of money is decreasing what does that say about spending and savings, if anything? How can we use that chart to support the notion that corporate earnings and more importantly gross margins are so very high?

    • John John December 1, 2013, 7:34 am

      Red,
      50 years of continuous inflation makes US Government GDP figures worthless on any time frame past 2 or 3 years.

      The New York Daily News gave out an abbreviated reprint of their 11-23-63 issue to commemorate JFK.
      The price on the 1963 issue was 5 cents.
      The price on the 2013 issue it came inside of was $1.

      Schlossman’s Furniture had an ad in the 1963 issue for a 19 piece, 3 room furniture outfit for $159 or $1.50 a week!

      Brookwood developers had a full page ad for brand new homes on 1/4 acre lots in New Jersey for from $15,900 to $19,500.
      A $19,500 2,400 SF home was $900 down and $149 a month!
      Vets could get nothing down!
      So, assuming a 6% RE commission, the RE agent charge on a 300k house today is more than a whole house cost back in 1963!

      A quart of Clan MacGregor was $6.19

      Economists predicted total Research and Development expenditures for the US would be about 20 billion dollars in 1964.

      Broadway show tickets ran from $2.95 to $7.50 in 1963 ads.

      Anyway, between inflation and fudged numbers, it is hard to believe anything the Government claims as far as the state of the economy goes.

      I think they are very close to losing control as economic events assume a life of their very own.

  • John Jay November 29, 2013, 11:09 pm

    If we had access to pension/annuity payout tables we could probably cobble together a chart with a “Death Cross” where Fed QE will have to go parabolic to maintain the illusion that all is well.

    Will we see a two tier system of Immigration to the US as most of the world descends into financial and social chaos?
    Lots of poor people to depress wages and a voter revolt.
    And a select few wealthy heading for the safety of a US Police State to enjoy their ill gotten gains?

    We are definitely in the “Twilight Zone”, and the old rules no longer apply.
    The Government is making it up as they go along.
    An insane financial/social simultaneous equation is working itself out!

    Your guess is as good as mine!

    • Troll November 30, 2013, 12:47 am

      And who, John Jay, will get control of all the drones, smart bombs, ammunition, fighter jets, nuclear missiles and army personnel once we finally get what so many people on this site want?

      There’s a can of worms.

      &&&&&


      Take a few deep breaths, Steve. And it wouldn’t hurt to stay on topic.
      RA

      • Buster November 30, 2013, 11:27 pm

        Hopefully, someone who isn’t hell bent on totalitarian control to keep their form of creeping genocide & wealth concentration enforced.

        U.S. generals now take action to watch Obama:

        http://www.wnd.com/2013/11/u-s-generals-now-take-action-to-watch-obama/#KjBH7herxL0pKV51.99

        This goes out to Gary, too, with his increasingly ridiculous support for what everyone & his dog can see is Government on the wrong side of the people, but not just in the US, across the globe & in particular in every land with a central bank run by all the same global cabal.
        Really, ‘careful what you wish for’ is no rebuttal to those who’ve lost all hope in a system that surely cannot be more transparent in it’s self serving purpose. But I suppose things are going to have to get even worse before all of us can see what the alternatives really are.
        What we have is certainly not an option for the majority who just want to live, as we’ll sadly see soon enough.

      • Troll December 2, 2013, 1:35 am

        Well, I am sorry, Rick, but I just don’t think there is enough thought behind the “logistics” should such an event take place.

        It is not as though GATA and Peter Schiff are going to magically take over the government.

  • gary leibowitz November 28, 2013, 9:03 pm

    United States by any measure you come up with is ranked in the top 5 nations of the world. Here we are whining that the crash and devastation isn’t already here. How it’s a sham that out leaders hasn’t already given up with trying to prop up a weakening failed world policy.

    Try living in Zimbabwe where they have a very long standing President and a policy that hasn’t changed for decades. Very understood policies where you can’t complain about social program giveaways or handouts.

    I can guarantee you that if/when we do come on very hard times you will be among the first to thank the lord that it occurred, but the last to admit how much you missed it, and that nothing will ever take its place. If this nation is as broken and corrupt as it comes, what country or model political system would you adapt after the devastation? Any thoughts on that? Just get rid of what we have? I guess that’s enough for now. Lets not bother to think ahead. A new dawn will magically lift us up, something like the second coming.

    What an amazing group we have here. Deconstruct what we have since it is corrupt to the core. Reconstruct without any new or known foundation? Interesting problem.

  • mario cavolo November 28, 2013, 5:36 am

    In fact, skipping spiritual beliefs whatever they may be, everyone here would welcome the Pope to join Rick’s board after reading his spot on paper blasting global capitalism. Well worth the read…Cheers, Mario

    http://www.businessinsider.com/the-pope-on-the-financial-system-inequality-money-2013-11

    • Kibitzer November 29, 2013, 7:23 pm

      Not everyone, Mario! And it is not worth reading IMHO. You really miss the boat here I’m afraid. Your name “Mario” leads me to believe your lineage is probably Italian and therefore highly likely a Catholic and you blindly follow the missives of the Pope. Or not…

      Pope Francis is a remarkably unimpressive Pope with an obvious lack of knowledge in the area of Capitalism having lived his entire life in a socialistic society. “Attacking capital will solve nothing. It will cause capital to withdraw and create even fewer jobs.” – Martin Armstrong. Also, as Anne Barnhardt correctly observed, “Pope Francis is a Peronist-Fascist which is a particular subset of Marxism in South America that believes that the state should control the economy and redistribute wealth.” He falls into the category of “useful idiots” according to Lenin himself.

      How can one possibly think he knows anything about the global banking system and it’s massive derivatives exposure. He is probably just as knowledgeable about properly lighting a cigar and choosing the appropriate liquor to enjoy with it. I don’t think he knows any more about guiding the Catholic church or the world’s economy than Obama knows about guiding our American Economy. Both are wrong on all accounts so far, but they do share like opinions on abortion and same sex marriages.

      The final commandment of the Ten Commandment is “You shall not covet your neighbor’s house; you shall not covet your neighbor’s wife, nor his male servant, nor his female servant, nor his ox, nor his donkey, nor anything that is your neighbor’s.” Francis and Obama are both “coveting” the earnings of the 1-2% as well as your and my investments and will use their marxist platforms to confiscate it if they can.

      This Pope should stick to offering up prayers for his flock and I suggest he follow the lead of all Popes before him and bend a knee (Genuflect) to the Lord (which he inexplicably refuses to do). You can see this for yourself in his First mass in the Sistine Chapel, at the consecration of the Chalice at 53:10 into the video. https://www.youtube.com/watch?v=sdWZWDqhCdA#t=23 The rubrics call for both hands to be flat on the altar, which lends a great deal of physical support to the priest, and for there to be servers on each side who can assist with the genuflections by holding the elbows of the priest. That is one of the reasons the servers are there – to physically assist the priest if needed.

      Even Pope Benedict, frail to the point of citing his frailty as a reason for his abdication, fully genuflects to the knee, as every priest MUST do as a non-negotiable rubric of celebrating the Holy Sacrifice of the Mass. See him do it here at 1:20:21 during this year’s (2013) Ash Wednesday service. https://www.youtube.com/watch?v=rviYNeMNJLI

      Summary: Both Francis and Obama, are woefully unfit for their positions and not to be taken seriously.

      “Cheers”.

      PS. Apologies for the double post (the other is still awaiting moderation)

  • Troll November 28, 2013, 1:09 am

    Because the GDX has now charted out at negative numbers (A is 55.25 and has hit a bearish entry), I am going to call a temporary halt to the slide.

    Having said that, people are finally standing up to the environmental destruction that is part and parcel of the mining industry http://action.sumofus.org/a/mining-costarica/5/4/?sub=fb

    So what about those who follow us, DK? Our kids, nephews and nieces?

    Are you invested in miners? You certainly are concerned with Japan! I can only hope you are equally as responsible (environmentally speaking) where gold and gold mining is concerned.

    So an economic “cleansing” is good.

    But it’s still okay to mine for gold?

    Who cares about the environment?

    Oh right, there is that thing with Japan you brought up (off topic).

    Kill us fast or kill us slow.

    But damn, gold is really important, isn’t it?

    • Troll November 28, 2013, 1:30 am

      In a roundabout way, what I am saying is, we are no better than the people we complain about daily.

      If you own one bar of gold, it’s displaced (or annihilated) at least one species, and probably more.

      I am not innocent of this.

      I am making a simple point.

      You don’t like what people do to the economy.

      I don’t like what people do to the environment.

      But, I have bought into “the game,” like the rest of you and I am guilty as charged.

      At least I can admit as much.

      • gary leibowitz November 28, 2013, 3:57 am

        Just look no further than all of Africa. Genocide, starvation, disease, outside influence to control resources and subjugate the people. Happening since I was a kid.

        We can’t hold a torch up high and proclaim we follow and know the moral truths. There is no easy answer. Start with being true to yourself before trying to tackle higher issues. That’s why I don’t see things as easily as others here do. I view the world and its history as an outside observer. That way you are not caught up in emotional bondage when it affects you. We will never have an absolute perfect world. Not a bad thing to strive for one, but it has to be put in perspective. We can’t over simplify and categorize everything that happens as pure evil or sainthood. We are but human. If we are allowed to expand on our vices like greed, corruption, and hate, we can become the thing we most despise. Easy to judge others when you yourself were not placed in that situation.

        That is why I see problems getting resolved and as a human race we still manage to advance. I am pretty darn sure the next debacle will be very painful. I just don’t view it as the end of civilization, but rather a beginning of a new chapter.

      • Cam Fitzgerald November 28, 2013, 1:54 pm

        “Just look no further than all of (Europe). Genocide, starvation, disease, outside influence to control resources and subjugate the people. Happening since I was a kid”.

        Sorry…I could not resist, Gary. I appreciate what you are trying to say with regards to Africa and there is certainly truth that it has experienced some bad years in select locations where the crisis has been pretty serious….not a lot different than what has been seen in Russia or China or Europe in the past century though. We need to keep that in mind before writing off the whole continent. It is a lot more peaceful over here than you can believe though. Surprisingly peaceful in most places actually. It is just the nature of the news to fixate on the problem zones but it sure as heck is not the whole continent or every one of the 54 countries on the continent. If you don’t yet know it, Africa is the source of the strongest new growth in consumerism anywhere. It is the go-too place for opportunity at a time when the rest of the globe is withering from credit and debt exhaustion and much of it is booming right now. We really need to get an update on Africa just so people can appreciate that there is still growth opportunity available somewhere on the planet and especialy at a time when depression looms in Europe and China teeters on the edge of a credit crisis.

      • gary leibowitz November 28, 2013, 8:04 pm

        Cam, I wouldn’t classify African plight with Europe, China, or even Russia. They all have stable governments, centralized rule and law, irrigation systems, etc… Russia had its satellite countries breaking away, and there has been ongoing wars with ethnic groups. Still not even close to compare Africa to other nations in regard to abuses. Long, long, long term abuses.

        I visited three different countries on three different occasions. My first visit was Batswana, which is considered one of the wealthiest African countries there are. I also visited Zimbabwe and Tanzania. While not claiming to have lived the experience I do know what has been going on for decades. Aids, well water poisonings, some of the most brutal dictators on the planet. Massive genocide, feudalism, stripping their natural resources for outside interests.

        Just look at the Human Development Index which ranks countries life expectancy, literacy, education and standard of living. The best was Seychelles with a world ranking of 46 to Republic of Congo ranked 168th. The majority of African nations was listed from 100 and above. Not exactly a great showing. In fact Zimbabwe wasn’t even ranked since they couldn’t get sufficient government data to place them. I would guess it would rank well below the Republic of Congo. For my stay there the people were generous, kind, and dirt poor. One of the most corrupt nations living under one dictator for a very long time. Hyper-inflation with their currency being a joke. Absolutely a beautiful and mineral rich country that could easily turn its economy around overnight.

        If the problems going on there were in central Europe today there would be a world outcry for something to be done to stop it. Are you really suggesting that African people are seen the same as Westerners? Would it take millions of people to be slaughtered before any news clip airs here?

      • gary leibowitz November 28, 2013, 8:18 pm

        The ranking of countries mentioned: USA ranked 3, Russia 55, China 101. This was as of November of 2012. Most all of the bottom ranked countries is African. Since China is so huge with rural and urban cities so far apart in almost every category, I wouldn’t know how to approach their true ranking. They do have a very stable government with little or no large scale violence. Standard of living and longevity of life should rank them in the top 75 countries. (IMO).

  • gary leibowitz November 27, 2013, 6:41 pm

    Anyone using the 10 year note to project future market conditions? The current move is at critical levels technically speaking. If it breaks down from here it might be an old classic head and shoulder move, but since that pattern can be seen even when it never materializes I suspect we are going to breakout soon.

    We are in a nice channel right now, with seasonality and some blowout earnings, especially in the Q’s. SPX of 1820 as the first stop is very doable, and soon. I even think that 1900 could hit within another month or so. Using Fibonacci and Elliott Wave there is some short term cycles that are due to bottom by mid-December. that suggest the next correction should happen between now and mid-December. There is also a chart showing the last 2 big long term waves peaked in a 5 year cycle. this suggests that we have perhaps 4 more months to peak, assuming we follow the prior two patterns.

    • Troll November 27, 2013, 11:25 pm

      I am using a 13 year trend line on the Dow :

      2000 top to 2007 top and connecting the dots.

      It’s up to you if you think a line will stop the Dow (and the markets) in its tracks.

      http://oi39.tinypic.com/2mhe6wo.jpg

      • mario cavolo November 28, 2013, 2:32 am

        Draw in the bottom line Troll and we’ve got a rising wedge which will more likely squirt up to the upside of the wedge at its apex. Considering the global picture that’s most likely…

      • gary leibowitz November 28, 2013, 3:40 am

        For the SPX the wedge doesn’t work. The upper boundaries far exceeded the pattern. As for the Nasdaq it is in a clear upward channel all the way back.

        So much for easy answers. The DOW current line drawn is a pretty interesting one. Hitting almost exactly where we are today. I suspect it goes a lot higher breaking yet another easy chart pattern.

        The crashes of 2000 and 2008 were terrorism and implosion from mortgage backed securities. Not exactly a normal end to a bull run. I wouldn’t base the whole history on that pattern to continue.

      • Troll November 28, 2013, 7:02 pm

        If memory serves, Mario, I believe rising wedges are bearish. Not that a wedge means much of anything when everyone can see the same thing (including the line I mentioned). I just thought it was an interesting point of reference.

        Happy Thanksgiving to All.

    • Redwilldanaher November 28, 2013, 5:49 am

      Wrong, they were the result of manipulation and the bubblenomics, that you so desparately crave, that make it all possible. Look at assets held by Fed in this run and then comeback and tell us how organic it all is.

  • DK November 27, 2013, 9:59 am

    Sorry for being off topic, Rick. You were entertaining the idea of writing a piece of Fukushima. The situation is dire and there are some very odd things happening off the coast of California.
    I’m not one to give much weight to coincidences:

    http://www.nytimes.com/2013/11/25/us/with-extra-anchovies-deluxe-whale-watching.html?_r=2&

    very disturbing

    &&&&

    We’ll get to Fukushima, and soon, Daniel. I didn’t want to have that discussion during Thanksgiving week. RA

    • DK November 27, 2013, 10:04 am

      addendum

      i fear the 2 might be connected. many scientists are warning of a massive plume headed towards, specifically, southern california, ongoing until 2030.

      thoughts and prayers out to those directly affected and those in the path.

    • Andrew Gutterman November 27, 2013, 2:06 pm

      DK,

      There is a more mundane explanation:

      http://www.nature.com/news/2003/030110/full/news030106-13.html

      Do a Google search on Anchovies California global warming

      Andy

    • Chuck November 28, 2013, 1:58 am

      I’m not sure the situation of the gulf oil spill was ever fully resolved either….on a bright side, maybe this is what is actually going on with the gold prices….
      http://news.goldseek.com/GoldSeek/1385573765.php

      • Cam Fitzgerald November 28, 2013, 3:53 am

        When golds time to shine returns, Chuck, it will be the futures markets, ETF’s, equities and paper trades that are going to be key to pumping prices back up again. It is because that is where all the easiest money is made with the fewest premiums and fees and there is the most liquidity and depth. All the nonsense about paper versus physical will be proven worthless the moment futures traders move gold in a way that is favourable to the gold camp again. That is when they will shut up about “paper” gold once and for all and you won’t hear a peep from those fools again until after the gold cycle finally ends.

      • Chuck November 30, 2013, 12:42 am

        well, perhaps so, but in the end – unless you the gold in hand, you may not have anything of value. how can you ‘own’ paper gold, when there isn’t enough gold to cover the paper positions. it will be musical chairs, and unless you own physical, you will not have a chair to sit in.

      • Chuck November 30, 2013, 12:43 am

        ‘unless you HAVE the gold in hand’…..

      • Cam Fitzgerald November 30, 2013, 6:14 pm

        You are assuming there is not going to be enough gold to go around. There is always enough at the right price. As long as you are prepared to pay what is asked to hold it. Futures contracts can be played to infinity though. Delivery is not required to make money. You must realize most people just want to make a buck and keep moving as the cycle works through to its conclusion. It is only the gold camp that thinks physical ownership is essential but even that makes no sense because at the end of the day if you want to take a profit (before the inevitable decline) you must still be a seller. Why bother with the extra fees, storage costs, premiums and time when you can just trade it online?

  • Troll November 27, 2013, 6:57 am

    Meanwhile, the Gold Bugs has hit a critical midpoint (A is 364.2550). Be careful out there where paper gold (aka mining stocks) is concerned.

    • DK November 27, 2013, 10:22 am

      Oh, and Troll,

      My last reply didn’t sit well? Too bad.
      Don’t like getting a taste of yours? Too bad.
      Don’t like getting snubbed? Too bad.

      I don’t care how you feel about me or anyone else, skip it.

      So far, bereft of content, no answers (still), and for that matter, no surprises.

      Re: Pivots – So far as I can remember, members leave those in the chat room (Rick’s and Harry’s), if anywhere. I’ve left several myself but I’m not going to archive dive or data mine them; I haven’t been in the chats in quite some time.

      Government statistics? You must be joking. If anything I continually and vehemently challenge them. I post them on here, randomly, to illustrate how ridiculous their claims are. Sheeple don’t like it? Open the books and prove the naysayers wrong. Audit the Fed, Ft. Knox, etc. That applies to everything “they” are involved in. Still won’t release Oswald’s tax records, why the heck not 50 years later?

      Misdirection, suppression, and projection breeds suspicion.

      Rhetoric? See above. Would you like recent examples?

      Your opinion means squat to me, firmly. You’ve established that for me.

      I believe in both technical and fundamental analysis. I just like being thorough, that’s how I was trained. However, more often I lean towards the former. My “master” is neither, they both have value.

      Rick has cemented the notion that there are uncountable opportunities on both sides of the trade.

      As Rick pointed out previously, I think a reboot could be good for many reasons. Honesty, sanity, integrity, and accountability are paramount in any system, fundamentally. You support fraud, because you are “scared,” obviously.

      There will be pain either way, but the pain will subside much more quickly if we were honest with ourselves.

      Treat the cause, not the symptoms.

      You think things are good now? Imagine how it would be without as much of the bullsh*t.

      People (like you) want to keep living a lie, that’s your/their prerogative which the rest of us are held captive to. Don’t expect “it” to end well, it can’t and it won’t. Keep kicking the can. Deal with it now or later.

      Father time will come knocking, either way, and the younger generations will be left holding the bag. You, like so many others, don’t think about that and don’t care. “They” are stealing it from us and from our youth.

      Sucks to be them? They will “thank you” later, I hold no doubts about that, especially since people in your camp don’t want to deal with the problems, and the youngins can’t find jobs.
      More and more younger people every year have your camp to thank for that. The squeeze ensues. You want to leave the problems for someone else? Typical. There’s a heck of a lot more meaning to that than you realize, I imagine.

      For as bad as it gets, there’s enormous good that can come out of it.

      You are exhausting.

      Oh, and you’re preaching to the choir with your “AMAZING planet” comment(s).

      Pay attention more often.

      • Troll November 27, 2013, 11:03 pm

        For someone who doesn’t care what I think, you spend an awful lot of time dealing with what I think.

        Save your energy.

  • Rich November 27, 2013, 3:50 am

    No idea where the market will end up at the end of 2014

    Do know the LT Big4 are long Cattle, Cheese, Copper, Euro, Gold, Loonie, Lumber, Milk, Nikkei in Yen, Peso, Pound, SPX, T Bonds, T Notes, VIX, Yen, short Cocoa, Coffee, Cotton, Crude, Dollar, Dow, Franc, MidCap, OJ, NatGas, NDX, Oz, Ruble, RUT, Silver and Sugar

    http://www.cftc.gov/marketreports/commitmentsoftraders/index.htm

    Each one of those has an IT Point and Figure Target like the SPX 1970

    ST stock market sentiment is pretty euphoric right now, so will not be surprised to see a market correction greeting the new Fed Chair

    Happy Thanksgiving All

    • Cam Fitzgerald November 27, 2013, 8:19 am

      Long Cheese, Rich? We don’t hear enough about cheese that’s for sure. Do you mean via Saputo and others?

      • mario cavolo November 27, 2013, 8:49 am

        I say long extra virgin olive oil!

      • Cam Fitzgerald November 28, 2013, 3:31 am

        Good point, Mario. We don’t hear anything about extra virgins anymore either!

      • Rich November 30, 2013, 6:26 pm

        That’s long Big Cheese, Cam, maybe Saputo from Montreal and someone from Wisconsin started trading cheese, along with Butter, Milk and Non Fat Dry Milk on the Chicago Mercantile. Big4 traders long all but Non Fat:

        http://www.cftc.gov/dea/options/deacmelof.htm

        Who wants Non Fat for the holidays?

    • Rich November 30, 2013, 6:30 pm

      MC, Soybean Oil but no Virgin yet
      Maybe on 25 December if anyone remembers

  • old Dave November 26, 2013, 11:53 pm

    Mercury Retrograde post shadow period ends 11/27/13. During this MR which began 10/1/13, we have seen new highs in the stock market along with many stocks.
    Will the dreaded decline soon begin on 11/29/13?

  • Rick Ackerman November 26, 2013, 11:27 pm

    Fascinating…and depressing: The Dow rises to 40,000, even as America’s standard of living erodes to Third World levels.

    • mario cavolo November 28, 2013, 2:27 am

      yea, that’s pretty much it Rick because the view and sense of economics isn’t “American” anymore, its global. We have to look at it from a big picture world history perspective and no matter what, when massive trends take hold, large swaths of people in their path will be in the right place at the right time or the wrong place at the wrong time.

    • Cam Fitzgerald November 28, 2013, 2:43 pm

      As I have mentioned before, there must be some irony in that life in the Third World is often much better than life in the West despite the steep differences in incomes and Western amenities we all take for granted. Personally I can live without perfectly paved roads, bridges that don’t flood seasonally and a host of regulations so deeply entrenched you cannot help but break a rule daily without even knowing it sometimes. There is something to be said about econmies that fly by the seat of their pants and are dynamic in way America has not experienced in decades.

      • mario cavolo November 29, 2013, 6:48 am

        Cam, had chest pains, didn’t think it was my heart, that’s another story, wanted a check to be wise, since I’m 53. Went to the hospital, paid $1 to register and see a doctor. Had a heart ultrasound done the next day…it was amazing, I could see my heart valve opening and closing like a canal gate….all clear…$40. Had all other workups done, full abdominal ultrasound, the tech spent 15 minutes gliding over every organ, all clear…$15. Full blood workup, chest and abdominal x-ray, sent from the xray lab the the doctor’s computer…we looked at it together…$40….you swipe your card in an ATM machine in the hallway, it spits out the report from the computer, you take it to your doctor….marvelous!

        Yesterday, my lower back went out again…ouch. Carrying out my 25 month old boy 🙂 … went to the local hospital…. a session of traction table and cupping. $7.50 a pop.

        Everything I needed done within the same day or schedule for the next day. Efficient healthcare as a service to its citizens, not for profits. Wow, a novel idea.

        I’ll take this kind of good with the bad anyday.

        Happy Turkey Day All! Mario

      • Cam Fitzgerald November 30, 2013, 3:17 am

        Not bad Mario. I can’t say we have the same standard of care and availability of equipment over here but for anything usual that causes you problems the cost of care is incredibly low. Consultations with a doctor as low as a dollar for example, medications at a tiny fraction of North American costs, testing and blood panels so cheap they are almost free. If I had not come here to see it for myself I would not have believed it.

  • Andrew Gutterman November 26, 2013, 2:08 pm

    I quote from the Ben Hunt link above, right under the graph of FED assets and the SP 500:

    This is the Common Knowledge of our day … that so long as the Fed continues to buy, the market will continue to go up. Maybe they taper the rate of purchases or even stop expanding altogether, but if the market gets squirrelly they will just start buying again. The Narrative of Central Bank Omnipotence doesn’t mean that the market will only go up; it means that central bank policy is the overwhelming causal factor for market levels. It is as powerful a Common Knowledge structure as I’ve ever measured, and it’s at the heart of Grantham and Hendry’s hand-wringing. They aren’t capitulating to the market going up, but to WHY the market is going up. It’s a market dynamic that is alien to their (formidable) talents as money managers and to their (strongly held) belief structures on the meaning of an investment.

    But for both Grantham and Hendry (and I suspect every investor who has been fighting the Fed in one way or another), this is a temporary capitulation. They both cling to the notion that this, too, shall pass, that we shall someday return to a market environment where real-world business fundamentals matter more than monetary policy. Maybe the return to “normal” comes with a bang … some sort of “Minsky moment” and asset price collapse where there’s a sudden realization that the Emperor has no clothes (or no more bonds to buy) … or maybe it comes with a whimper, as the Fed slowly and calmly drains the excess reserves it has built up in the financial system with the magical “tools” that are touted every time Bernanke (and now Yellen) testifies before Congress. To which I say … maybe. Or maybe that’s just wishful thinking for a market clearing Shock Ending or Happy Ending, as opposed to what seems to me to be the more likely outcome of the Entropic Ending, a long gray slog through a more or less permanently depressed world and a more or less permanently Fed-centric market.

    Andy

    • gary leibowitz November 27, 2013, 3:41 am

      All long standing bull runs seem like it will never end, but it does. The notion that we can continue with massive market support from the Fed without repercussions goes against physics. Any increasing imbalance has to result in disorder.

      We should be close to an intermediate top since most on this board have thrown in the towel. The notion that we can sustain or contain the economy to an ideal earnings model is not going to last forever. In fact the recent news on housing reinforces my belief that too much of a good thing will kill this market. If housing and employment continue on this path two things will happen. One, rates will have to rise despite any interference by the Fed. Two, wages, which have already risen above recent norm, will rise and so will costs.

      The 10 year note should give us a clue. If it assaults the 2.9 to 3 percent barrier again and breaks thru the market will react very negatively.

      I believe this scenario will take time, and I would guess it should be sometime in 2014. Time and events change, and so will the end game.

  • C.C. November 26, 2013, 1:39 am

    Rick – there’s a chart out there floating around that might be relevant to your question. It shows:

    – S&P 500
    – St. Louis Fed adjusted monetary base
    – Corporate after-tax profits

    And they all kinda follow each other in some pretty wild trajectories.

    All I have been able to gather from observation, is that for the past year or so, many of those I followed who were staunchly cautious/skeptical, are getting on board this train. No more John Williams (shadowstats.com) interviews in other words…

    Remember back right about this time last year, a gentleman by the name of Craig Johnson (managing director, Piper Jaffray) came out and said S&P at or above 1700 in 2013? He was on Yayhoo finance the other day claiming 2000 as a very real possibility in 2014. How are such bold predictions – and results, possible? What do men like this know…? That chart helped to explain it for me.

    The disconnect in my mind, resides in those claiming that the ‘growth’ is organic and sustainable – no matter taper, or interest rates rising as a result. That’s interesting, because new starts took a hard right to the cheek when the taper fake-out in September caused a short-term spike. What will it be like at anything approaching normal rates – in the 5% region? Is this market strung together tight enough to handle that?

  • gary leibowitz November 25, 2013, 6:38 pm

    I think it is now a foregone conclusion that a low interest rate environment, high productivity, low costs, low wage growth, positive GDP results in corporate earnings power. I have stated this for a long time that the stock market was in a “sweet spot” where stable but low growth environments would result in high gross margins.

    I have also stated that there will come a time when the dynamics change. Higher growth, higher wages, and higher employment will put pressure on earnings. The transition from bull to bear market however is a slow one when this occurs. The accelerated employment and wage component will translate in a lower gross margin but the added sales might compensate for that. That is why I am skeptical that we are near “the” top. The other possibility is that we fall into another deep recession where the recent growth trend in wages and employment reverse back down creating a tighter credit market. Either way we have been dangling on a tight-rope for a long time now.

    According to some theories October 2014 signifies a major bottom for Elliott Wave followers. Not sure how that plays out but I would guess that the longer this bull stays afloat till then, the higher the chance of a nasty drop going into October. I myself am not convinced it will be the final move, but chances are, based on this 5 year run we hit a wall of some sort by then.

    Ricks ability to use his technical acumen disregarding personal bias is commendable.

    • Chuck November 25, 2013, 9:13 pm

      Doesn’t hurt that the fed infused 85 billion/month goes right into the markets…..although somewhere about a year ago I thought I remember RA saying that was not happening…..geez maybe GL was right all along.

      &&&&&&

      Your recollection is flawed, Chuck; I don’t know what you are talking about. However, I’m on record as saying that the much-fretted-about (mainly by imbeciles) Tapeworm is about as likely as a Martian invasion. RA

      • gary leibowitz November 26, 2013, 2:54 am

        Rick, did you see the article showing the Fed might adapt the ECB policy instead of the 85 billion per month long end bond purchase. They stick to the very short term maturity and the article suggests that the ECB policy is working without spending much money. Surely they have to come up with something to relieve this bloated debt mess.

        I have never been confident that we can elevate this economy enough for real economic growth. I have leaned my support towards the Fed winning out. We should see shortly if that’s the case. From here on out the economy should either tip over or continue its marginal growth.

      • Kibitzer November 29, 2013, 7:14 pm

        Flawed indeed!

  • Andrew Gutterman November 25, 2013, 2:43 pm

    I have found that if you really want to understand reality then you have to read Ben Hunt:

    This for why the market has a life of its own:

    http://epsilontheory.com/the-18th-brumaire-of-janet-yellen/

    And this for why QE and Obamacare are very similar:

    http://epsilontheory.com/when-e-f-hutton-talks/

    I’ve yet to find anything Ben has published on where all this is taking us. I’m not sure anyone knows, least of all Ben, but I did just send him an email asking about it.

    We all have theories and speculations, but the truth is we have never been where are are today, so how can we KNOW how it will end? And end it will, unless the FED has truly discovered perpetual motion.

    Andy

  • Buster November 25, 2013, 12:47 pm

    It’s business as usual, with the profits rolling in if you’re on the right (though it’s possibly the broad left side??) of the walls, as impregnable as they may appear, just as they did back then before the course of the river Euphrates changed the whole look of the sick & sorry looking place- in all it’s splendor!-..somewhat!

    For those who’ve been paying attention to what are, (well actually Gary!), the more important things and ones that without which we may all just as well spend our precious time on this -increasingly ruined- planet, just digging our own graves, the latest scandal hitting the wires this side of the Atlantic confirms just where the parasitic nature of the booming profits of our corporate ‘leaders’ of fascism are screwing them from.
    Just to confirm that there really is absolutely no way humanity can co-exist with the serpent worshipers, the slithering bail-out beneficiaries have been merrily pillaging the very people who paid out, not only for their survival, but bumper bonuses to boot!:

    UK Banks found to have acted like ‘hit squads’, by deliberately causing healthy businesses to go bust in order to seize their assets at knockdown prices:
    http://www.dailymail.co.uk/news/article-2512791/Banks-ruin-firms-just-make-killing-RBS-Lloyds-branded-unscrupulous-profiteers.html

    Such ‘ridiculous conspiracy theories’ are nothing new to those who’ve witnessed this sort of predatory butchery first hand over many decades, but will no doubt be met with either gasps of “No way” or calls for more regulations & power of the state from those who’ll bleat about it with the loudest voices, despite this being the very machine employed to furnish such economically destructive practices in the first place.

    The real key to stopping the downward (Fibonacci?) spiral of the world economy is neither more or less government, rules, legislation or regulation, when all are found to be corrupt or corruptible. The only apparently very unlikely solution is an unbiased judicial system that speaks a new language, one clearly foreign to the majority of the kids now scrapping, screaming, biting & scratching for whatever they can leverage from a system of ever diminishing returns, both real & in numbers actually benefiting, that self serving Corporate Fascism, & humanity most surely is.
    Founded on lawlessness but with the airs & graces that only legalese terms could conjure, it’s bemusing that it’s often the most lowly among us who are fearful of the true law enough to stand up against our illegitimate rulers of lawlessness:

    Mountain Man Arrested for Trying to Feed Himself, Lectures Judge On Natural Law:
    http://freepatriot.org/2013/11/22/watch-mountain-man-arrested-for-trying-to-feed-himself-owns-judge-on-natural-law/

    -Pure class!
    The spirit of Steve is surely alive & well!

    For the ever decreasing numbers of us who cling to the novel notion that there’s really anything left to salvage from the satanically run (just in case anyone didn’t notice!) virus infected carcass of the old world order, even as it is “losing it’s desire”, I say “enjoy!”
    Just be wary if you haven’t got all your work done by sunset on Friday evening, ready for the Sabbath, just in case the storm’s keeping to some sort of a plan??

    Interesting times…..

    • Buster November 27, 2013, 1:01 am

      This is how it ends….clear breach of law, as enacted by the lawless judge & her clueless paid enforcers:

      http://www.liveleak.com/view?i=703_1385224413

      “…Let no one deceive you in any way. For that day will not arrive until the rebellion comes and the man of lawlessness is revealed, the son of destruction.”.

      This may make some sense considering the trail that leads all the way back, past the Banksters, the Elites, the British Empire and the Monarchy, back to the contractual ties to the Papacy, apparently still in place & grounded upon the takeover of the Western system under ‘Christendom’ enacted by Pope Sixtus III, otherwise known as the beast of 666, who imposed satanism under the guise of Christianity, which later changing the Sabbath law from Saturday to Sunday whilst claiming the Pope’s authority is above God’s. This order of things only now finally & painfully reaching it’s full tormenting fruition for all to become fully aware of…..(even Gary)

      According to historical records, symbolism & much more evidence besides, it would appear that we’re all living under a Satanic order, folks.
      Twisted to the extreme, narcissistic, insanely psychopathic ……..& in plain sight!
      Upon this hypothesis the awakening is going to be inevitable yet necessary, & a very painful one.

      • Redwilldanaher November 27, 2013, 2:53 am

        If you perform even a few hours of research, you should at least come away with questions. Well, everyone but Gary, since as you note, he has it all figured out despite ignoring the facts, the research, his own misses and most importantly the truth. He’ll be along shortly though to dismiss conpiracy followed with a strong embrace the superficial lies that are fed to us all.

        When you see all the hand gestures that obvious psyhopaths in power employ, you should begin to wonder if you’re not fully zombifed. The Rockefeller evidence is there for all to see. Part of the record. It is as obvious as the likelihood that LBJ was part of the JFK assassination.

        You’ve got to want to see the truth as a prerequisite. Otherwise, as has been proven in this forum, a willing member of the matrix will you remain.

      • Buster November 27, 2013, 11:39 am

        Judging by the volumes of comments across the web from the increasing numbers of the disenfranchised, I think it’s fair to say that ‘ignorance is bliss’ is fast running out of time & will inevitably reach an exponential rate until this legal case is settled. Amusingly, some MSM sites such as MSN are now omitting public comments from anything important, usually propaganda based news, whilst only allowing comments for the trivial news stories it spews out on a daily basis to entertain the sheeple with all things irrelevant. It’s funny then to see people’s condemnations simply being posted on these trivial stories. I can say it’s refreshing to hear the numbers of people grasping that we’re being run by tyrants is now the majority. RT TV isn’t so popular without reason. The majority are realizing we’re all being hoodwinked by the mainstream propaganda news & are turning to the alternatives, even accepting their own shortfalls. I recently was shown a new UK based news service that typifies this trend, & I’ll print it here as I also think it fits in with Rick’s post referring to the opportunities of a career in news services from a while ago:
        http://thepeoplesvoice.tv/

        There certainly seems to be a massive trend for alternative news. And rest assured. even the Gary’s of this world will be fully aware of our predicament as the curtain finally falls to reveal the bars, though realizing that the cage is constructed by Satanists may take us all a little longer to grasp as it does require quite a bit of digging & detachment, but I’m quite sure the ‘aha!’ moment will come to us all.

        My biggest question is now, accepting that this evil certainly exists & with such purpose, is there really something good with one? Ultimately, the question is that, understanding that ‘Satan’ has a voice, does a ‘God’ have one and, with the fast approaching point of singularity where all choice & compassion is smothered, will ‘He’ speak, as events dictate ‘He’ must do?
        Still some time yet, though, & in the meantime I’ll keep mindful of the apparent stripping of Babylon by the kings, as we continue to observe by way of the increasing penalties heaped upon the financial system by governments. I suspect the spotlight on the Banksters of the last few years is not without purpose, & that despite being responsible for this creature, the powers will soon enough take it down completely, painting themselves as the good guys to the masses. I theorize that one simple move such as an official alternative digital currency could end the need for the Bankster middleman & with a complete digital record of all transactions ever made, allow governments the ultimate monetary control system of their dreams! Now where could such a system be found? (per chance??)
        Oh yes, Bitcoin. I smell a scaly plan & a snaky trap possibly already laid???
        On this premise it may turn out to be the quickest way to make money in all of history, & also our worst nightmare!
        “Difficult to see, the dark side is….”

      • Buster November 28, 2013, 12:33 am

        Fascinating interview with the mountain man himself:

        http://www.liveleak.com/view?i=9ce_1385335555

        The story’s going ‘viral’, apparently. I get the feeling that this is about to shake the World consciousness. A lot of people are shocked at the revelation that we are being sued under a ‘corporate fiction’, but now’s probably the time that the fact goes mainstream.
        There will, however, continue to be plenty of people willing to play the charade even after becoming aware of it. Let’s not forget that the Elites have never done the dirty work of enacting lawlessness themselves, as I suspect they well know that they are subject to universal law. They therefore must trick or bribe the Sheople to both accept the lie & impose it. Even Satan had to get God’s permission to attack Job for the test, suggesting that this is the key to solving our whole global predicament. ie. Lawful non-compliance.
        Soon, anyone continuing this scam will be doing so without the excuse of being ignorant to the fact of what is actually happening. One way or another, I think that may prove to be a very, very bad place to be.

  • Cam Fitzgerald November 25, 2013, 10:03 am

    I don’t know that anyone wants to guess where we will be at the end of 2014 but it is easy to imagine an unpleasant outcome awaits as the frequency of rises and falls in US equity markets become suggestive of a terminal point somewhere not too distant in the future. By “frequency” I am referring to the visual look of the charts where a tightening is apparent as new highs are reached. Call it a vibration of actions and reactions in buys and sells perhaps or the simple results of the cumulative behavior of algo trading and machine driven activity on price behavior. Whatever you call it, there is a visual look to the charts that is worrisome even if it cannot convey a time and a date when a correction event might occur. It is a warning sign and one that is familiar to anyone who has been involved in stock buying for years. Even the experienced remain confident that they will get out in time though and so continue to buy the trend not wishing to miss some easy opportunity. Like moths to a flame, the end always surprises despite its obvious fiery outcome being plain as sight in front of our eyes. I came across a great piece by John Hussman this morning that was just so good it has to be repeated here for others to read. In the link below John notes what I think is one of the most worrisome aspects of todays rise in price. That is that the speculative behavior of investors today is premised very strongly on the belief that there is a so-called “Bernanke Put” on equity markets. As John notes “it is different this time” and that difference is that we are allowing ourselves to be led to believe we are all insured based on actions and interventions of the Federal Reserve. Complete nonsense of course……we have no such warranty and all speculative events end the same way with mean reverting, losses and plenty of tears. John always has a way with words. Some people read him and walk away asking what the hell it is he just said but that is all the more reason to take his words seriously and try to divine his point. Linked below from Zerohedge:

    Why The Fed Can’t See A Bubble In Equity Valuations
    http://www.zerohedge.com/news/2013-11-24/why-fed-cant-see-bubble-equity-valuations

    • Cam Fitzgerald November 26, 2013, 11:03 am

      And here is another article discussing Hussmans recent articles that I thought was interesting. It is from Mish Shedlock who draws other insights from the peculiar case of Hugh Hendry who publicly threw in the towel and is going long equities just as John warns that :

      “….avoiding bubbles is incredibly hard to do, and this one has been exceptional. But that is precisely the problem with bubbles. The associated 10-year expected nominal total return for the S&P 500 is negative.”

      Personally the great risk I foresee given that a stock market meltdown is probably inevitable at some stage is that it has the potential to utterly destroy the pensions of millions of retirees whose nut is reliant upon an ever rising market to sustain them in their golden years. Such an event as a severe market selloff would greatly amplify the coming losses we see emanating from the impending (virtually guaranteed) defaults of a number of cities and municipalities who are currently strung out and running short of cash. I have to wonder if it is not going to be a heart-rending pension crisis that will become one of the single greatest financial tragedies of the coming decade and be the true whipping boy of the financial conflagration wrought by years of interventionist policy and lack of fiscal restraint and discipline. We all know the chips must land somewhere. I believe it will manifest in staggering losses borne by those who have spent decades saving only to discover that they have become the fodder for the machine that must offset losses with real wealth. And where else can enough real money be found these days if not in the savings of retirees whose stash of capital is nearly a mirror image of the national debt? From that perspective it makes sense to reconsider exactly how savings are allocated (just in case) and be wary of being too invested in equities despite their incredible advance.

      The Problem with Bubbles – Mish Shedlock
      http://globaleconomicanalysis.blogspot.com/2013/11/hussmans-open-letter-to-fed-problem.html

      • Jason S November 26, 2013, 9:24 pm

        Cam, I think you are right in your concern over pensions being a potential crisis in the waiting that could tip us beyond the brink of Federal Reserve patching.

        Based on other countries’ history, the Govt. will come to the rescue (of their constructed crisis) by forcing defined contribution and defined benefit plans to invest substantially, if not completely, in US treasuries. This is what many countries have done in last ditch efforts to save the sinking ship (Ireland, Argentina, Yugoslavia, Poland, Chile, etc.) It wont work and will be a precursor to greater inflation and economic trouble.

      • Chuck November 27, 2013, 4:42 pm

        The pension system is why they are infusing 85 billion a month into the ‘system’. They are ALREADY concerned with the pensions of the older populous – ‘be damned’ with the young.

        &&&&&&&

        Absolutely. In NYC, subway token vendors have a package worth $110k and can retire at 55 (or years earlier if they’ve accumulated sick time) with unbelievable benefits and 85% of their peak pay. That’s why NYC’s looming bankruptcy will be Detroit’s times 100. (How appropriate that they’ve elected a Commie mayor to preside over Gotham’s collapse. The city is sustained now only by Wall Street’s profits.)

        On the other coast, BART generates huge costs, and yet there are few employees to be seen. In fact, more of BART’s revenues go toward paying retirement benefits than salaries. Ditto for every school system in the country.

        There will be riots in the streets before taxpayers are made to cover the pension and healthcare liabilities that public-union employees will claim as ‘inviolable’. RA

      • Cam Fitzgerald November 28, 2013, 1:50 am

        Agreed. And as pensions fold then so goes a huge part of the economy as a truck sized hole is opened in the hull of a battered ship of state. This must surely be the time of reckoning as an economy that has grown to be so dependant for its lifeblood on consumption is gutted by an epic failure of its pension system and a growing segment of the population retires poorer, more heavily taxed and with fewer benefits than envisaged. A book could be written on the coming tragedy that our seniors will face. I happen to think all of it will be socialized in the end, that all remaining pensions will be taken over by the state and redistributed in a way to create a semblance of fairness for all. Not that it will really be fair at all…it will just mean everyone got screwed together! The current mammoth attempt at reflation and credit creation has done little to bring about salvation in this regard (except delay the inevitable) and it looks more and more likely that estimated pension payouts in a multitude of states and municipalities will never be fully honoured as a growing percentage of the population, both young and old, now rely upon state handouts for survival. The numbers simply do not add up for the economy unless all the necessary dollars can be conjured out of thin air into perpetuity. Unless there is a serious bout of inflation to counter the dismal demographic profile and it happens in conjunction with a heightened youth immigration program then the clock will simply run out on opportunities to remediate the screwball numbers that got plugged in to make the existing pensions function. How the hell are most plans going to come up with the required 7 and 8% returns necessary annually to make it all work never mind just trying to catch up with the losses over the past 5 years? If a pension crisis is not yet our biggest fear for the future we should probably get it on the radar quick because this is looking to me to be the biggest economic disaster we all face in the coming years.

      • mario cavolo November 28, 2013, 2:20 am

        No doubt Gents, couldn’t be clearer. The govt is becoming the economic socialist system it now needs to become to sustain what it can, a social welfare benefit provider to the entire system, not just the “poor”. The American landscape, the global landscape, the fiscal landscape has undergone massive change and will continue to do so. Think of what the demographic picture of American business looked like twenty years ago and today, and then imagine what the demographic picture of American business is going to look like in 20 more years. Ditto for the global picture. Whoa, an incredible generation of time in history in which we live.

        Cheers, Mario

      • Cam Fitzgerald November 28, 2013, 2:48 am

        You know….what is most interesting about the pension topic is that unlike most other aspects of the economy that are akin to a rubics cube of complexity, this one boils down to plain old math we can all understand.

        The actuarial tables just don’t add up in a low growth, low rate environment with a diminishing workforce and expanding retiree base. The math on pensions are just hell. Put more simply, there is not enough tax dollars or contributions to pay the benefits or entitlements and there will not be unless we are about to experience an economic rennaisance.

        Everyone in authority knows. The union heads know it. Some of the public are finally catching on and yet this one topic is almost taboo like the simple act of speaking about it will bring a bad outcome. It is infused with false beliefs, empty hopes and superstition.

        But the bare facts are that the estimated benefit payouts will NOT be paid because they cannot be paid. The money is just not there. Public debt levels are simply too high already, taxes too low and we are looking at years of modest economic growth if not extended periods of recession where there will not be an opportunity to make up for the current or impending shortfalls.

        That means that retirees are on their own and if you are one of them (speaking directly to any reader out there who is nearing 65) you had better get the facts quickly because a whole lot of pain is coming for the unprepared.

        Here is a sample read of just one state (California) including three union examples to help make you sick to your stomach about what is about to happen to your retirement if you don’t have a fallback position.

        There will be adjustments and reductions coming. Do not doubt that. The longer this is delayed the more serious they will be. According to this report the three unions in question had unfunded liabilties of almost half a billion dollars at the time of its writing.

        Little consideration in the report is given for the current slow economic growth nor the potential hazards a stock market blowout might wreak on the funds themselves. Of course this is why it is all such a screw up. The guys who put together these pension schemes back in the day gave no consideration whatsoever for long run credit or debt cycles.

        The failure of the public and private pension systems are therefore one of the easiest of predictions to make. Just get out your calculator and start adding it all up. ***Warning….keep a hanky handing because there will be some tears for the old farts who honestly did not see this coming.***
        —————————-

        “There is no doubt that we are going to have to adjust our pensions so that money coming in is going to be equal to what we can expect what the money going out will be. It’s not even a matter of higher math. It’s fifth-grade arithmetic.” — California Governor Jerry Brown, Oct. 13, 2011

        PENSION MATH: California Retirement Spending Squeezing State Budget
        http://siepr.stanford.edu/system/files/shared/Nation%20Statewide%20Report%20v081.pdf

      • Cam Fitzgerald November 28, 2013, 3:27 am

        One thing I might add, Mario…..if we don’t socialize this problem away in an organized way then it is likely something much, much worse will fill that void. No idea what that outcome might be but if history is a guide it ain’t pretty when a country runs out of money, time and options.

      • gary leibowitz November 28, 2013, 8:45 pm

        Detroit pensioners shouldn’t be allowed to live off their lavish benefits. Look at the animosity it causes. Yes the average pay was 20,000 per year. I am sure they were all slackers and there was hordes of people scrambling for those lavishly high paying jobs, with great working conditions.

        Look no further than government demands for performance pay scale. Imagine you had a job, worked your butt off, lived by strict government rules, with a feudal bureaucratic system that rewards teachers that are young with low pay, as opposed to experienced higher paying ones. Now combine that with the fact that your performance relies on having students under you that can learn at the same pace as any student anywhere. I do wonder why the test scores from non-government chartered and catholic schools had similar results in similar demographics? I do wonder why after 10 years of this nonsense no one brings up the results where there is absolutely no advantage being in private or government run schools. I guess it is politically incorrect to declare it’s the students stupid!

        Another great example of viewing the world in a nice neat package, where you can define and categorize all events as either good or bad. All pensioners step to the left, and all true blue Americans’ to the right. All social programs to the left, and all self-made hard working entrepreneurs to the right.

  • DK November 25, 2013, 8:18 am

    Rick, your comments echo the sentiments of many in sheer disbelief over what we have been witnessing; up we march.

    The trends do not match reality for anyone paying attention to every day life, as you’ve alluded to above. With the idea of the markets being forward-looking, we are further from that than I can ever remember. Perhaps this is because we are further from free markets than ever before.

    The engineering of this world has truly been amazing, much to the chagrin of many on this board and elsewhere, it will continue and people will continue to stew.

    I can’t believe what I’m seeing and it’s appears far from tiring indeed.
    Interesting Fiege piece as well.

    • mario cavolo November 28, 2013, 2:14 am

      Hi DK,

      a thought set just popped into my head and its….

      …I hear you, I do, however it might be said only if you look at Wall Street as “American” and its actually not anymore. Maybe there’s a simple twofold reason why the stock market is “smarter” than any of us…it is anticipating “global” growth, whereas as I’ve noted before, while 100,000,000 million American middle class have been in a worsening situation, 500,000,000 million lower class people elsewhere on the planet in important emerging markets starting with China are in better shape than ever before and their size and power will soon far exceed that of the American middle class. Couple that with the fact that revenue and earnings of the S&P are global, not domestic and bingo, that’s the model of the new world economic order. Then, it makes sense a bit more. Why shouldn’t the stock markets march higher?…Global GDP is on the rise, is well heading toward $100 trillion from today’s $45 trillion. So in the macro global picture, it is far more reasonable. Now of course, I am no pollyanna, the comment above does not forgive the outrageous shenanigans that go on….

      Cheers, Mario

  • Silver Surfer November 25, 2013, 7:51 am

    a black swan event amidst the euphoria, watch for it
    when they cry peace and safety…
    http://bittsandbytes.net/BIRDS/BIRDS_OF_AUSTRALIA/BLACK_SWAN/BlackSwan.jpg

  • mario cavolo November 25, 2013, 4:59 am

    Barring the truly unexpected in a world of new rules, thus making the unexpected truly more unexpected and unknowable, there are many reasons globally to think the balance of economic conditions will continue in the direction of trend for the past few years, possibly for decades. The U.S. toughest timeframe is the next 6 or so years demographically after which the demographic foundation improves. China is in the midst of a yet much talked about babyboom, no matter the most recent pronouncements regarding the one child policy because money dictates far more than policy and Chinese have more money than God. Demographically they are looking at similar challenges, but economically they are far stronger with a rising society, not a society struggling with reality at the mature end of its economic expansion cycle and a govt to fear.

    And so we shouldn’t expect much more than classic corrections, pivot bottom lows that are scary for a week or two, historically standard retracements as world GDP marches upward toward $200 trillion with the stock markets pretty much in lock step with that. None of which address how much the have not masses of the West will or will not struggle against continuing decline. They’re already tapped out so its old news anyway at this chapter in the story. My guess is that Wall Street is rising also because it knows very well what the global picture is moving forward. QE has been too big a fuel to get us over the economic hump so to speak and with damage along the way, but it may have in that sense, served its purpose. I don’t like sounding so positive about it knowing how much damage they have also caused with their oligarch shenanigans.

    Cheers, Mario