(No) Fear And (No) Loathing In Las Vegas

| About: SPDR S&P (SPY)

Summary

Let's take a look around the casino.

What do you see?

"I see dead people."

So Goldman was out Tuesday calling for a 5-10% drawdown on the S&P (NYSEARCA:SPY):

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(Chart: Goldman)

Which probably means you should buy everything in sight (you "muppet," you).

But all contrarian indicator, Vampire Squid jokes aside, the landscape out there is a real head-scratcher.

I mean think about it.

The UK just voted to exit the European Union which is facing the most acute refugee crisis since World War II.

That refugee crisis was precipitated by the outright unraveling of society in the Mid-East where the US-led invasion of Iraq ended up indirectly creating a confederation of murderous desert bandits out of the last vestiges of Saddam's toppled Ba'athist security apparatus.

China is about to implode under a debt pile that now sits at something like 250% of GDP.

Capital markets are so broken that European banks will pay you to take out a mortgage.

Saudi Arabia is going broke.

The summer Olympics are about to be held in a BRICS country that just impeached its president with a committee comprised of possible criminals, is mired in what amounts to a depression, and is desperately trying to turn the tide in a battle against hordes of mosquitoes carrying a virus that shrinks baby heads.

Oh, and markets are run by algos.

And Donald Trump is about to be President.

Somehow, that translates to the following conditions in the casino we call a "market":

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So as we head into the back half of the year, I wanted to show you a few enlightening charts.

Here's multiples versus real rates:

(Chart: Morgan Stanley)

And here's a look at how sharply estimates have been revised lower:

(Chart: Morgan Stanley)

And as noted on Tuesday evening, this rally looks a bit tired:

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(Chart: SocGen)

As Goldman puts it, "flat is the new up."

Here's what some of you are thinking (or maybe you're so exasperated you're shouting it aloud to no one in particular, alarming the guy in the next cubicle in the process): "Ok, but someone believes in this market because it sure has proven to be resilient!"

And you'd be right. "Someone" does believe in this market. See if you can spot "who" it is:

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(Chart: BofAML)

Remember, corporations are people too.

But at the end of the day you shouldn't worry. If things get messy you can always pay someone "2 and 20" to outperform the market.

Oh, wait...

Click to enlarge

(Chart: Morgan Stanley, my additions)

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.