The Bernanke Agenda - It Isn't What You Think It Is [View article]
RS
Bernanke gave you a clue on the impact of a market crash now vs 2007-09 crash. He was pretty clear that the Fed has taken the necessary actions to mitigate the damage to the system and that is the thrust of my point. He has flooded the system with liquidity and all the major banks passed the stress test with just 2 of them being close and the others in pretty good shape.
I am not sure I understand why everyone thinks I am saying Bernanke would induce a crash. That is not what I said at all. I do think the Fed has kept a floor under the market but if they simply step aside at this point or slow down on QE a crash is inevitable. The same applies to Congress. The recent statement on budget deficit estimate is now under $700 billion.
That in itself will put GDP in negative territory. Bernanke doesn't need to orchestrate a crash as it is coming based on a lot of pretty negative macro issues. The market continuing to fly in the face of this with more and more successive highs and excess leverage virtually guarantees a crash.
The truth is there is no dry powder to back stop a sell off and margin calls will create a downward spiral unlike anything we've seen in decades. The market is irrational and the bull side pundit hype is pure spin and there is a lot of it.
The Bernanke Agenda - It Isn't What You Think It Is [View article]
scar
I did the heavy lifting here. Yes the Pesident would need to sign on as would congress.
Biden's speech to Import-Export bank explaining why this is necessary would seem to suggest the executive branch may already be on board. Speech was last month calling for a new monetary system.
Congress is completely clueless on this subject as are investors so they will act as they always do - do nothing until they have no choice. In the last crash Bernanke, Paulsen, Geithner, et al sold congress leadership in record time on Tarp and other legislation. It was kind of a "where do I sign" moment.
The Bernanke Agenda - It Isn't What You Think It Is [View article]
PF
Please look at my calls on gold, the US dollar and Apple. And if you think I fit in the lazy category I want you to know I wrote 5 drafts of this before publishing and I have about 200 hours of research on the subject.
I did the research for my own benefit and elected to share my work with those who care to read it.
The Bernanke Agenda - It Isn't What You Think It Is [View article]
frosty
I certainly didn"t foecast the end of the world. I did forecast a continuation of the secular bear with a repeat of a test of the 2002 and 2009 lows followed by the beginning of a new secular bull market. Additionally, I offered a very logical basis for why the next move will produce a real bull market.
The Bernanke Agenda - It Isn't What You Think It Is [View instapost]
Rigorous
When something doesn't make sense in the normal sense you need to search for a way to explain - an outside the box process if you will. Here is what we know about Bernanke. He is an avid student of Keynes and he is an avid student of the Japanese experiment with QE - a failed experiment by the way.
He knows what Keynes said at Bretton Woods. We've had a pretty erratic and volatile century so far and no credible economist really disagrees with Keynes that a sovereign currency works. That may not be main stream but believe me Bernanke and company know. There is a huge volume of work on this dating back to 2008 when the UN commisssioned a group of economists to identify problems and propose solutions - they came up with the IMF and the SDR.
Since then a number of others have written on it extensively. Joe Biden called for it in a speech last month. It is going to happen as it is the only way we can break out of this mess. It will involve a major devaluation of currencies and a monetizing of debt across the spectrum.
That will kill those with pensions as they will still receive nominal payments that in real terms will have much less buying power. It is a once and done deal that screws some but deals with the massive levels of unfunded liabilities and the inherent deflationary drag that the dollar has on global economies - especially the emerging markets.
This isn't the script for a movie - it is our fiscal and monetary leaders doing the right thing.
The Bernanke Agenda - It Isn't What You Think It Is [View instapost]
ba419
What can one say to that kind of foolishness. I have considered the need to compare equity price in the context of returns relative to alternatives but to do so presumes - at the least - some degree of confidence in economic metrics and not just a confidence in the Fed.
As I went through Bernanke's speech I saw nothing at all in his comments that suggests the Fed wants to see investors contiune down this path. In fact all I saw were warnings.
The Bernanke Agenda - It Isn't What You Think It Is [View instapost]
Bill
Clearly this is a "what if" situation but the idea that it will take a long time to put this in place neglects to account for the fact that the issue surfaced back in '08 and the amount of work done toward this end is substantial. Whether we end up with the scenario outlined or not I am certain all the specifics and fine points have been worked out already. I'm not forming an opinion out of thin air. The papers, speeches, etc are voluminous on this subject.
The most recent was Joe Biden's speech to the Import-Export Bank on this subject and the need for it.
As to gold - the sell off in gold is only partially explained by the economic slowdown and deflationary forces. I think a lot of the unusual price movement in gold is a process of shifting gold reserves in preparation for a new monetary system.
Not sure you are seeing Bernanke in the right light. There are many who criticize his moves but also many who see him in a very positive light. In any event even a cold enema might be welcome if that is really what you need to alleviate the problem.
In the end I see it much like Steve Jobs. When asked if he thought they should do research to identify what products customers want he replied they won't know what they want until we invent it and tell them they want it and need it. That is clearly the case with a new monetary system. Very few will grasp the relevance or significance of the proposal anyway but everyone will be eager to accept a solution - probably any solution - after another market crash.
Why I Remain Bearish Despite The Cyclical Bull Rally [View article]
stir
What I find most interesting is the complete flip in investor sentiment from about 4:1 bearish a week or two ago to almost 4:1 bullish based on nothing more that a chart break out into new highs.
Being a bull in a market that is up 12% on the year in 4 months presents some real problems to me even with a postive economic back drop. The best the bulls can offer is that you've got to ride the bull but they rarely offer much of substance for why I would expect more than a 12% gain in a year.
It is a scientific fact that a chemical transformation occurs when investors are winning - a surge in testosterone and an irrational confidence. I tend to become most fearful when everyone else is fearless which is almost always at the top of a bull move and fearless when most are afraid which is usually at the bottom of a move.
John Coates is a hedge trader turned neuroscientist who describes this phenomenon in a great book called "The Hour Between Dog and Wolf".
Why I Remain Bearish Despite The Cyclical Bull Rally [View article]
streak
Yes there is. My loss will be taken at 15% of portfolio value. I have structured this trade in a way that is not consistent with my normal rules but that doesn't mean I am not setting risk relative to potential gain.
Why I Remain Bearish Despite The Cyclical Bull Rally [View article]
165,000 jobs is significant to you. Please.
And where were the gains realized. Do you know? They were low paying, low quality jobs. The report was disappointing to those who bothered to look under the hood and even if they were high quality jobs 165,000 is a dismal number by anybody's standard. We need 250,000 to 300,000 and we need those levels consistently.
Hell, the BLS has lost about 9,000,000 workers altogether as that is how far the labor pool has shrunk in order for the government to keep showing steady progress on the headline number. Do the math on that and let me know how long it will take at 165,000 a month to get those lost workers back to work.
Why I Remain Bearish Despite The Cyclical Bull Rally [View article]
red
I see cash as an excellent investment in this enviornement. The dollar index has appreciated nicely in recent months and has a lot more to go.
People simply fail to consider the dollar as an investment asset. Mainly because the industry has conditioned us to assume you are an idiot if you are not invested in something they sell and they don't sell cash. That is utter nonsense and a salesman's ptich.
The dollar moves inversely and in direct proportion to any other asset you might consider buying. If the asset goes up you made a wise choice in buying it. If it goes down you made a bad choice as you could have bought more of it had you stayed in cash and waited till it fell.
I don't suppose I can overcome the brainwashing that the industry has managed to achieve over the years but ask yourself this - how nice would it have been to be in cash in 2007 and gone to stocks in 2009. Would you have lost out by being in cash?
Why I Remain Bearish Despite The Cyclical Bull Rally [View article]
New SuperH
You are right. I am betting on that huge adverse move and I see it occuring at a much faster rate than the last move down. I am risking about 15% of my assets and if I am right my returns will be dramatic - no very dramatic - and if wrong I lose 15%. A risk I am completely comfortable with.
I don't recommend anyone else follow in my footsteps. We all have different risk tolerance and levels of sophistication and each of us has to tailor a strategy that fits for us. It isn't a one size fits all sort of thing.
The Bernanke Agenda - It Isn't What You Think It Is [View article]
I am not betting the farm on anything but if I did I would bet we see 1000 on the S&P before we see 1750.
JS
The Bernanke Agenda - It Isn't What You Think It Is [View article]
Bernanke gave you a clue on the impact of a market crash now vs 2007-09 crash. He was pretty clear that the Fed has taken the necessary actions to mitigate the damage to the system and that is the thrust of my point. He has flooded the system with liquidity and all the major banks passed the stress test with just 2 of them being close and the others in pretty good shape.
I am not sure I understand why everyone thinks I am saying Bernanke would induce a crash. That is not what I said at all. I do think the Fed has kept a floor under the market but if they simply step aside at this point or slow down on QE a crash is inevitable. The same applies to Congress. The recent statement on budget deficit estimate is now under $700 billion.
That in itself will put GDP in negative territory. Bernanke doesn't need to orchestrate a crash as it is coming based on a lot of pretty negative macro issues. The market continuing to fly in the face of this with more and more successive highs and excess leverage virtually guarantees a crash.
The truth is there is no dry powder to back stop a sell off and margin calls will create a downward spiral unlike anything we've seen in decades. The market is irrational and the bull side pundit hype is pure spin and there is a lot of it.
JS
The Bernanke Agenda - It Isn't What You Think It Is [View article]
I did the heavy lifting here. Yes the Pesident would need to sign on as would congress.
Biden's speech to Import-Export bank explaining why this is necessary would seem to suggest the executive branch may already be on board. Speech was last month calling for a new monetary system.
Congress is completely clueless on this subject as are investors so they will act as they always do - do nothing until they have no choice. In the last crash Bernanke, Paulsen, Geithner, et al sold congress leadership in record time on Tarp and other legislation. It was kind of a "where do I sign" moment.
JS
The Bernanke Agenda - It Isn't What You Think It Is [View article]
Please look at my calls on gold, the US dollar and Apple. And if you think I fit in the lazy category I want you to know I wrote 5 drafts of this before publishing and I have about 200 hours of research on the subject.
I did the research for my own benefit and elected to share my work with those who care to read it.
JS
The Bernanke Agenda - It Isn't What You Think It Is [View article]
I am not saying this will be a manufactured crash. I am saying there is a limit to what the Fed can do and it has been reached.
Bernanke knows this and has warned you. They are not going to create the crash though - ill informed, giddy investors will.
As I said you can't blame the Fed on this one and they aren't manufacturing a crash.
JS
The Bernanke Agenda - It Isn't What You Think It Is [View article]
I certainly didn"t foecast the end of the world. I did forecast a continuation of the secular bear with a repeat of a test of the 2002 and 2009 lows followed by the beginning of a new secular bull market. Additionally, I offered a very logical basis for why the next move will produce a real bull market.
That is not a doomsday scenario.
JS
The Bernanke Agenda - It Isn't What You Think It Is [View article]
Not yet.
JS
The Bernanke Agenda - It Isn't What You Think It Is [View instapost]
When something doesn't make sense in the normal sense you need to search for a way to explain - an outside the box process if you will. Here is what we know about Bernanke. He is an avid student of Keynes and he is an avid student of the Japanese experiment with QE - a failed experiment by the way.
He knows what Keynes said at Bretton Woods. We've had a pretty erratic and volatile century so far and no credible economist really disagrees with Keynes that a sovereign currency works. That may not be main stream but believe me Bernanke and company know. There is a huge volume of work on this dating back to 2008 when the UN commisssioned a group of economists to identify problems and propose solutions - they came up with the IMF and the SDR.
Since then a number of others have written on it extensively. Joe Biden called for it in a speech last month. It is going to happen as it is the only way we can break out of this mess. It will involve a major devaluation of currencies and a monetizing of debt across the spectrum.
That will kill those with pensions as they will still receive nominal payments that in real terms will have much less buying power. It is a once and done deal that screws some but deals with the massive levels of unfunded liabilities and the inherent deflationary drag that the dollar has on global economies - especially the emerging markets.
This isn't the script for a movie - it is our fiscal and monetary leaders doing the right thing.
JS
The Bernanke Agenda - It Isn't What You Think It Is [View instapost]
What can one say to that kind of foolishness. I have considered the need to compare equity price in the context of returns relative to alternatives but to do so presumes - at the least - some degree of confidence in economic metrics and not just a confidence in the Fed.
As I went through Bernanke's speech I saw nothing at all in his comments that suggests the Fed wants to see investors contiune down this path. In fact all I saw were warnings.
JS
The Bernanke Agenda - It Isn't What You Think It Is [View instapost]
Clearly this is a "what if" situation but the idea that it will take a long time to put this in place neglects to account for the fact that the issue surfaced back in '08 and the amount of work done toward this end is substantial. Whether we end up with the scenario outlined or not I am certain all the specifics and fine points have been worked out already. I'm not forming an opinion out of thin air. The papers, speeches, etc are voluminous on this subject.
The most recent was Joe Biden's speech to the Import-Export Bank on this subject and the need for it.
As to gold - the sell off in gold is only partially explained by the economic slowdown and deflationary forces. I think a lot of the unusual price movement in gold is a process of shifting gold reserves in preparation for a new monetary system.
Not sure you are seeing Bernanke in the right light. There are many who criticize his moves but also many who see him in a very positive light. In any event even a cold enema might be welcome if that is really what you need to alleviate the problem.
In the end I see it much like Steve Jobs. When asked if he thought they should do research to identify what products customers want he replied they won't know what they want until we invent it and tell them they want it and need it. That is clearly the case with a new monetary system. Very few will grasp the relevance or significance of the proposal anyway but everyone will be eager to accept a solution - probably any solution - after another market crash.
JS
Why I Remain Bearish Despite The Cyclical Bull Rally [View article]
What I find most interesting is the complete flip in investor sentiment from about 4:1 bearish a week or two ago to almost 4:1 bullish based on nothing more that a chart break out into new highs.
Being a bull in a market that is up 12% on the year in 4 months presents some real problems to me even with a postive economic back drop. The best the bulls can offer is that you've got to ride the bull but they rarely offer much of substance for why I would expect more than a 12% gain in a year.
It is a scientific fact that a chemical transformation occurs when investors are winning - a surge in testosterone and an irrational confidence. I tend to become most fearful when everyone else is fearless which is almost always at the top of a bull move and fearless when most are afraid which is usually at the bottom of a move.
John Coates is a hedge trader turned neuroscientist who describes this phenomenon in a great book called "The Hour Between Dog and Wolf".
JS
Why I Remain Bearish Despite The Cyclical Bull Rally [View article]
Yes there is. My loss will be taken at 15% of portfolio value. I have structured this trade in a way that is not consistent with my normal rules but that doesn't mean I am not setting risk relative to potential gain.
JS
Why I Remain Bearish Despite The Cyclical Bull Rally [View article]
And where were the gains realized. Do you know? They were low paying, low quality jobs. The report was disappointing to those who bothered to look under the hood and even if they were high quality jobs 165,000 is a dismal number by anybody's standard. We need 250,000 to 300,000 and we need those levels consistently.
Hell, the BLS has lost about 9,000,000 workers altogether as that is how far the labor pool has shrunk in order for the government to keep showing steady progress on the headline number. Do the math on that and let me know how long it will take at 165,000 a month to get those lost workers back to work.
JS
Why I Remain Bearish Despite The Cyclical Bull Rally [View article]
I see cash as an excellent investment in this enviornement. The dollar index has appreciated nicely in recent months and has a lot more to go.
People simply fail to consider the dollar as an investment asset. Mainly because the industry has conditioned us to assume you are an idiot if you are not invested in something they sell and they don't sell cash. That is utter nonsense and a salesman's ptich.
The dollar moves inversely and in direct proportion to any other asset you might consider buying. If the asset goes up you made a wise choice in buying it. If it goes down you made a bad choice as you could have bought more of it had you stayed in cash and waited till it fell.
I don't suppose I can overcome the brainwashing that the industry has managed to achieve over the years but ask yourself this - how nice would it have been to be in cash in 2007 and gone to stocks in 2009. Would you have lost out by being in cash?
JS
Why I Remain Bearish Despite The Cyclical Bull Rally [View article]
You are right. I am betting on that huge adverse move and I see it occuring at a much faster rate than the last move down. I am risking about 15% of my assets and if I am right my returns will be dramatic - no very dramatic - and if wrong I lose 15%. A risk I am completely comfortable with.
I don't recommend anyone else follow in my footsteps. We all have different risk tolerance and levels of sophistication and each of us has to tailor a strategy that fits for us. It isn't a one size fits all sort of thing.
JS