Thursday, March 21, 2013

Fool Me Three Times, Shame On Me...

The ECB just gave Cyprus until Monday to agree to the terms of the Eurozone bank bailout plan or face a liquidity "cutoff". Bank depositors are queuing up at ATMs around the country...

Neither side can be seen to capitulate, but nor can they risk a full fledged bank run. Once again, the world economy held at the brink by banks that profited from risky loans that should have never been made in the first place. None of these banking buffoons learned a fucking thing from 2008. What more proof do we need? Meanwhile, the Eurocrats in charge of resolving this fiasco have no clue as to the overall level of macro risk that has been piling up while they were away at Davos...

Key Macro Risks at This Juncture:

1) Contagion Fragility: A pending bank run in one of the world's smallest countries. Not enough of a calamity to garner market "worry", but just enough to start a bank run in Europe

2) Market complacency - the Dow hitting a new all time high yesterday (unconfirmed by other indexes)...

3) A Clueless Fed - inflating stock prices, but telling us that inflated stock prices are not an issue. He forgot to mention that the Fed now steps into the financial markets every day now to prop them up. And if they didn't, the stock market would collapse. These constant market interventions by the Fed are what's known as Central Planning and it's supposedly what every "true" capitalist tells us they are against. Ironically, at this juncture, without Central Planning, capitalism would be obliterated by the inevitable demand collapse. So these crony capitalists now fully dependent upon the Fed, are only against Central Planning when it benefits the average person, when it benefits them, it's A-Ok.

4) Ignored profit warnings - profit warnings running at the fastest pace since 2001. Just yesterday, Caterpillar, Oracle, Fedex...

5) A Rising dollar - despite the Fed's best efforts to dilute the dollar, there is no better indicator that the Fed's attempt at Central Planning is losing efficacy, than a rising dollar. For these past four years, Central Banks have influenced the marginal willingness of speculators to take risk i.e. the binary "Risk On" mode. However, they can't control the actions of 300 million people let alone 7 billion people indefinitely. They don't control asset allocation decisions in the face of real risk, which means they can't control what happens next in "Risk Off" mode which has now been delayed so long, it's well overdue.

> Options volatility - 6 year low
> Leading Economic Indicators
> P/E Ratios
> Profit Margins - All time high
> Options Put/Call ratios
> #New Highs/Reversals ("Climaxes")
> Polled Sentiment
> Stock Margin Debt - Back at 2007 levels
> Insider Selling (2 year high)

Last but not least, perma-bear bloggers like this one, looking stupid for four years straight, and thereby doing our part to convince the Idiocracy at large, that this pyramid scheme disguised as an economy, can go on forever.

If the entire goal of this four year "Extend and Pretend" program was to get as many people on board as possible with the latest Wall Street/Central Bankster scam, just prior to pulling the plug for the third time in 13 years, then it's Mission Accomplished. 

Fool me three times, shame on me...

S&P 500