Don’t pay attention to prophets of doom who only have facts to reference. You need to believe the Wall Street shysters who are pumping out shitty money losing IPOs as fast as they can. You need to believe mega-corporation CEOs who are selling their own stocks at a record pace. You need to believe the bimbos and boobs on CNBC who are paid to mouth the Wall Street mantra of best time to buy. Don’t let facts and history get in the way of a good story. Just like October 2007. Wall Street needs a few good muppets to keep their party going.
Peak Bubble 2.0: The Market Is Now Exactly As Overvalued As It Was At The Last Bubble Peak
Submitted by Tyler Durden on 04/04/2014 12:48 -0400
According to this chart from JPM the market’s forward P/E ratio now is precisely 15.2x. What was it at precisely the last bubble peak on October 9, 2007? 15.2x.
Everyone knows what happened next.
Source: JPM
I don’t fully understand financial charts.
But I do understand Dead Muppets. Thank yeew.
2014-04-04 11:13 by Karl Denninger
Note: Severe Technical Damage
The “high flyers” have been getting pounded pretty good as of late.
But recently a number of these names — like Netflix — have taken some fairly-severe technical damage.
These names have not, as of yet, violated critical levels — but several of them are close to doing so.
Netflix, for example, is close to violating it’s 200MA. It has not traded under the 200 day since late 2012!
Amazon has violated it’s 200MA with authority. It poked there a few times in 2012 and 2013, but since 2012 it has not traded below it to any material degree or for any length of time. This is no longer true.
Facebook hasn’t traded under the 100MA since mid 2013. It has now broken that level.
As I write this the Nasdaq 100 is off 81 handles, or 2.25%. That’s a decent move, but not a “plunge.”
Yet.
But there is something to pay attention to here, because when momentum stocks that are trading on field of dreams visions instead of actual earnings roll over it is not unreasonable to believe that they may have no price support floor under them at all since their businesses are not generating material profits in the form of earnings per-share.
This is the same process that got going in 2000, and the triggering event was a little company having a wee restatement problem — utterly unconnected to all the other names in the space.
The point here is that you don’t need an actual reason for these stocks to break, and thus for the market to break hard. You only need some critical mass of people to wake up one morning and realize that they just paid $10,000 for a tulip bulb, and it all goes to hell.
One final point: Margin debt is at all time highs, which means that if this picks up steam the odds of it accelerating dramatically due to margin calls is quite elevated.
Bimbos and boobs…..it sorta sounds like your hate’n on Maria “The Money Honey”….what ever happended to Becky do-me Quickly anyway – did Uncle Warren lock her away on a private retreat somewhere?
I know people who are smart and dumb and content who will soon be smart and really angry. I got a buddy that just wants to know when….yeah, he’s pretty much fucked. I’ll bet you know them too. Kermit going down is one thing, but when you mess with the blue monster its just too much – I gots ta luk waay.
“You only need some critical mass of people to wake up one morning and realize that they just paid $10,000 for a tulip bulb, and it all goes to hell.”
Hold on a sec … isn’t something like just 5% of the American public invested in the stock market?
Anecdotal, but within the last two days I heard a minimum wage employee crowing about joining the 401K plan and a college student explaining why its important his parents signed him up for a credit card so he can start building a credit score “you, know, for buying a house and stuff.”
Only a small sliver of the population has learned anything from 2008.
I don’t think its a coincidence the HFT algo news suddenly went mainstream, several years after many of us knew about it. Wall Street is preparing to sacrifice a small segment of their own as a scapegoat foundation for their next major bubble.
@PJ – Probably in individual stocks, but when you add in IRAs and 401ks the number grows by leaps and bounds.
According to my lazy google fu, more than 54% of Americans held stocks of some sort in 2011, down from 67% in 2002.
Source: http://www.gallup.com/poll/147206/Stock-Market-Investments-Lowest-1999.aspx
According to an article from CNN (citing a gallup poll) 52% of US adults currently claim to hold stocks of some sort.
Source: http://money.cnn.com/2013/05/09/investing/american-stock-ownership/
Anecdotal evidence: Despite have friends that are almost exclusively millenial, we all have stocks of some sort, either IRA or 401k.
My wife has an individual stock (singular, one). When we were 19 she asked me for “anything from Tiffany and Company.” Being the smartass that I am, I bought her a stock from OneShare.com and she loved it even more than jewelry. Got it framed and everything.
Lucky me, back then the stock was only worth $30, but the cheapest jewelry I could find was $100 and I was dirt poor. Sometimes being a smartass pays off.
PJ, pension plans and lots of institutional investing is in stocks. The over pricing of the stock market is less relevant to the economical health of the nation, than income and wealth inequality. A stock market revaluation would only be a symptom of deeper societal woes.
I read today, just got back from a camping vacation with no internet, so this may be a few days old, but Michigan just became the 34th state calling for a constitutional convention ostensibly to consider a balanced budget amendment for the feds. Good luck with that considering they’re over $200T in debt, including unfunded liabilities. It would be worth it if part of the process is repealing the FRA of 2013.
The concern is what else a constitutional convention might unleash. The feds are going to crash and burn, that writing is on the wall. Why should be pay interest on our own money, which is merely printed paper anyway? It’s going to be hell, but the bankers need to be cast out, and I would be in support of a balanced budget amendment to the US constitution.
Hey Joe , I know….don’t have children….
Posted by Jesse at 7:10 PM
Gold Daily and Silver Weekly Charts – Pop Go the Weasels – Thank You To Zerohedge et al.
Stocks dumped hard on post end of quarter selling, even though the economic news was not too hot and not too cold.
The metals came roaring off their oversold conditions with gold leading the push higher.
There was little activity in the Comex gold warehouse, and a few more traders stood for delivery.
I explained again the other day that not all those who stop a futures contract for delivery actually end up taking the physical gold. And further, if they do take it, that may not be reflected immediately in the warehouse report, because they take the title to the gold if you will, but may not move it or change its status right away. So we can see a lag, or even nothing.
But again, as I seemingly have to say again and again, the Comex setting gold prices is the tail wagging the dog. It is just that the tail is easier to see.
Gold is moving from West to East, and the glimpses we get of that trade confirms its size. And I think we understand why it is moving, because a great change is taking place in the world’s thinking on international currencies.
It appears that the currency war may be heating up on a number of fronts: Russia Prepares To Attack the Petrodollar. If someone is going to attack something, why would they preannounce it? Most likely in response to the threat of increased sanctions I would imagine. The US has expressed its displeasure that Russia is crafting a bilateral trade deal with Iran, and has threatened additional sanctions if they break the embargo on that country.
There are some increased international tensions certainly, and some of the most recent movement in gold, which is outpacing silver, *might* be due to a flight to safety or supply pressures in the markets where physical supply really makes a difference.
This is playing out and we have to be patient in watching it, and try not to fill in the blanks too aggressively with what can be or might be. But as for what is, I think we have a decent idea of the longer term reasons why things are happening the way that they are.
I have included a special thanks to Zerohedge and the other bloggers in my stock market commentary today. I started to thank ZH for publishing an interesting stock valuation chart from JPM, and then I started thinking about all the other sites I look at every day, and felt a need to just say ‘thank you.’ They are included in my blogroll, and there are quite a few. You can scroll down or simply click here for the stock market comments.
It is easy for us to criticize each other, and find those areas where we might disagree, often on details and interpretations. But I think we can all agree that without the internet, and the bloggers and columnists who work long hours for relatively little reward, the void created in the news by the mainstream media would be even more intimidating and daunting than it already is.
Have a pleasant weekend. Spring is in the air.
Market is in an uptrend until it is not.