The talking heads will be rolled out on CNBC to assure the masses that all is well. The economy is strong. Corporate profits are awesome. The stock market will go higher. Op-eds will be written by Wall Street CEOs telling you it’s the best time to invest. Federal Reserve presidents will give speeches saying there are clear skies ahead. Obama will hold a press conference to tell you how many jobs he’s added and how low the budget deficit has gone.
We couldn’t possibly be entering phase two of our Greater Depression after a temporary lull provided by the $8 trillion pumped into the veins of Wall Street by the Fed and Obama. Could we?
1927-1933 Chart of Pompous Prognosticators
Chart locations are an approximate indication only
- “We will not have any more crashes in our time.”
– John Maynard Keynes in 1927 - “I cannot help but raise a dissenting voice to statements that we are living in a fool’s paradise, and that prosperity in this country must necessarily diminish and recede in the near future.”
– E. H. H. Simmons, President, New York Stock Exchange, January 12, 1928“There will be no interruption of our permanent prosperity.”
– Myron E. Forbes, President, Pierce Arrow Motor Car Co., January 12, 1928 - “No Congress of the United States ever assembled, on surveying the state of the Union, has met with a more pleasing prospect than that which appears at the present time. In the domestic field there is tranquility and contentment…and the highest record of years of prosperity. In the foreign field there is peace, the goodwill which comes from mutual understanding.”
– Calvin Coolidge December 4, 1928 - “There may be a recession in stock prices, but not anything in the nature of a crash.”
– Irving Fisher, leading U.S. economist , New York Times, Sept. 5, 1929 - “Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months.”
– Irving Fisher, Ph.D. in economics, Oct. 17, 1929“This crash is not going to have much effect on business.”
– Arthur Reynolds, Chairman of Continental Illinois Bank of Chicago, October 24, 1929“There will be no repetition of the break of yesterday… I have no fear of another comparable decline.”
– Arthur W. Loasby (President of the Equitable Trust Company), quoted in NYT, Friday, October 25, 1929“We feel that fundamentally Wall Street is sound, and that for people who can afford to pay for them outright, good stocks are cheap at these prices.”
– Goodbody and Company market-letter quoted in The New York Times, Friday, October 25, 1929 - “This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan… that any man who is bearish on America will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years.”
– R. W. McNeel, market analyst, as quoted in the New York Herald Tribune, October 30, 1929“Buying of sound, seasoned issues now will not be regretted”
– E. A. Pearce market letter quoted in the New York Herald Tribune, October 30, 1929“Some pretty intelligent people are now buying stocks… Unless we are to have a panic — which no one seriously believes, stocks have hit bottom.”
– R. W. McNeal, financial analyst in October 1929 - “The decline is in paper values, not in tangible goods and services…America is now in the eighth year of prosperity as commercially defined. The former great periods of prosperity in America averaged eleven years. On this basis we now have three more years to go before the tailspin.”
– Stuart Chase (American economist and author), NY Herald Tribune, November 1, 1929“Hysteria has now disappeared from Wall Street.”
– The Times of London, November 2, 1929“The Wall Street crash doesn’t mean that there will be any general or serious business depression… For six years American business has been diverting a substantial part of its attention, its energies and its resources on the speculative game… Now that irrelevant, alien and hazardous adventure is over. Business has come home again, back to its job, providentially unscathed, sound in wind and limb, financially stronger than ever before.”
– Business Week, November 2, 1929“…despite its severity, we believe that the slump in stock prices will prove an intermediate movement and not the precursor of a business depression such as would entail prolonged further liquidation…”
– Harvard Economic Society (HES), November 2, 1929 - “… a serious depression seems improbable; [we expect] recovery of business next spring, with further improvement in the fall.”
– HES, November 10, 1929“The end of the decline of the Stock Market will probably not be long, only a few more days at most.”
– Irving Fisher, Professor of Economics at Yale University, November 14, 1929“In most of the cities and towns of this country, this Wall Street panic will have no effect.”
– Paul Block (President of the Block newspaper chain), editorial, November 15, 1929“Financial storm definitely passed.”
– Bernard Baruch, cablegram to Winston Churchill, November 15, 1929 - “I see nothing in the present situation that is either menacing or warrants pessimism… I have every confidence that there will be a revival of activity in the spring, and that during this coming year the country will make steady progress.”
– Andrew W. Mellon, U.S. Secretary of the Treasury December 31, 1929“I am convinced that through these measures we have reestablished confidence.”
– Herbert Hoover, December 1929“[1930 will be] a splendid employment year.”
– U.S. Dept. of Labor, New Year’s Forecast, December 1929 - “For the immediate future, at least, the outlook (stocks) is bright.”
– Irving Fisher, Ph.D. in Economics, in early 1930 - “…there are indications that the severest phase of the recession is over…”
– Harvard Economic Society (HES) Jan 18, 1930 - “There is nothing in the situation to be disturbed about.”
– Secretary of the Treasury Andrew Mellon, Feb 1930 - “The spring of 1930 marks the end of a period of grave concern…American business is steadily coming back to a normal level of prosperity.”
– Julius Barnes, head of Hoover’s National Business Survey Conference, Mar 16, 1930“… the outlook continues favorable…”
– HES Mar 29, 1930 - “… the outlook is favorable…”
– HES Apr 19, 1930 - “While the crash only took place six months ago, I am convinced we have now passed through the worst — and with continued unity of effort we shall rapidly recover. There has been no significant bank or industrial failure. That danger, too, is safely behind us.”
– Herbert Hoover, President of the United States, May 1, 1930“…by May or June the spring recovery forecast in our letters of last December and November should clearly be apparent…”
– HES May 17, 1930“Gentleman, you have come sixty days too late. The depression is over.”
– Herbert Hoover, responding to a delegation requesting a public works program to help speed the recovery, June 1930 - “… irregular and conflicting movements of business should soon give way to a sustained recovery…”
– HES June 28, 1930 - “… the present depression has about spent its force…”
– HES, Aug 30, 1930 - “We are now near the end of the declining phase of the depression.”
– HES Nov 15, 1930 - “Stabilization at [present] levels is clearly possible.”
– HES Oct 31, 1931 - “All safe deposit boxes in banks or financial institutions have been sealed… and may only be opened in the presence of an agent of the I.R.S.”
– President F.D. Roosevelt, 1933
2014-10-15 15:31 by Karl Denninger
Netfux Is Done (-26%)
Vindication comes to the patient…
HBO’s streaming announcement didn’t help, and neither did weak guidance and decelerating growth.
When you’re priced at 134x earnings absolutely nothing can go wrong or you get destroyed.
In this case if you were long the stock you just saw 26% of your money evaporate within 30 minutes.
PS: Just wait until the other dominoes come down on this one…… Raise your glass to stupidity America, bidding up stocks to 134x earnings is, well, stupid — and when you get reamed doing it just remember who’s fault it is that you got so greedy as to not sell out before this point — YOURS.
Oh, by the way, what’s Amazon’s P/E?
THAT DIDN’T TAKE LONG
Market fundamentals have not changed: Goldman Sachs CFO
By Sital S. Patel
Published: Oct 16, 2014 10:09 a.m. ET
NEW YORK (MarketWatch) — Goldman Sachs Group Inc. GS, -2.88% believes over the long-term, markets follow fundamentals, and the bank’s economists believe nothing has fundamentally changed the past few weeks, or certainly the last 24 hours, regarding the long-term outlook for the global economy. The market moves on Wednesday was “clearly a market in the morning where investors were, quite frankly, shooting first and asking questions later,” said Chief Financial Officer Harvey Schwartz during the bank’s third-quarter earnings call on Thursday. “Clearly, investors are now debating whether we will see lower rates for longer, and more importantly, whether the global economy is slowing or continuing to grow,” he said. “We have seen this market reaction in the past, and while painful, it’s somewhat a normal part of how markets function.” The market’s selloff Wednesday is a reminder about the power of investor sentiment and how fragile it can be at times, said Schwartz.
Administrator says:
THAT DIDN’T TAKE LONG
NO IT DID NOT
Hiding From The Destruction
Monty Pelerin
October 15, 2014
Financial markets appear headed toward destruction. Destruction is not meant to mean the end of markets, just a massive overdue correction that will bring markets closer to the underlying crummy economies which are supposed to support them.
Stock markets around the world appear to be in their destruction phase. While the last weeks have been extremely painful, SPY (ETF for the S&P 500) is off less than ten percent from its highs. It his a high of around 200 and closed today at around 186. Call it a 7% drop from the high in mid October.
A correction is generally defined as 10% or more. Is this market going to turn around or continue downward. My belief, and it is no better than yours, is that the destruction phase has just begun and has a long way to run. There is no way to predict whether 10, 20, 30% or more will occur before the destruction phase ends. My guess is that it is 30 or more percent, which if true, means “we haven’t seen nothin yet!”
If that sounds unrealistic to you, then so be it. Recall however that in the first ten years of this century we had two drops from highs to lows each of which exceeded 50%!
Is there anywhere to hide from this destruction? Some say no, just put your money under the mattress for a while until the destruction phase ends. That is certainly the surest way of protecting your nominal wealth. Only if the dollar loses purchasing power will you lose real wealth. If you believe that all of the increased liquidity by governments around the world is conducive to fiat currency holding its purchasing power you might also believe in the tooth fairy.
To be sure, there is no certain or sure way to preserve your wealth given the state of economies, monetary policy and economic conditions. Everything you do involves a risk, whether you recognize it or not.
Peter Hug provides his opinion of what to do or where to hide in the following piece:
Nowhere To Hide? Not True!
Wednesday October 15, 2014 14:29
I guess I should qualify the following, because if you are an American this may not be as valid, but it may become more urgent as time moves forward. Today the U.S. equity markets are getting slaughtered, as U.S. economic growth is beginning to wane. The 10-year bond travelled under 2%, as investors were terrified and looking for a safe haven. Europe is on the verge of another economic Armageddon and geo-political risks continue to accelerate in the Middle East. Where to hide? Well gold popped some $20, but as an American investor so what, what’s the big deal. I agree: from the beginning of the year gold is up a paltry 3% in US$ terms. But what if you’re a Canadian or a European? Canada has seen its stock market evaporate to the tune of 12%, in the last few weeks, as commodity complexes disintegrate, against the back drop of global deflation. Gold in Canadian terms started 2014 at +/- $1,280 and is now at +/- $ $1,405. For a German, gold in Euro terms has increased 10.3% since the beginning of the year. The fundamental drop in value for the C$/US$ is 6% since the beginning of the year and for the Euro the drop has been 6.5%. So for the Canucks and the Europeans, gold has provided what it is intended to provide, protection. Our American friends may be next.
What Mr. Hug suggests would have cost you wealth prior to this period. Gold has lagged behind most other asset classes for the last few years. Perhaps it time is now, or perhaps not.
Regardless of what you do, caution should guide your actions. These are dangerous times!
Fundamentals no longer exist in a world where the Fedgov cranks out shit numbers and the MSM supports their lies. I don’t think anyone really knows or understands the true picture and that’s really scary. Best “us folks” can do is keep stackin’ if you have the dough, and if not buy extra spam and peas.