iftttwall

On the heels of his recent appearance pouring cold water on Jim Cramer's housing recovery exuberance, recent Nobel Prize winner Bob Shiller unloads another round of uncomfortable truthiness (presumably on the basis of his future-proofing tenure guaranteed by the Nobel). "Bubbles look like this," Shiller tells Der Spiegel, adding that he is, "most worried about the boom in US stock prices." As Reuters reports, Shiller is concerned since "the world is still very vulnerable to a bubble," and with stock exchanges around the world at record highs despite an economy that is "still weak," the Nobel winner proclaimed, "this could end badly."

 

Via Reuters,

[Bob Shiller] believes sharp rises in equity and property prices could lead to a dangerous financial bubble and may end badly, he told a German magazine.

 

…

 

"I am not yet sounding the alarm. But in many countries stock exchanges are at a high level and prices have risen sharply in some property markets," Shiller told Sunday's Der Spiegel magazine. "That could end badly," he said.

 

"I am most worried about the boom in the U.S. stock market. Also because our economy is still weak and vulnerable," he said, describing the financial and technology sectors as overvalued.

 

…

 

"Bubbles look like this. And the world is still very vulnerable to a bubble," he said.

 

Bubbles are created when investors do not recognize when rising asset prices get detached from underlying fundamentals.

We tend to agree – bubbles do look like this…

…we observe a variety of other features typically associated with dangerous extremes:

• unusually rich valuations on a wide variety of metrics that actually have a reliable correlation with subsequent market returns; margin debt at the highest level in history and representing 2.2% of GDP (eclipsed only briefly at the 2000 and 2007 market extremes);
• a blistering pace of initial public offerings – back to volumes last seen at the 2000 peak – featuring “shooters” that double on the first day of issue;
• confidence in the narrative that “this time is different” (in this case, the presumption of a fail-safe speculative backstop or “put option” from the Federal Reserve); lopsided bullish sentiment as the number of bearish advisors has plunged to just 15% and bulls rush to one side of the boat;
• record issuance of covenant-lite debt in the leveraged loan market (which is now spreading to Europe);
• and a well-defined syndrome of “overvalued, overbought, overbullish, rising-yield” conditions that has appeared exclusively at speculative market peaks – including (exhaustively) 1929, 1972, 1987, 2000, 2007, 2011 (before a market loss of nearly 20% that was truncated by investor faith in a new round of monetary easing), and at three points in 2013: February, May, and today (see A Textbook Pre-Crash Bubble).

Many of us in the financial world know these to be classic features of speculative peaks, but there is career risk in responding to them, so even those who view the situation with revulsion can't seem to tear themselves away.

 

 

While I have no belief that markets follow any mathematical trajectory, the log-periodic pattern is interesting because it coincides with a kind of “signature” of increasing speculative urgency, seen in other market bubbles across history. The chart above spans the period from 2010 to the present. What’s equally unsettling is that this speculative behavior is beginning to appear “fractal” – that is, self-similar at diminishing time-scales. The chart below spans from April 2013 to the present. On this shorter time-scale, Sornette’s “finite time singularity” pulls a bit closer – to December 2013 rather than January 2014, but the fidelity to this pattern is almost creepy. The point of this exercise is emphatically not to lay out an explicit time path for prices, but rather to demonstrate the pattern of increasingly urgent speculation – the willingness to aggressively buy every dip in prices – that the Federal Reserve has provoked.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/_DAzCwweo2I/story01.htm Tyler Durden

While even the most naive private sector cyber-experts knew well in advance that an effective rewrite of Obamacare’s 500 million lines of code would take a “little longer” than the month promised by the government in advance of the November 30 fix deadline, the Obama administration went ahead with its much touted healthcare.gov relaunch anyway. The results have been mixed.

The WSJ quotes Obama administration officials who said Sunday there has been “dramatic progress” in fixing HealthCare.gov but acknowledged “there is more work to be done” in improving the site and its underlying technology and that technicians for the site said they will not be able to fix all the glitches by the deadline.

Centers for Medicare and Medicaid Services officials released an eight-page report Sunday morning offering a few details of progress in fixing the site, which crashed shortly after its launch Oct. 1.

The site now allows 50,000 people to use it at the same time, according to the report, and wait times for Internet pages to load have dropped from 8 seconds to less than a second. More than 400 fixes have been made to the site.

 

“The bottom line, HealthCare.gov on Dec. 1 is night and day from where it was on Oct. 1,” said Jeffrey Zients, the Obama aide tasked with fixing the technical mess, in a call with reporters.

Ironically, if Obamacare ends up being the success Obama has portrayed it as since day one, and traffic to the website surges (as is needed for Obamacare to become financially viable as opposed to just stop showing 404 screens), it is likely that it will crash once again. CMS representative Julie Bataille cautioned, “If there are extraordinary high spikes in traffic, which exceed the site’s capacity, consumers will be put in a new advance queuing system that will give them an expected wait time, or allow them to be notified via email when they can return to the site.” Aka: F5.

That said, assuming the website is indeed finally fixed, it is clear who should be thanked: Google and Oracle. “Contractors and outside engineers from Google Inc. and Oracle Corp. brought in by Obama administration officials have been working overtime over the past five weeks to try to fix the site and its underlying technology, including systems that send information and payments to insurers. Administration officials say they installed fixes this weekend to address erroneous customer data that have been sent to insurers. They won’t know if that issue has been fixed until more consumers get through the enrollment process and more customer data is sent to insurers, said Julie Bataille, a CMS spokeswoman.”

In other words, you have to sign up for Obamacare, to find out not only what’s in it and what your premiums will be, but if it has even been fixed.

Finally, those still confused about the enrollment process, will get some much needed clarity from the flowchart below.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/FvB3dFzSaUk/story01.htm Tyler Durden

While even the most naive private sector cyber-experts knew well in advance that an effective rewrite of Obamacare’s 500 million lines of code would take a “little longer” than the month promised by the government in advance of the November 30 fix deadline, the Obama administration went ahead with its much touted healthcare.gov relaunch anyway. The results have been mixed.

The WSJ quotes Obama administration officials who said Sunday there has been “dramatic progress” in fixing HealthCare.gov but acknowledged “there is more work to be done” in improving the site and its underlying technology and that technicians for the site said they will not be able to fix all the glitches by the deadline.

Centers for Medicare and Medicaid Services officials released an eight-page report Sunday morning offering a few details of progress in fixing the site, which crashed shortly after its launch Oct. 1.

The site now allows 50,000 people to use it at the same time, according to the report, and wait times for Internet pages to load have dropped from 8 seconds to less than a second. More than 400 fixes have been made to the site.

 

“The bottom line, HealthCare.gov on Dec. 1 is night and day from where it was on Oct. 1,” said Jeffrey Zients, the Obama aide tasked with fixing the technical mess, in a call with reporters.

Ironically, if Obamacare ends up being the success Obama has portrayed it as since day one, and traffic to the website surges (as is needed for Obamacare to become financially viable as opposed to just stop showing 404 screens), it is likely that it will crash once again. CMS representative Julie Bataille cautioned, “If there are extraordinary high spikes in traffic, which exceed the site’s capacity, consumers will be put in a new advance queuing system that will give them an expected wait time, or allow them to be notified via email when they can return to the site.” Aka: F5.

That said, assuming the website is indeed finally fixed, it is clear who should be thanked: Google and Oracle. “Contractors and outside engineers from Google Inc. and Oracle Corp. brought in by Obama administration officials have been working overtime over the past five weeks to try to fix the site and its underlying technology, including systems that send information and payments to insurers. Administration officials say they installed fixes this weekend to address erroneous customer data that have been sent to insurers. They won’t know if that issue has been fixed until more consumers get through the enrollment process and more customer data is sent to insurers, said Julie Bataille, a CMS spokeswoman.”

In other words, you have to sign up for Obamacare, to find out not only what’s in it and what your premiums will be, but if it has even been fixed.

Finally, those still confused about the enrollment process, will get some much needed clarity from the flowchart below.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/FvB3dFzSaUk/story01.htm Tyler Durden

 

 

The markets are entering a blow off top.

 

For five years, by keeping interest rates near zero, the Fed has been hoping to push investors into the stock market. The hope here was that as stock prices rose, investors would feel wealthier (the “wealth effect”) and would be more inclined to start spending more, thereby jump-starting the economy.

 

This has not been the case.

 

From 2007-early 2013, individual investors fled stocks for the perceived safety (and more consistent returns) of bonds. During that time, investors have pulled over $405 billion out of stock based mutual funds.

 

The pace did not slow throughout this period either with investors pulling $90 billion out of stock based mutual funds in 2012: the largest withdrawal since 2008.

 

In contrast, over the same time period, investors put over $1.14 trillion into bond funds. They brought in $317 billion in 2012, the most since 20008.

 

Throughout this period, the market rose, largely due to institutional buying. Every time the market started to collapse, “someone” stepped in and propped it up. Consequently, institutional traders were not committed to a collapse, and gradually the market moved higher.

 

At this point the “mom and pop” crowd was, for the most part, not participating in the rally.

 

That all changed in early 2013. Suddenly the “crowd” began to get religion about the Fed’s monetary madness and piled into stocks. We’ve now reached truly manic proportions: thus far in 2013, investors have put $277 billion into stock mutual funds.

 

This is the single largest allocation of investor capital to stock based mutual funds since 2000: at the height of the Tech bubble. That year, investors put $324 billion into stocks. We might actually match that inflow this year as we still have two months left in 2013.

Indeed, investors are reaching a type of mania for stocks. They put $45.5 billion into stock based mutual funds in the first five weeks of October. If they maintain even half of that pace ($22.75 billion) for the remainder of the year, we’ll virtually tie the all-time record for stock fund inflows in a single year.

As a result of this, the market has entered a blow off top from a rising wedge pattern.  You can clearly see the mania beginning to hit in the middle of 2013.

 

 

So, we have investor sentiment showing record bullishness, investors are piling into stocks at a pace not seen since 1999-2000: at the height of the Tech Bubble, earnings are generally falling, the global economy is contracting, and the Fed is already buying $85 billion worth of assets per month.

 

We all know how this bubble will burst: badly. It’s just a question of when. The smart money is either selling into this rally (Fortress and Apollo Group) or sitting on cash (Buffett). They know what’s coming and are waiting.

 

For a FREE Special Report outlining how to protect your portfolio from a market collapse, swing by: http://phoenixcapitalmarketing.com/special-reports.html

 

Best Regards

Phoenix Capital Research 

 

 

 

 

 

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/CckIcPZUCl4/story01.htm Phoenix Capital Research

As reported yesterday, in the aftermath of the violent crackdown on a pro-Europe rally, and the resulting call by the opposition for president Yanukovich’s resignation through nationwide strikes, the situation in the Ukraine is increasingly more unstable. Moments ago Reuters reported that Ukrainian nationalist protesters broke into Kiev’s city hall and were occupying at least part of the building during mass protests that drew several hundred thousands out on the streets to protest the government’s decision to forego an EU deal. Nationalist leader Oleh Tyahniboh told Interfax that representatives of his party had taken over the building. “Today literally 40 minutes ago, our boys took the Kiev Council,” he told crowds on Kiev’s Independence Square.

Some more detail on the rally itself via Reuters:

Hundreds of thousands of Ukrainians shouting “Down with the Gang!” rallied on Sunday against President Viktor Yanukovich’s U-turn on Europe and some used a building excavator to try to break through police lines at his headquarters.

 

The rally, by far the biggest seen in the Ukrainian capital since the Orange Revolution nine years ago, came a day after a police crackdown on protesters that inflamed demonstrators further after Yanukovich’s policy switch.

 

Last month Yanukovich – after months of pressure from former Soviet master Russia – backpedalled from signing a landmark deal on closer relations with the European Union in favour of closer ties with Moscow.

 

To try to defuse tensions before Sunday’s rally, Yanukovich issued a statement saying he would do everything in his power to speed up Ukrainian moves toward the EU.

 

In a sea of blue and gold, the colours of both the EU and Ukrainian flags, protesters swept into Kiev’s Independence Square to hear heavyweight boxer-turned-opposition politician Vitaly Klitschko call for Yanukovich to resign.

 

“They stole the dream. If this government does not want to fulfil the will of the people, then there will be no such government, there will be no such president. There will be a new government and a new president,” he said to cheers.

 

Far-right nationalist Oleh Tyahniboh, another opposition leader, called for a national strike. “From this day, we are starting a strike,” he declared.

 

“I want my children to live in a country where they don’t beat young people,” said protester Andrey, 33, the manager of a large company, who declined to give his surname for fear of reprisals against him.

At what point will Russia have to step in, either directly or indirectly, to preserve the new post-USSR world order it has so carefully and meticulously achieved so far?

Live webcast from the Ukraine below:

Live streaming video by Ustream

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/SAuLwT5h2A0/story01.htm Tyler Durden