Macro Warnings

From ZH. Been expecting something akin to this for a while now:

8 – Based on the reasons set out earlier and also covered in my two prior notes, over the August to November period I am looking for the S&P500 to trade off down from around 1400 to 1100/1000 – in other words, I expect over the next four months to see global equity markets fall by 20% to 25% from current levels and to trade at or below the lows of 2011! US equity markets, along with parts of the EM spectrum, will I think underperform eurozone equity markets, where already very little hope resides. For iTraxx crossover, this equates to a spread wide for 2012 of – in my view – 800/1000bp. NOTE however that investment grade cash corporate (non-financial) bonds remain a core (relative!) safe-haven. This four-month coming major risk-off phase will, in my view, also be very USD bullish (my expectation of Fed USD1trn QE in December should eventually alter the bullish USD trend of course) and bullish core government bonds (USTs, Gilts, Bunds) – perhaps we could see 10yr Bunds at 50bp all-in yields, with USTs and Gilts at/close to 1%. By late 2012, based on my Fed December QE view, my tactical call will likely turn bullish/risk-on – let us see about that closer to the time. And of course I still see a very clear path to 800 on the S&P500 at some point in 2013/2014, driven by market revulsion against pump-priming money printing central bankers, but this discussion is also for nearer the time.

You have been warned!

The system is backed up and needs an adjustment. Has for a long time now.

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Macro Econimics: S&P 2012 YE Projection Data

See Zerohedge here.

Specifically we are looking at Bank of America, which with a forecast surge in Earnings from ($2.5) billion to $10 billion accounts for 14.1% of the entire change in S&P earnings forecasts. And since the S&P is simply the Earnings number multiplied by some multiple, all consensus views that have 1400 as their 2012 year end forecast rely on bank of America to account for nearly 20 S&P points!

I’m not which random orifice they are pulling this data from, but in the end it doesn’t matter. Projections like this are bitterly ludicrous. They will in no way ever come to fruition. BAC is currently trading under $6 a share. Relying on this insolvent corporation to account for 20 S&P points by the end of 2012 is simply not going to happen.

This is the kind of large scale movement that you need to keep an eye on. While there is nothing you can do about it, it is sound intel and should serve as a blatant warning that the disconnect between the elites and reality is wide indeed.

Didn’t Expect it to Take This Long

I spoke about this earlier in the week.

Karl posted about it (more eloquently & elaborately than i) this morning. I felt it worthy another comment.

I am very surprised (really, i am) that this has only now come to a head. Macro forces being what they are, I estimated that around December of 2010 you would start seeing reports of this from the state controlled media. While this Christmas season was abysmal, it got the spin treatment in force.

Perhaps this is a calculated effort? /me puts on tinfoil hat.

Perhaps it’s time to watch the other hand?