Since the 666 low, ZH has consistently pounded the drum of fear and bad tidings. And of course, they were consistently wrong. Wrong as in out of the ballpark wrong.
Back in May, when Zero Hedge said we should hide in a cave, I said the most reckless bull would be the one who would be deemed the most prescient:
That headline makes as much sense as those who now say we are now heading into the 5th and final leg down of this market. It's just Poppycock. This economy, and this stock market, will reward the most outlandish bull, and the most bullish economic forecasts. It's not a market, or an economy for the timid.This market will give no quarter to the bears, no quarter for the pessimists, and no quarter for the professors and their statistics of gloom.
It will also give no quarter to the deflationistas, and no quarter to anyone who thinks our Government paper is worthwhile holding.
So short PIMCO, Peter Schiff, Whitney Tilson, Nourel Roubini, and Blackrock Bob Doll's conservatism and any other money manager of the same ilk, and go long Pollyanna. Because that's how you are going to make money. Today, this stategy will be known as reckless. Next year, it will be deemed prescient.
Did that work? Reckless became prescient!
As everyone that reads me knows, I'm touting 1440 on the S&P 500 by June. 1440. Not one strategist, not one Wall Street tout or pimp has that for a target.
So what will happen?
Look for 1440. Heck, round it up to 1444! Because you had confirmation on that by Zero Hedge---who never got a prediction right!
Look at the latest fear bogeyman that we are supposed to be afraid of by ZH. Whatever.
As everyone is engrossed by assorted groundless Christmas (and other ongoing bear market) rallies, and oblivious to the debt monsters hiding in both the closet and under the bed, Zero Hedge has decided it is about time to present the ugliest truth faced by our 'intellectual superiors' and their Wall Street henchman who succeeded in pulling off Goal #1 for 2009 - the biggest ever bonus season (forget record bonuses in 2010... in fact, scratch any bonuses next year if what is likely to transpire in the upcoming 12 months does in fact occur).
If someone asks you what happened in 2009, the answer is simple - two things. There was a huge credit and liquidity crunch, and then there was Quantitative Easing. The last is the Fed's equivalent of band-aiding a zombied and ponzied corpse, better known as the US economy. It worked for a while, but now the zombie is about to go back into critical, followed by comatose, and lastly, undead (and 401(k)-depleting) condition.
Back to the math... And here is the kicker. Accounting for securities purchased by the Fed, which effectively made the market in the Treasury, the agency and MBS arenas, but also served to "drain duration" from the broader US$ fixed income market, the stunning result is that net issuance in 2009 was only $200 billion. Take a second to digest that...
Out of the $2.22 trillion in expected 2010 issuance, $200 billion will be absorbed by the Fed while QE continues through March. Then the US is on its own: $2.06 trillion will have to find non-Fed originating demand. To sum up: $200 billion in 2009; $2.1 trillion in 2010. Good luck.
And ZH's conclusion? The Fed has three options.
- Do more QE.
- Prepare for a major increase in interest rates.
- Or engineer a 30% stock market crash.
If the Fed decides on option three, we fully believe a 30% drop (or greater) in equities is very probable as the new supply/demand regime in fixed income becomes apparent. We hope mainstream media takes the ideas presented here and processes them for broader consumption as indeed the Fed is caught in a very fragile dilemma, and the sooner its hand is pushed, the less disastrous the final outcome for investors.
Now what's the S&P at? 1120ish? ZH says we could fall 30%. What if instead, we rally 30%. Wouldn't that then put us above 1440?
If ZH was wrong on just about every prediction they made on the stock market last year, why would this be any different?
Did they say the NAZ would be up 43% for the year? Back in May? Or to buy the bottom at 666? Back in March? Or have a target of 1120ish for the S&P for 2009? Or to sell every bit of your Govt. paper on New Years Day 2009?
So now you have the confirmation of where the market is going.
You just have to read between the lines!
They missed Door number 4!
Just put a one in front of it!!
Back in May, when I said you should be reckless, I ended that post with this:
Maybe they should just listen to some old Led Zeppelin. They can start with No Quarter.
They choose the path where no-one goes.
They hold no quarter, they hold no quarter.
Walking side by side with death
The devil mocks their every step
This market is the devil's bird thrown at the bears!
It still stands today!