Well It didn’t take long (a new all time never before seen in the history of mankind always fuels this) before not only did I once again begin receiving smirks from others in regards to my thoughts on the financial markets, but a few thought they would jab a few elbows my way adding that maybe I should not have been so forth coming, or so quick to write my thoughts on what Tony Robbins had been expressing. For as one person said to me “You seem to have a little egg on your face.”
Yes, one could view it that way. And after all, when one is in the public arena and makes a statement publicly there are those that are going to question every aspect of it. (as they should) Especially when you’re talking or discussing a viewpoint diametrically opposed with some of the largest players on the world stages today. It comes with the territory at this level, and I both understand it, as well as accept it. It’s par for the course.
So with that said; I would like to express as well as expand what I was trying to get across using a different vehicle other than just words, but also with some pictures known as charts.
I’ve annotated them to try to make the argument for what I’ve been expressing for many years as opposed to what many in the financial media, as well as the media in general has been using as “the fundamental reasons” why the markets are where they are.
I’ll also add just one piece of history to bring some perspective on why I believe I have standing to state my ideas, and ask not to just brush them aside as “just another wanna-be trying to insert himself into a story or argument.”
Remember when High Frequency Trading (HFT) was nothing more than some “crazy tin-foil wearing people” making claims about something that basically didn’t exist let alone had any real impact within the financial markets?
This came from the highest authorities that either worked, owned, or regulated the firms of Wall Street. The “paper of record” as they would say in days before websites was non-other than ZeroHedge™ (ZH).
This was the lone voice (and still is in many ways) that pounded its keyboard over, and over, and over, again warning, documenting, and revealing the pernicious effects HFT was wreaking within the markets and the catastrophic effects that were growing beneath the surface that no-one was addressing.
Or, to state it better: No-one would even consider. Let alone acknowledge.
ZH is considered by some of the largest media news sites (both print, web, as well as radio and television) in the world today as the place where “the people who truly understand Wall Street express their views.” It is regarded as a “go to” site for many in the global media today.
I know there are many of you that probably don’t follow financial matters all that much where you also may have never really paid attention in hearing the name when you’re listening to your own news programs. But – now that you know. I’ll guarantee it’ll stick out next time you may hear it when listening to some news outlet.
As I’ve stated before you don’t just get to “contribute” as in a – you find them. It’s more like – they find you. You can’t even get a subscriber account name to receive email updates on what’s posted there without a 2 week wait in an “approval process” as they do some form of background checking. Again, that’s just to read and comment!
So with that said here’s just one instance that I’ll point to where I was personally part of the larger discussion where at the time what people like myself were stating was being disregarded, laughed at, and more. Then suddenly, what we were stating was no longer all so “tin-foil capped” crazy. To wit:
Michael Lewis’ Flash Boys: A Wall Street Revolt (March 2014 W.W. Norton & Co.) is released and rocks the financial house of cards. As I said earlier. The paper of record making that argument when no one else would? ZH. Suddenly the tin foil hat wearing monikers turned into more of an all-seeing turban styled viewpoint.
It was also both previous, as well as during, that period the regulatory bodies were still standoff-ish when it came to looking into the true underlying issues for potential criminality. Then this headline was posted on ZH.
“If HFT Algos Were People They’d Be Perp Walked”
that article was written by yours truly. What happened next? Just 4 hours later this hit the wires:
Like I’ve said previously. No one would even contemplate the impact of HFT at the time let alone the regulatory bodies as to look into any possible legal issues. However, you don’t need to be trying to spin or conflate this issue to show that just maybe – you were right when everyone (including the most powerful voices on Wall Street itself were stating people like myself “didn’t have a clue as to what we were talking about.”
We did, and just how much of a clue gets reported in greater detail every passing day. And the picture isn’t getting any better or more settling. As a matter of fact, it’s becoming even more frightening.
This is just one example, (and there have been more) but I think it’s an important one as to show those who may be new readers and wonder what gives me the standing to interject my opinions or ideas about Wall Street based issues since for many I’m just some “motivation” guy.
So with all that said I’ll shift into what is becoming far more dangerous in my view today that once again seems no one wants to either understand, contemplate, or worse – they just won’t admit it.
Here’s the first of 8 charts. They’re annotated so just click on them if you need to see them in a larger size to read more clearly.
First: Question 1.
This was the moment in time where it just seemed nothing could derail the economy. Everyone you knew seemed to have their own personal ATM machine. (Remember when owning a house seemed to fit that descriptor?)
Jobs were plentiful, construction was everywhere, people were shopping, buying cars, boats, vacations, luxury branded items, you name it. Getting a loan or credit card was as easy as breathing. And in some cases – breathing was optional. It was truly a form of economic euphoria for many. What was next to invest in, purchase, speculate, _________ (fill in the blank) Again – you name it. For good times seemed here to stay. The only question that wasn’t being asked was – for how long?
We found out. Not that long at all.
Near overnight everything you once thought, believed, or held dear as to your financial security or health was disappearing right before one’s very eyes.
Neighbors were suddenly being foreclosed upon, cars were being repossessed, stores closing, mass layoffs, businesses shuttering’s and far more.
Panic seemed to be both filling the air not only outside but inside one’s own home. What made matters worse were all those people who touted “they knew what to do” suddenly not only hadn’t a clue, they were just as dumbfounded and outright panic-stricken as their clients were.
Nobody knew what other proverbial shoe was to drop next. And just as many didn’t want to know.
The only answers any one wanted to know or hear were to: Would it stop? Or, would they survive it?
For the first time in months it seemed as if one could catch their breath and maybe put back the pieces of their financial life.
With a massive bailout now known as TARP and the introduction of another program tried for the first time known as QE1 the markets had not only seemed to stabilize but had regained some of its composure – although it was far from stable.
Then QE1 was touted as a one time only type fix and was ending. And with that end, out of the blue, the markets once again began to falter and began heading back toward the lows set during the first melt down stage.
This is where it became clear there truly was so much damage to the economic underpinnings of the capital markets that it was deemed unfit to be left on its own.
And with that then Fed. chairman Ben Bernanke make an announcement in what many deem (as do I) the “infamous” Jackson Hole speech. Where he announced the Fed. would basically not only reinstate QE, but would apply the pedal to the metal in a fashion never before seen in the history of the markets.
That took place precisely where that arrow points. Because up until that moment – all bets – were once again – off!
Now: The Real Question.
This is where we stand today with probably: the most important question that one can ask in relation to exactly how one views or how they’re going to treat their finances going forward.
Why is it so important? One would think the most important one was when we were nearing the abyss. After-all: Isn’t that the one? Along with answering: We answered it correctly did we not? After all -”Just look at that chart!”
I would like to say yes, but instead; I’ll base my answer this way…
When we started out at “Question 1″ it is hard for anyone who understands business, or finance, entrepreneurship, or even self-reliance and not see - we were a little ahead (or maybe even full) of ourselves.
The economy, the jobs, all of it was fueled by an over-extension of credit within the economy that all of us were able to partake in. And I do mean near everyone.
Many would say that’s where we are now. In just an over extension of free money equaling basically the same thing. And a growing number seem to making some case as to which; we now know more on what to do and could handle a similar shock if it ever appeared once again in much the same manner. i.e., “The Fed’s got your back!” So what’s all the worry about?
Even more are starting to fortify the: “Just do like they those guy’s on television say to do and “Buy the F’n dips!”
I mean, not for nothing – they’ve been right so far. Maybe it’s you that needs to ‘think like a billionaire’ and get with it. Obviously these people are currently ‘Kill’n it!’”
And therein lies the real question that one must answer first before moving past GO and receiving their proverbial $200.00
What you must honestly answer first before you can “think like a billionaire” or contemplate a myriad of possible other myths that may pertain to the financial markets is this:
As faulty as the markets were at the point before the markets fell. And – as hallucinatory as the financial exuberance was for good, or for ill. What was different then from today is the jobs were real, the houses being bought and sold were real, the shopping, the construction, all of it. Again “for good, or for ill” were real and everyone was basically reaping in the spoils.
That money (as in a literal economic fashion) did change hands, was put to work, however you want to describe it was there being swapped and exploited by near everyone.
Now, for all intents and purposes the only one’s that have benefited this time are the top 1%. The other 99% are more concerned about the economy than ever, because they know and can plainly see just by looking out their own front doors – this economy looks nothing like the economy that supported similar levels just a few short years ago. Regardless of any report or chart being touted and used to support validity on why “It’s different this time!”
Today, from where that third arrow sits, precisely where the Fed announced QE would not only once again be tried, but the amount to be unleashed will be one for the history books to wonder over for generations. All the way to the final arrow at the top where we are today. That whole rise, all of it – has absolutely nothing remotely close to the fundamental economic underpinnings or economics we had before the crisis.
Or if I may be so bold to say – anything to do with what you or I took to understand as “fundamental economics.” These “fundamentals” are more inline with “funny/fuzzy-mentals” which for my money ipso facto proves the markets themselves – are the myth.
The jobs aren’t there, the sales, the construction, the loans, the housing. There’s now falling GDP from not only the US – but nearly every other economy including – China. You know, the GDP producer that was going to save the world?
Yes, even theirs is contracting. Not only that, even Wall Street itself can’t take advantage all this rising market as one would think they would or could. They themselves are continually needing to layoff, or shutter certain operations, and a host of others.
The financial media such as the once darlings of Wall Street CNBC™ has ratings that have plummeted to levels not seen since their start 2 decades ago. Nobody cares, nobody’s watching, and more importantly – nobody’s buying this market except for the Central Banks which are now seemingly unleashing wave after wave of “beggar thy neighbor” monetary policies that are beginning to make even die-hard Keynesian devotees blush.
So maybe the real question that should be asked and answered should also be asked a little tongue-in-cheek style that fits the Clint Eastwood portrayal of Dirty Harry.
“Now that you’re here, at never before seen in human history highs in the market. And seeing you’ve just witnessed the Central Banks version of a monetary Howitzer™.
And seeing it is the biggest most powerful monetary gun in the world, and can blow the short sided or contrarian asset managers account clear off the trading room floor.
You need to ask yourself. Did they fire the last round of QE? Or is there still one left? For in all this parading of meaningless minutia and HFT fueled stop running algo programs I’ve kinda lost count myself.
So I guess the real question is…
Do you feel lucky?”
Sometimes a little brevity in the way one asks a serious question just might push forth the truth. For today, more than ever, truthful answers to the correct questions are what’s truly needed.
© 2014 Mark St.Cyr