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@truth-offering
Chart of the Day
Healthy economy?

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Housing - "Partying Like Its 2005-06"
We have previously mentioned the importance of main stream media magazine covers and how the psychology of a cover is a manifestation of "extremes" in mood by the general public. In other words, when a magazine proclaims extreme optimism or pessimism, its a sure bet that a top or bottom is close at hand.
Exhibit A - this Time Magazine cover from 2005. Housing declined 45% over the next 3 years.
Exhibit B - this week's Bloomberg cover. Must we say more?
"Scary" Sequester
Top 3 Charts of 2013
While the year is still early, we present the top 3 charts of 2013 that we know we will look back on in December 2013 and giggle like little school children.
Can You Handle the Truth?
Lots of good news - who are we to report on things that actually might dampen the party? Without further ado - we leave the truth telling to a 50 year veteran of Wall Street - Art Cashin - Director of Floor Ops for UBS.
Warning - Art speaks the truth and its not pretty. Some of the highlights:
1. This past week has seen a resurgence in European problems (we thought everyone in Davos said things were fixed?)
a. Rajoy in Spain about to be ousted
b. Berlusconi in Italy about to win election ( he is threatening to repeal tax increases and austerity)
2. An options trader put an $11 million bet that volatility will increase (and stocks will collapse) by April 20th.
3. Inflation is beginning to show based on a spike in the M2 money velocity indicator
4. Law of diminishing returns with QE
5. Egypt, biggest Arab nation at risk of coming apart. Biggest importer of wheat to make subsidized bread to keep the population quiet.
6. Iran growing more desperate. Syrian problem not gone away.
7. China and Japan about to go to war.
Full audio interview here - 15 minutes well spent:

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From Ridiculous to Absurd...
For the last 2 weeks we have been looking for "signs" of impending reversal in world markets. While we have written endlessly about the frothy NO MONEY DOWN real estate market, CEO insiders selling, and extreme optimism - we believe this one takes the cake.
In something eerily reminscent of the year 2000 - when your local shoeshine boy was making stock recommendations to buy the latest dot.com bust, we present 16 year old Desperate Housewives actress cum day trader - Rachel Fox.
While she seems to take credit for her trading prowess, she should really be thanking Uncle Ben for her proven formula:
"BTFD - "Buy the Fuckin' Dip".
If this isn't the ULTIMATE sell signal - we COMPLETELY give up and will buy real estate, go back to college by taking $200,000 in student loans and live like P Diddy on massive credit card leveraged debt.
Editors note: Embed not working - click on link to see video:
http://storify.com/CNBC/meet-this-16-year-old-trader?utm_content=storify-pingback&utm_source=t.co&utm_medium=sfy.co-twitter&awesm=sfy.co_p1E8&utm_campaign=
Insider Selling - Suckers Alert
As the Dow continues to hover near 14,000 - the public is downright getting orgasmic about their stock portfolio. We have written in the past week here, here, here and here about this unprecedented euphoria or stupidity (depending on how you view it).
Well, as the market climbs, none other than corporate insiders are selling their stock to Joe Blow - in a total suckers exchange. One line stands out from the article below: "There have been more than nine insider sales for every one buy over the past week among NYSE stocks"
From CNBC:
Insiders have been pulling out of stocks just as small investors are getting in.
Selling by corporate executives has surged recently as the Dow Jones Industrial Average hit 14,000 and retail investors flooded into stocks. The amount of insider selling has usually preceded market selloffs.
"In almost perfect coordination with an equity market that was rushing toward new all-time highs, insider sentiment has weakened sharply — falling to its lowest level since late March 2012," wrote David Coleman of the Vickers Weekly Insider report, one of the longest researchers of executive buying and selling on Wall Street. "Insiders are waving the cautionary flag in an increasingly aggressive manner."
There have been more than nine insider sales for every one buy over the past week among NYSE stocks, according to Vickers. The last time executives sold their company's stock this aggressively was in early 2012, just before the S&P 500 went on to correct by 10 percent to its low for the year.
"Insiders know more than the vast majority of market participants," said Enis Taner, global macro editor for RiskReversal.com. "And they're usually right over a long period of time."
"Insiders (are) showing a remarkable ability of late to identify both market peaks and troughs," states the Vickers report.
Will this time be different - will the "insiders" be wrong and the market go to 15,000?
We think not. Next Stop is Dow 11,000 by April 1st.
February 8, 2013 UPDATE:
Late Friday, after the market close, Eric Schmidt, Chairman of Google quietly announced he is selling HALF his shares in Google.
http://www.marketwatch.com/story/schmidt-to-sell-nearly-half-his-google-stake-2013-02-08
Today's Daily Dose of "Optimism"
In what is fast becoming a daily "bubble-icious"occurrence - today we share with our readers more signs of Summer 2007 - a time when "all was good" on the outside, but the entire financial system and global economy was crumbling from the inside.
Today, we learn that Dell Computer was taken over in a leveraged buyout by SilverLake Management in a deal worth $22 Billion. Why is this important you ask? Why the only deal larger was by Blackstone LBO'ing Hilton Hotels on July 3, 2007 for $26 Billion.
From a psychological standpoint, these type of events occur at moments of extreme optimism. A better time to do a deal like this would have been at DOW 6500 four years ago, as the buyer would have gotten a MUCH better deal at a significantly lower valuation. But, that's thinking rationally - and that's not allowed nowadays. The mantra is buy high, and find a sucker who will buy from you higher - until it doesn't work like 2008.
Today's Dell Announcement:
"The leveraged buyout by Silver Lake Management LLC and founder Michael Dell would be the biggest since at least 2007, with an enterprise value of about $22 billion, according to data compiled by Bloomberg. The size of the deal probably will amplify potential buyers’ confidence, spurring them to tackle more targets, said Sandler O’Neill & Partners LP’s Devin Ryan.
“LBO activity historically has led the M&A markets more broadly,” said Ryan, an analyst with the New York-based boutique investment bank. “More LBOs generally spark more strategic activity as well -- it all kind of ties into together."
Blackstone Hilton Announcement on July 3, 2007 (3 months before the economy began to IMPLODE):
"U.S. private equity firm Blackstone Group said on Tuesday it would buy Hilton Hotels Corp. for about $26 billion cash, the richest deal in a series of recent private equity offers for hotel companies.
The hotel industry is enjoying a multiyear boom as robust demand has allowed hoteliers to steadily raise rates. The upbeat market environment, supported by limited construction of new hotels, has made lodging assets hot commodities."
Wash-Rinse-Repeat. Wash-Rinse-Repeat......
Why Home Prices MUST Stay Up...
Housing has been on a tear. There are many reasons why. Low interest rates, supposed high demand, etc. Prices cannot and must not fall. Why? Because 47% of Americans aged 50-70 are relying on the "home equity" in their home to supplement their retirement.
"Home equity" is nothing more than a perceived value in excess of what is owed. We say perceived because it represents what one person is willing to offer above what is owed. But, if one day, the person in question "offers" something lower than what's owed, their is NO MORE "home equity." Gone - just like that.
Hope home prices stay elevated - because if they don't, there is an entire legion of baby boomers who are in BIG TROUBLE. Don't think Uncle Ben isn't aware of this....
From the WSJ:
"Even though the housing market has not recovered, nearly half of older working Americans expect to use equity in their homes to help finance their retirement, a new survey finds.
Roughly 47 percent of employed Americans ages 50 to 70 said they were relying on equity in their homes, the Retirement Check-In survey from Ameriprise Financial found. The finding is surprising, an accompanying report notes, because housing values in many parts of the country remain below the level they were before the recession. Also, 37 percent of homeowners say they’re not on track to pay off their mortgage before they retire."
Frothiness Continues..
We wake up this morning to more EXTREME sentiment. We continue to document this as we are sure to look back 6 months from now and ask ourselves "So what was everyone so excited about again???"
Because at the end of the day, any passionate consensus among the mass population is a terrific signal, because it means that there is no one left to convince and therefore the market in question should have extreme difficulty continuing in the predicted direction.
Simple right?
From the WSJ - Get Aboard the Choo Choo Train:
From the Washington Post:
"Across the country, Americans are embracing riskier investments that they shunned in the aftermath of the financial crisis. The Federal Reserve has pledged to keep interest rates near zero for at least the near term, and that is keeping bond yields low and leading investors to look for better returns.
Many local brokers and money managers say they are seeing renewed interest in stocks, which is pushing markets higher. Others say their clients never fully left the market, but are trading more frequently now and investing larger amounts of money.
TD Ameritrade, the Omaha-based online broker, registered an average 370,000 trades per day in January, up from 30,000 trades a day in December, said Steve Quirk, senior vice president of trade for the company."

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Return of "No Money Down"
Just when you thought you'd seen it all - here we go again. Banks are now reintroducing the one thing that caused their epic collapse a short 5 years ago - No Money Down 100% financing.
From the WSJ:
"It's 100% financing—the same strategy that pushed many homeowners into foreclosure during the housing bust. Banks say these loans are safer: They're almost exclusively being offered to clients with sizable assets, and they often require two forms of collateral—the house and a portion of the client's investment portfolio in lieu of a traditional cash down payment."
Of course, this is rationalized when the portfolio in question has been juiced by the Fed at a level of Dow 14,000. What happens when interest rates rise (which they have already), borrowing and spending decline and therefore the "portfolio" in question declines with the Dow.
Answer? The banks are once again underwater. But, this time there is no TARP, no backstop. Too big too fail? Maybe not...
Side Effect of Dow 14,000
Central bankers in chief want it both ways. They want house and equity prices up and inflation low. Well, in a liquidity driven, zero interest rate policy environment, where its all about taking risk, its also all about putting money to work and buying EVERYTHING.
So, hedge funds are bidding up oil and ergo, gasoline. Despite high TRUE unemployment and a slack in manufacturing which should equate to lower demand for oil and gasoline, here we are again with prices creating major pain at the pump and grocery store and household budgets, etc, etc.
Yawn.....zzzz
Chemtrails: Scars In the Sky
Geoengineering is a relatively new idea to the world. According to Wikipedia, "The modern concept of geoengineering (or climate engineering) is usually taken to mean proposals to deliberately manipulate the Earth's climate to counteract the effects of global warming from greenhouse gas emissions. The National Academy of Sciences (NAS) defines geoengineering as 'options that would involve large-scale engineering of our environment in order to combat or counteract the effects of changes in atmospheric chemistry.'"
Geoengineering also includes what is known as "Stratospheric Aerosols," which is sometimes referred to as "Chemtrails," though they're not often mentioned in mainstream discussion of geoengineering. The term chemtrail "is derived from 'chemical trail' in the similar fashion that contrail is an abbreviation for condensation trail. It does not refer to common forms of aerial spraying such as crop dusting or aerial firefighting."
So what's a chemtrail look like? Watch this...you won't believe your eyes:
Dow 14,000
We officially give up - BUY STOCKS.
Are you F*cking kidding me? We reiterate this is another bubble - GET LIQUID NOW. Sell, Sell, Sell....
Party Like its 1999 & 2007....
We have been adamant about impending signs of caution lately (see here, here and here), because of the scope of what lies ahead. While not evident yet, the danger has not gone away. Based on the implications of the "pattern" of the market over the past 4 years and ESPECIALLY the last 10 months, this recent burst of optimism should be savored, because it looks like the next couple of years could be outright gruesome - if the pattern holds true.
That being said, this weekend we see EVEN MORE danger signs as manifested via the main stream media. Reason being, when news of stock market highs hit your NON-BUSINESS newspapers and general evening news, it is generally a sign that the top is near - as the public always buys at tops and sells at bottoms.
First up - ABC World News Tonight - jumping on the bandwagon with this lead story on their Friday January 25, 2013 broadcast. NBC and CBS also led with similar segments - though we didn't post:
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But wait there's more. None other than the New York Times has chimed in as well with than article titled "As Worries Ebb, Small Investors Propel Markets."
The first sentence from this article:
"Americans seem to be falling in love with stocks again."
Here are examples of other times when non business, main stream media got extremely bullish:
Housing 2005-06 - Time Magazine called the top of the housing market:
House prices fell 57% in the next 2 1/2 years from the time this article came out. They are still down 45% from the all time peak.
Dot.com 1999-2000:
Internet boom topped on March 14, 2000 and the tech heavy NASDAQ index fell 78% in 18 months. Didn't any of the covers above see that happening?
Here's a real time example of the danger of linear extrapolation and public greed. How Apple's Stock Could Reach $1,000 - back on March 15, 2012.
And 10 months later: Apple Stock Implodes After Earnings
Finally, we share with our readers this time tested graph of greed and fear. Notice the "Smart Money" gets in during the Stealth Phase, the "Institutional Investors" get in during the Awareness Phase, and the Public gets in during the Mania Phase. Are we truly at a "New Paradigm?"
Given the weight of the evidence above and including what we've written in the past - is this time any different?

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About that Housing Recovery....
Nice recovery....
Tomorrow's World | Infographic
It's almost impossible to predict the future, as has been proven time and time again by so-called experts and thinkers (see here, here and here). But predictions are fascinating nevertheless, and the BBC has given this time-honored tradition a shot in the form of an infographic. Some fascinating stuff: