Delaying The Inevitable As We Creep Closer To the Edge

We saw a brief glimpse of the bears this afternoon. Glad to know they are still out there. In a little more than an hour they sucked up 7 S&P points. Nice! Only, of course, to have almost all of it POMOed back in the next hour.

A slightly damaging Beige Book from the Fed sent a tremor thru the markets.Oops: Beige Book Sees “Widespread Signs Of Deceleration” from Zero Hedge and Fed’s Liar Book (Beige Book) from Denninger cover the announcement quite nicely. If you want the “Just the facts mam” version, there is always Calculated Risk Fed’s Beige Book: Continued growth, but “widespread signs of a deceleration”. From ZH, “This is not what the market wanted to hear: “Reports from the twelve Federal Reserve Districts suggested continued growth in national economic activity during the reporting period of mid-July through the end of August, but with widespread signs of a deceleration compared with preceding periods.”" – Nuff said.

Let’s throw on top of that European Credit Stress Returns With Vengeance – Irish, Portuguese Bond Spread at All Time High – Yen Soars – Gold Hits All Time High from Mish.”Another name for the risk aversion play is the deflation play. There is plenty of room for the dollar, treasuries, gold, and German government bonds to rally while the rest of the commodity complex drifts lower.” Sounds sensible to me (except I think everything deflates except gold, food and ammo).

ZH has one post that sums up a lot of things in Albert Edwards: “Equity Investors Are In A Vulcan Death Grip And Are About To Fall Unconscious”  where the truth rears it’s fugly head in, “It is now well known that the former Fed governor was manipulating the stock market on a day to day basis, as his statement that “if the stock market continues higher it will do more to stimulate the economy than any other measure we have discussed here” makes it all too clear that the Fed does not care about inflation or unemployment but merely Dow 10,000 hat sales, and will do everything in its power, even if that means collaborating with Chicago hedge funds in dark pools, to get stocks to go up. Yet how long until investors finally realize that stocks are not only a lagging indicator but a manic-depressive one at that.” I have been screaming for well over a year now that the market is all “they” have left between “them” and total anarchy, nothing else matters and saving the markets is what it is all about. How bout that battle at 1040 and the subsequent rise on that solid GDP number? Debt? What debt? GSE? What GSE’s they are not even included in the federal budget? Shall I move on to states, municipalities, pensions, Social Security, Blah, blah, blah…..

For those of you that like to refernce P/E and it’s levels as some sort of reliable value indicator you may want to read P/E Expansion & Contraction from Ritholtz. “History teaches us that valuations typically become extremely attractive at the end of Bear markets. The P/E ratio — as well as the dividend yield, enterprise-value-to-free-cash-flow ratio,” is well stated and in the purdy chart in the post you’ll note P/E is about 2/3 of the way to where recessionary periods typically bottom (sub 10). I’ll add that P/E is a joke in the stimulus driven, fraudulent accounting and market manipulated environment we are currently experiencing