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By Tyler Durden

Over the weekend, we were surprised to read that none other than recent market cheerleader Goldman Sachs had come up with six reasons why its chief equity strategist believes the market is poised for a material draw down (read “big drop”) in the coming weeks. Among these were the following:

1. Valuation is a necessary starting point of any drawdown risk analysis. At 16.7x the forward P/E multiple of the S&P 500 index ranks in the 86th percentile relative to the last 40 years. Most other metrics paint a similar picture of extended valuation. The median stock in the index trades at the 99th percentile of historical valuation on most metrics. The most likely future path of US equities involves a lower valuation.
2. Supply and demand trends also suggest downside risk. During the first quarter, the lack of investor positioning in domestic equities was the most bullish argument for a share price rally. Even as the S&P 500 index rebounded from its February 11 low, institutional and hedge fund US equity futures positions remained net short and our Sentiment Indicator hovered near 10 (out of 100, see page 5). A low sentiment reading represents a bullish trading signal for the subsequent 4-6 weeks. Sentiment has shifted sharply during the past few weeks. Since the end of March, investors have bought $23 billion worth of futures positions, lifting our Sentiment Indicator to 32, a less bullish level compared with mid-winter.
3. Corporate buybacks represent the single largest source of equity demand but may wane during coming months. Most firms completed 1Q earnings season by early May and have now resumed their discretionary buybacks, providing near-term support for the market. The month of May typically witnesses 10% of annual repurchase spending. However, spending normally decelerates in June and again in July, when just 7% of buybacks occurs as companies enter a blackout window ahead of 2Q earnings reports.
4. The fed funds futures market currently implies an 83% probability of zero (41%) or one (42%) rate hike in 2016. Our economists expect two hikes this year. The two upcoming FOMC meetings (June 14-15 and July 26-27) and the July Humphrey-Hawkins testimony to the House and Senate will offer opportunities for Chair Yellen to guide the market in the direction of the FOMC central tendency, which also anticipates two hikes in 2016. Put differently, given current futures market pricing we believe more likelihood exists for an incremental hawkish surprise than a dovish surprise.
5. Now-dormant economic growth concerns could awaken at any time and provide a catalyst for a sell-off. Official “total social financing” data shows China credit growth surged by $1 trillion in 1Q but acceleration in credit creation is needed to prevent a slowdown in activity by 3Q (see Asia Economics Analyst, May 3, 2016). Decelerating growth in China would cause investors to re-focus on the prospect of a US recession, a topic that has receded from client conversations after dominating discussions in 1Q. Our US-MAP index of economic data surprises has slipped back into negative territory and reinforces …read more

   Source: Bank Of America Reveals Nine "Reasons To Worry" About A Big Market Drop

       

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By Tyler Durden

After questioning whether a self-imposed process to make airline check-ins more rigorous, knowingly increasing wait times, was a Federally-funded scheme to force travelers to enroll in pre-check programs, thus manipulating people into cooperating with authoritarian strategies; it seemed rather appropriate that the following video, which went viral, shows what is simply a stunningly long TSA line wait at Midway Airport.

As WaPo reports, when Sean Hoffman arrived at Midway Airport last week for his flight home to Oregon, he said he was taken aback by the comically long line to get through security.

“I got to the end, (and) I was like, holy (expletive), people would probably like to see this,” Hoffman recalled in an interview.

And so he did…

And that wasn't the end of it… Today the carnage continues at Chicago's O'Hare, as CBS reports, with increasingly long lines to get through security at the city’s airports, many travelers have been missing their flights, and some ended up sleeping at O’Hare International Airport on Sunday.

American Airlines put out cots for fewer than 100 travelers who missed their flights Sunday night due to the long lines at TSA security checkpoints.

Adrian Petra said he missed his flight after standing in line for 2 hours and 20 minutes.

The TSA has been urging passengers to get to the airport at least two hours early for domestic flights, and three hours early for international flights. However, some passengers have said that is not enough time to get through security and still make their flight.

American Airlines said some 4,000 passengers have missed flights at O’Hare since February because of the long wait times.

American Airlines spokeswoman Leslie Scott sounded off on the security issues.

“We are frustrated. We know our passengers are frustrated, and our employees are really frustrated,” she said.

Scott said, on Sunday alone, American had to delay 30 flights, and about 450 passengers missed their flights due to the security lines.

Nearly 800 people missed American flights from O’Hare in the last week alone, the most of any airport where American operates.

The purpose seems clear, as we noted previously, Homeland Security wants to force more travelers to become “known” to the government via PreCheck programs.

Ultimately, it seems, Homeland Security hopes to be the arbitrator of who flies in the US and who does not. This is how fascism encroaches on public life, not all at once, but a little bit at a time.

How do we know? Our specialty is analyzing the “memes” of mainstream media, the propaganda regularly presented to create acceptance for globalist solutions.

Let’s analyze the steps taken in this case. The TSA has been embarked on a process to make airline check-ins more rigorous.

Here from Travel Weekly:

The confluence of events leading up to this point started last year when a TSA internal investigation revealed security failures at many of the nation’s busiest airports, where undercover investigators smuggled weapons through checkpoints in 95% of trials.

This caused the TSA to tighten screening methods and stop procedures that helped facilitate the …read more

Source: Viral Video Shows Nightmare TSA Line Stretching "For Miles"

    

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SandRidge Energy filed for a Chapter 11 bankruptcy on Monday, making the shale driller one of the biggest oil companies to go bust during the current downturn. …read more

Source: Oil bankruptcies mount despite crude rebound

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By Tyler Durden

The self-described “magic people” who “give to the markets” are facing a mutiny this morning as Raghuram Rajan, the head of the Indian central bank, admits central banks and governments of rich countries are running out of ammunition for stimulating their economies… but they can never admit as much. Crushing the dreams of “extreme monetary policy”-setters, Rajan goes on to discuss the sanity of 'helicopter money' warning that people will not be 'stimulated' to spend but will question: “What kind of world are we in when the central bank prints money and throws it out of the window?”

Blasphemy!!

Mr. Rajan – an outspoke critic of low interest rates in rich countries that can drive hot-money flows to poorer parts of the world – criticised efforts to use fiscal and monetary policy and infrastructure programmes to boost growth rates in advanced economies. As The FT reports,

Although Mr Rajan said there were limits on stimulus, he said central banks “cannot claim to be out of ammunition because immediately that would create the wrong kind of expectations, so there’s always something up their sleeves”.

Mr Rajan said he was a supporter of stimulus policies to “balance things out” over short periods when households or companies were proving excessively cautious with their spending. But eight years after the financial crisis, we “have to ask ourselves is that the real problem?”.

“I have this image of stimulus as a bridge,” he said. “As the economy goes down, there is an expectation it will come up. Stimulus is a bridge which smoothes over the growth rate of the economy and prevents damaging expectations from building up.”

If stimulus went on for a long time, if it did not work, he said, the adjustment would be sharp, indicating there was little room for further stimulus.

Mr Rajan warned governments not to rely too much on fiscal stimulus through cutting taxes or increasing public spending. “If your debt to GDP is over 100 per cent, [and you] do more fiscal stimulus, you’d better have a pretty high rate of return in mind, otherwise your younger and middle-aged generations are thinking ‘This thing is not going to return enough, but I’m going to have to pay for it’.”

Central bankers were also under “stress” to stimulate more when inflation was below target, Rajan continued to explains to The FT…

The most extreme forms of stimulus — such as “helicopter money”, where the central bank prints money so that governments can give a cheque to their citizens — were unlikely to work, Mr Rajan said.

The Bank of Japan and the European Central Bank are under pressure to consider such a move but Mr Rajan said there was a good chance households would see the move as a sign of panic rather than a sign to spend more.

“Is the advent of helicopter money going to result in everybody going out and spending as though there is no tomorrow when they get a cheque? Or are they going to ask, …read more

Source: Mutiny Among The "Magic People" – India Central Banker Admits "The Ammo Is Almost Gone"

    

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