Friday, March 11, 2011

Volatility Update: The Economic Storm Has Likely Returned. Largest Earthquake Ever Recorded In Japan Rocks The Pacific

I haven’t posted a lot regarding volatility since the beginning of the year but for any new readers, one of the major themes we have remarked of on here incessantly since starting this blog is that we are in a cycle of volatility.  And that the volatility which is manifesting itself in our economies and our societies is the same volatility we see in the natural world around us.  In other words, humanity’s self-deceit of becoming masters of the world around us is an illusion created by the human mind.  We are clearly impacted by the same forces that shape the world around us in ways that most people do not even consider, let alone understand. 

Before the 2008 collapse we wrote that Wall Street’s low volatility models would eventually face doom.  That volatility can not be tamed.  And indeed they have.  I think we can assume generally that this process has only just begun and that the entire monster that Wall Street’s self-deceit has created will blow up before our very eyes.  And this is something we have hammered repeatedly. 

We have also remarked that we were in the eye of the volatility storm, similar to the natural occurrence of a Fibonacci spiral seen in hurricanes, during this rally off of the March 2009 low.  ie, That this economic storm would also parallel patterns seen throughout the universe.  And that we will eventually see something much worse as the storm returns and the back end devastates the investor class, economies and global financial markets.   As we wrote, this is exactly what happened with the onset of the Great Depression where a lengthy rally pulled many of the bears and the bulls back into markets for one massive and final blow of complete decimation. 

There is substantial scientific evidence for what I have written although you aren’t going to read it in what are often ideologically-driven half truths we call scientific text books and the decades of dogmatic drivel that have been heaped upon it, in a process we call “education” often better described as indoctrination.  As we have typed countless times, the world is substantially different than we are led to believe.  The human mind’s desire to trick us into a world where we control our destiny is behind much of our deluded thinking.  ie, As we have written, thinking with your eyes is a dangerous game of deceit created by the mind. 

Many may find it hard to visualize (thinking with our eyes again) the magnitude of an 8.9 earthquake given the Richter Scale is logarithmic, so below is a graphic comparing energy released with the Richter Scale located on the left side.  We can see that this earthquake and tsunami that hit Japan has an energy of one million times greater than the average quake we see throughout the normal course of events.

I have written quite a few times over the last six months that I believed the cycle of volatility was returning.  With the massive unrest in the Middle East, Greece and elsewhere taking hold, with this earthquake and that in New Zealand, with major storms and flooding over the last handful of months, with financial markets starting to show signs of increase volatility again and with multiple other instances of volatility, there is substantial reason to believe that indeed the storm has returned. 

It’s no coincidence a few months ago we wrote that were were once again bearish on financial stocks and that their profits had more than likely peaked post this crisis.  This was after we changed our position from bearish when Citigroup hit 99 cents to a statement that we were no longer bearish on banks because exogenous events would determine their future.

The Quickening has returned.

 

Click for larger view of graphic

quake

 

 

posted by TimingLogic at 9:09 AM