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Spread Between Optimism And Reality At All Time Record Wides

Tyler Durden's picture





 

Optimism is a good thing: just ask an unstimulated Larry Kudlow. Yet when optimism is the only thing, you have problems. These tend to materialize whenever any event occurs that shows just how disjointed reality and hope are in actuality. Of course, the greater the divergence, the greater the downside shock. And if the Conference Board's numbers are any good, we are set for a harsh reintroduction with reality.

Looking at historical data, the spread between the Leading Index and the Coincident Index is that widest in history: the US population is more "hopeful" at this moment than it has ever been. The last time the divergence was this wide, was December 1964.

And below is how the Leading-Coincident Index behaves with relation to the broad market.

 


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Fri, 09/25/2009 - 13:36 | Link to Comment Altan311
Altan311's picture

Smells like a great time for a debasement. Tyler what events are you looking at as key drivers of markets in the next 21-25 days?

Fri, 09/25/2009 - 13:48 | Link to Comment Mos
Mos's picture

End of QE

Audit Fed bill passing

Swine Flu

China stock market tanking

Earnings season

 

What did I miss?

Fri, 09/25/2009 - 13:49 | Link to Comment Gilgamesh
Gilgamesh's picture

War / Attack on Iran

Fri, 09/25/2009 - 13:54 | Link to Comment Veteran
Veteran's picture

almost a certainty

Fri, 09/25/2009 - 19:10 | Link to Comment Anonymous
Fri, 09/25/2009 - 20:15 | Link to Comment Printfaster
Fri, 09/25/2009 - 15:24 | Link to Comment AN0NYM0US
AN0NYM0US's picture

Pres. O's speech at UN and today at G20  = providing cover for  Netanyahu to do what he must and will do (also a convenient distraction from the G20 agenda)

so what is the timing and who shoots first (and what do they shoot?)

Fri, 09/25/2009 - 16:41 | Link to Comment Anonymous
Sat, 09/26/2009 - 04:10 | Link to Comment Broken_Trades
Broken_Trades's picture

..

Fri, 09/25/2009 - 16:33 | Link to Comment mgarrett84
mgarrett84's picture

possible headlines about political resistance to raising the debt ceiling.  (THIS WOULD BE SCARY)

Fri, 09/25/2009 - 17:01 | Link to Comment pivot
pivot's picture

this would only be scary to gov't workers/cronies

Fri, 09/25/2009 - 13:58 | Link to Comment Cow
Cow's picture

Terrorism in the US

Fri, 09/25/2009 - 14:03 | Link to Comment Anonymous
Fri, 09/25/2009 - 15:19 | Link to Comment curbyourrisk
curbyourrisk's picture

China war including bullets.....remember....trade wars generally lead to wars involving bullets.

 

I think there is a shortage of those here in the states right now.

Fri, 09/25/2009 - 16:31 | Link to Comment Anonymous
Fri, 09/25/2009 - 22:58 | Link to Comment dnarby
dnarby's picture

Unless this is a very recent development, this is not true.  My dad just bought several boxes of shotgun shells and 500 rounds of .22 ammo, no problem.

And anyway, the really serious shooters load their own...

Fri, 09/25/2009 - 14:04 | Link to Comment Anonymous
Fri, 09/25/2009 - 14:38 | Link to Comment Anonymous
Sat, 09/26/2009 - 07:00 | Link to Comment kevinearick
kevinearick's picture

Statistics gives you weakness. Fulcrums gives you location. $65 is the hinge point. More requires global stimulus acceleration. Less results in global contract failures. We are at the point of maximun cost.

It's like shooting ducks in a pond, and the ducks just realized they have no way out. Only the ducks are sharks, with no more food. The big shark, the US, hoping to survive Christmas, wants to blow it reserve wad leading up to the election. Will the other sharks wait until they can no longer swim?

Should be interesting.

Enjoy the Holidays.

(The magnetic side of the fulcrum is now fully invested in the new economy, cutting off the current, circulation, cash flow to the gravitational side, which is consuming itself to death.)

Fri, 09/25/2009 - 13:45 | Link to Comment ratava
ratava's picture

The second thumbnail leads to the first image, replace the href with http://www.zerohedge.com/sites/default/files/images/COILEI%20Corr.jpg ;P

Fri, 09/25/2009 - 13:48 | Link to Comment Anonymous
Fri, 09/25/2009 - 13:49 | Link to Comment AR
AR's picture

Most will look back on this period, kick themselves, and asked why they didn't see a top forming. Arrogance, and ignorance are blinding. Greed is the emotion that misleds them. Anyone remember the summer of 1987?  We do. Dollar needs to trade above 78+, with bonds above 121.15/20. Expansion of VOL in currencies are giving off signals as well.  Stay alert.

Fri, 09/25/2009 - 13:51 | Link to Comment Gilgamesh
Gilgamesh's picture

Seconded.

Fri, 09/25/2009 - 14:20 | Link to Comment Señor Tranche
Señor Tranche's picture

Well, I was 2 in 1987, but I don't see how a sustainable downward pattern (in nominal terms) is possible when there is so much liquidity flooding the market due to QE, and the possibility of a serious outbreak of inflation much greater than anything in the 8o's.  I'm in cash and physical gold now.  Too scared to short. 

Fri, 09/25/2009 - 17:08 | Link to Comment pivot
pivot's picture

ratchet up long gamma as cheaply as possible.

Fri, 09/25/2009 - 18:24 | Link to Comment monkeyshine
monkeyshine's picture

They are printing money like mad that is for sure. But is there more liquidity? That is the question of the year.  Are we still in deflation, are we in stagnation, or inflation?  I think there is a very fair chance that despite the QE there is still too little liquidity due to hoarding and asset allocation.  The velocity of money is still too low I think.

You are afraid of inflation but are in cash?  That's a contradiction. Perhaps you intuitively know that cash is more valuable than you overtly think, and that inflation isn't a real problem. 

Fri, 09/25/2009 - 13:56 | Link to Comment Anonymous
Fri, 09/25/2009 - 13:58 | Link to Comment Ragnarok
Ragnarok's picture

Hope and change. When was governtment involment in/control of the economy not been a good thing?

Fri, 09/25/2009 - 14:06 | Link to Comment docj
docj's picture

Gee, nice turn-around in the market at 1:30 with no news.  Neat.

Fri, 09/25/2009 - 14:08 | Link to Comment Ragnarok
Ragnarok's picture

So you're not buying the dips? What a dunce!

Fri, 09/25/2009 - 14:24 | Link to Comment docj
docj's picture

AU?  Yep.

Equities?  Not so much.

Fri, 09/25/2009 - 14:26 | Link to Comment Ragnarok
Ragnarok's picture

Cheers.

Fri, 09/25/2009 - 14:11 | Link to Comment pigpen
pigpen's picture

DXY is flat market will be flat. RIMM is irrelevant in FED controlled currency market manipulation.

Don't try to overthink it.

Feel bad for Japan with yen at 89.

Fri, 09/25/2009 - 14:13 | Link to Comment Anonymous
Fri, 09/25/2009 - 14:14 | Link to Comment lizzy36
lizzy36's picture

More bailouts on the way...

TBTF goes national?

Fresh bailouts for smaller banks being weighed

http://finance.yahoo.com/news/Fresh-bailouts-for-smaller-apf-3635481836.html?x=0

Fri, 09/25/2009 - 14:17 | Link to Comment AN0NYM0US
AN0NYM0US's picture

New home sales rise for 5th straight month

NEW YORK (CNNMoney.com) -- Sales of newly constructed homes rose for the fifth straight month in August, a government report said Wednesday.

New home sales inched up 0.7% last month to a seasonally-adjusted annual rate of 429,000, the Commerce Department reported. That was an increase from a downwardly-revised reading of 426,000 in July.

 

CNN and just about every other "news" source failed to indicate that July sales had originally been reported as 433,000

Fri, 09/25/2009 - 14:36 | Link to Comment Anonymous
Fri, 09/25/2009 - 14:17 | Link to Comment Sancho Ponzi
Sancho Ponzi's picture

HAL 9000 with VWAP algo inserted now in Hyperdrive. Yawn.

Fri, 09/25/2009 - 15:01 | Link to Comment Anonymous
Fri, 09/25/2009 - 14:21 | Link to Comment TraderMark
TraderMark's picture

I'm long and strong virtual reality

Fri, 09/25/2009 - 14:21 | Link to Comment carbonmutant
carbonmutant's picture

...I think I hear Judy singing "Over the Rainbow".

Fri, 09/25/2009 - 16:54 | Link to Comment payitdown (not verified)
Fri, 09/25/2009 - 14:28 | Link to Comment arnoldsimage
arnoldsimage's picture

check out megadeth's endgame album cover. dave knows something. http://i86.photobucket.com/albums/k109/Diamond_Oz/Endgame.jpg

Fri, 09/25/2009 - 14:47 | Link to Comment Anonymous
Fri, 09/25/2009 - 15:05 | Link to Comment lizzy36
lizzy36's picture

Well that confirms it the U.S population might possibly be more stupid than it has ever been (except or course for all the yanks on this site). 

Perhaps it is the regular injections of hopium, leading to a constant state of comfortably numb. 

 

Fri, 09/25/2009 - 16:36 | Link to Comment etrader
etrader's picture

Their going to prescribe those injections in the UK health system.....

http://news.bbc.co.uk/1/hi/uk_politics/8265641.stm

Fri, 09/25/2009 - 15:05 | Link to Comment BM (not verified)
Fri, 09/25/2009 - 15:46 | Link to Comment Anonymous
Fri, 09/25/2009 - 16:16 | Link to Comment Anonymous
Fri, 09/25/2009 - 16:54 | Link to Comment payitdown (not verified)
Fri, 09/25/2009 - 16:47 | Link to Comment Anonymous
Fri, 09/25/2009 - 22:20 | Link to Comment chindit13
chindit13's picture

"We work harder and are tougher than any other country"

Ever been to a factory in Shenzen?

Did you happen to spend any time in Eastern Europe when the Berlin Wall fell? 

How many Americans do you know who are "tough" enough to postpone immediate gratification, forego that 52" LCD TV and save 30% of their income?

Do you know the size of the US Current Account Deficit?

Do you know the average waist size of an American adult?  An American elementary school student?

What time did UMich call you?

Sat, 09/26/2009 - 00:13 | Link to Comment Anonymous
Fri, 09/25/2009 - 18:30 | Link to Comment Anonymous
Fri, 09/25/2009 - 22:56 | Link to Comment Anonymous
Sat, 09/26/2009 - 01:49 | Link to Comment Anonymous
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