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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 | 79746 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 | 79761 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 | 79764 Gilgamesh
Gilgamesh's picture

War / Attack on Iran

Fri, 09/25/2009 - 13:54 | 79773 Veteran
Veteran's picture

almost a certainty

Fri, 09/25/2009 - 19:10 | 80102 Anonymous
Anonymous's picture

Did you see Fareed Zakaria last Sunday? Medvedev made some news when he said Netanyahu had assured him (during a secret visit to Moscow) that Israel would not preemptively attack Iran... what that's worth, I don't know.

Fri, 09/25/2009 - 20:15 | 80152 Printfaster
Fri, 09/25/2009 - 15:24 | 79876 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 | 79988 Anonymous
Anonymous's picture

as long as they are green shoots

Sat, 09/26/2009 - 04:10 | 80323 Broken_Trades
Broken_Trades's picture

..

Fri, 09/25/2009 - 16:33 | 79960 mgarrett84
mgarrett84's picture

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

Fri, 09/25/2009 - 17:01 | 80010 pivot
pivot's picture

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

Fri, 09/25/2009 - 13:58 | 79781 Cow
Cow's picture

Terrorism in the US

Fri, 09/25/2009 - 14:03 | 79783 Anonymous
Anonymous's picture

chinese trade war

Fri, 09/25/2009 - 15:19 | 79869 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 | 79953 Anonymous
Anonymous's picture

I read an article yesterday that said that the shortage was due to hoarding and the war in Iraq and Afghanistan. The article also said that even though the ammo factories were being operated 24/7 the bullets were being bought up as soon as they were delivered. Even mentioned that they were gonna have to limit sales to customers because some people were coming in and buying up whole cases.

I've talked to the guy behind the counter down at Wal-Mart and he said that whenever rounds of .38 cal show up he buys the majority of them. He said he had a stockpile out the wazoo.

They did mention in the article that the shortage was primarily in handgun ammo and rounds used in AK's and AR's. Lost of hunting ammo available such as shotgun shells and such, but I don't see any large caliber rounds for sale at Wal-Mart at all. Listed as reasons for the purchase of weapons and ammo was the fear that the gun haters in the Obama administration would start a campaign of gun confiscation and fears that the legions of zombies would be unleashed during a crises.

Can't tell if this is a propaganda disinformation campaign because I can't confirm whether or not the ammo manufacturers are really busting balls 24/7 trying to get the ammo out. But, I can confirm that everytime I head down to Wal-Mart the shelves are empty except for shotgun shells. Not even .22 caliber rounds can be found.

Fri, 09/25/2009 - 22:58 | 80228 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 | 79787 Anonymous
Anonymous's picture

What he means is Old Testament, Mr. Mayor, real wrath of God type stuff.

Fire and brimstone coming down from the skies! Rivers and seas boiling!

Forty years of darkness! Earthquakes, volcanoes...

The dead rising from the grave!

Human sacrifice, dogs and cats living together... mass hysteria!

Fri, 09/25/2009 - 14:38 | 79826 Anonymous
Anonymous's picture

Classic! Well done...

Sat, 09/26/2009 - 07:00 | 80013 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 | 79755 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 | 79760 Anonymous
Anonymous's picture

How come I never get called for one of these surveys?

Fri, 09/25/2009 - 13:49 | 79766 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 | 79768 Gilgamesh
Gilgamesh's picture

Seconded.

Fri, 09/25/2009 - 14:20 | 79808 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 | 80017 pivot
pivot's picture

ratchet up long gamma as cheaply as possible.

Fri, 09/25/2009 - 18:24 | 80065 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 | 79777 Anonymous
Anonymous's picture

Unacceptable. I'm cancelling my subscription.

Fri, 09/25/2009 - 13:58 | 79779 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 | 79789 docj
docj's picture

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

Fri, 09/25/2009 - 14:08 | 79791 Ragnarok
Ragnarok's picture

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

Fri, 09/25/2009 - 14:24 | 79814 docj
docj's picture

AU?  Yep.

Equities?  Not so much.

Fri, 09/25/2009 - 14:26 | 79816 Ragnarok
Ragnarok's picture

Cheers.

Fri, 09/25/2009 - 14:11 | 79795 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 | 79798 Anonymous
Anonymous's picture

Rah-rah recovery!

There, that should do it.

Fri, 09/25/2009 - 14:14 | 79801 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 | 79803 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 | 79821 Anonymous
Anonymous's picture

facts are of no concern to newsfakers...

Fri, 09/25/2009 - 14:17 | 79806 Sancho Ponzi
Sancho Ponzi's picture

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

Fri, 09/25/2009 - 15:01 | 79847 Anonymous
Anonymous's picture

Yep, like clockwork. Shows how far the dog an pony show with Congress will go. Their feet must be sore from all of the footsie.

Fri, 09/25/2009 - 14:21 | 79811 TraderMark
TraderMark's picture

I'm long and strong virtual reality

Fri, 09/25/2009 - 14:21 | 79813 carbonmutant
carbonmutant's picture

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

Fri, 09/25/2009 - 16:54 | 79976 payitdown (not verified)
payitdown's picture

Goldman and Bank of Amerika run the markets along with Geithner, and beagle boy Ben. There is no free markets, only welfare capitalism and socialism for capitalism.

good articles; good articles 4 slow news day ..http://www..
hat tip: financial news & opinion updated daily

Fri, 09/25/2009 - 14:28 | 79818 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 | 79835 Anonymous
Anonymous's picture

come on now....we have had a massive 100 point correction in the stock market this week which is setting the stage for a rockets bursting in air rally next week....

as such optimism and reality are hitched at the hip...

better buy today because prices will never be lower....promise..

Fri, 09/25/2009 - 15:05 | 79848 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 | 79974 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 | 79850 BM (not verified)
BM's picture

the Hope became the Hate

http://nymag.com/nymag/toc/20090928/

Fri, 09/25/2009 - 15:46 | 79897 Anonymous
Anonymous's picture

Gotta luv someone who can quote "ghostbusters"

by Anonymous
on Fri, 09/25/2009 - 13:04
#79787

I am waiting for the 2nd coming of the "staypuft marshmellow man"!! But those who do not learn from
history are doomed to repeat it, so we better read up
on what happened with Japan!

Fri, 09/25/2009 - 16:16 | 79935 Anonymous
Anonymous's picture

Mannn-- Alan Grayson just rips this dolt a new one in this recent video... THE OBFUSCATION MUST END!!!

http://www.youtube.com/watch?v=mXmNpdYpfnk

Fri, 09/25/2009 - 16:54 | 79969 payitdown (not verified)
payitdown's picture

Goldman and Bank of Amerika run the markets along with Geithner, and beagle boy Ben. There is no free markets, only welfare capitalism and socialism for capitalism.

good articles; good articles 4 slow news day ..http://www..
hat tip: financial news & opinion updated daily

Fri, 09/25/2009 - 16:47 | 79996 Anonymous
Anonymous's picture

Quick lesson on what makes America great. We work harder and are tougher than any other country. Know why? When things are bad... real bad, we get a positive attitude and become determined to make things better. Historically we've always done this. So if things are really as bad as ZH claims, we would in fact need to have more optimism than ever to keep in line with history. Your chart proves that to be correct.

That made my weekend.

Fri, 09/25/2009 - 22:20 | 80214 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 | 80269 Anonymous
Anonymous's picture

i hope this was sarcasm....otherwise this was
the most ignorant emotional blathering i have
read since this afternoon....tell me you really
are not as retarded as you sound...please, do
it for the children...

Fri, 09/25/2009 - 18:30 | 80070 Anonymous
Anonymous's picture

WOW THE FUNNY THING IS THIS IS WAT YOU GET WHEN YOU LET THE BANKS RUN THE BIG SHOE

Fri, 09/25/2009 - 22:56 | 80225 Anonymous
Anonymous's picture

Wait -- according to the first graph, LEI minus COI was *negative* for forty years?? I don't get it...

Sat, 09/26/2009 - 01:49 | 80299 Anonymous
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