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The Incredible Shrinking Half-Life Of Central Bank Action

Tyler Durden's picture


It seems the market - or the collection of pre-programmed heuristic biases that make up the equity investing public (and machines) - is slowly but surely realizing the confidence trick that is the Fed's Quantitative Easing programs. The following chart should clarify - to anyone placing their gambling chips on the hopes of another round of easing from the Fed - why the game is up. To wit, the reverse geometric progression of S&P 500 performance during each Fed action: QE1 +50%, QE2 +30%, Twist +18%, QE3 & Twist +8%... so QE4 +4%, QE5 +2%, and QE6 +1%...



Chart: SocGen


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Mon, 10/29/2012 - 23:37 | Link to Comment CvlDobd
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If only people cared as much about Bernanke's storm swell as they did about Sandy's.


Not that Sandy's isn't important.

Mon, 10/29/2012 - 23:41 | Link to Comment Victorio
Victorio's picture

Does look a bit like Sandy's storm surge chart. 


Tue, 10/30/2012 - 01:44 | Link to Comment Dalago
Dalago's picture

Pair this chart with the value of the USD, Gold and Long-term treasury... Should be interesting, Tyler Durden.

Tue, 10/30/2012 - 02:01 | Link to Comment ACP
ACP's picture

I wonder how the dollar will be affected by repatriation after this...increase in value like (Edit: the yen) after the Fukushima disaster, or the Fed blasting the dollar to oblivion in overdrive to try to prevent this?

Tue, 10/30/2012 - 06:35 | Link to Comment markmotive
markmotive's picture

Here's another measure. A year ago 25% of Americans planned to work until age 80. Now that number is 30%.

Tue, 10/30/2012 - 11:26 | Link to Comment nofluer
nofluer's picture

HA! With the destruction of the US health care system, the carb intensive diets the govt and Big Ag is pushing on the lemmings, and the soon-to-be imported "Liverpool Care Pathway" most of these people won't live to be 80.

Mon, 10/29/2012 - 23:45 | Link to Comment flacon
flacon's picture

THE END of this madness can't come soon enough. I was going to use the word "retarded" but that would bean insult to the mentally challanged.

Mon, 10/29/2012 - 23:54 | Link to Comment Orly
Orly's picture



Mon, 10/29/2012 - 23:51 | Link to Comment Sam Clemons
Sam Clemons's picture

Too bad Bernanke's storm surge (above) is completely flat when measured in gold.  The Fed has always been impotent.

Tue, 10/30/2012 - 00:51 | Link to Comment SafelyGraze
SafelyGraze's picture


not at all. just think of the graph as a representation of artificially-induced ejaculate.

don't cringe. it's Science.

Long-term study on the effects of electroejaculation on seminal characteristics of the domestic cat.

 it feels good to borrow. and then refinance. and then refinance again. and then sleep.


Tue, 10/30/2012 - 06:09 | Link to Comment I am Jobe
I am Jobe's picture

Wow, WTF, how much funding was funneled into this shit?


Mon, 10/29/2012 - 23:55 | Link to Comment Eireann go Brach
Eireann go Brach's picture

Save this chart, so when all your pathetic Facebook "friends" ask why the stock market crashed 30%, you can post this chart and show them how the Fed created their latest bubble! So easy, even an Obama phone using, EBT card using, food stamp using, facebook junkie can get it!

Mon, 10/29/2012 - 23:59 | Link to Comment RafterManFMJ
RafterManFMJ's picture

No, they will never, ever get it. Even when they are 'getting it' fast and hard, they still won't get it.

Mon, 10/29/2012 - 23:37 | Link to Comment Timmay
Timmay's picture

We're saved!  Even if you walk half the distance to a wall, then half way again, and again, and again you will never reach the wall. Good job Ben, we will never reach the wall!

Tue, 10/30/2012 - 00:07 | Link to Comment Overfed
Overfed's picture

Or the edge of the cliff! :-)

Tue, 10/30/2012 - 01:04 | Link to Comment Vince Clortho
Vince Clortho's picture

You have captured the Fed's game plan in a nutshell.

Tue, 10/30/2012 - 10:01 | Link to Comment CPL
CPL's picture

One guy to dig a ditch and another one to fill it in.

Tue, 10/30/2012 - 11:33 | Link to Comment nofluer
nofluer's picture

Deny the wall. There is no wall. Tell yourself that the wall only exists in your imagination - it has no reality.

If you believe, if you TRULY believe, you can pass through the wall that you see and you can go beyond the wall that isn't. You can enter into a new world - a world without walls. But you must BELIEVE in the nullwall.

Mon, 10/29/2012 - 23:41 | Link to Comment kridkrid
kridkrid's picture

Math is such a bitch.

Tue, 10/30/2012 - 05:56 | Link to Comment Zero Govt
Zero Govt's picture

especially so when the losers Ben is backing can't do maths, price risk, ponder anything like thoughtfully the house of cards they built and can only count their bonuses

Bubbles, Jamie and Lloyd don't need more money, they need Biz Bascis 101 night classes ..and fast

Mon, 10/29/2012 - 23:41 | Link to Comment Anne Ominous
Anne Ominous's picture

Now if they can just lay that 8% sideways...

Mon, 10/29/2012 - 23:43 | Link to Comment lordbyroniv
lordbyroniv's picture

4th Turning........bitchez!

Mon, 10/29/2012 - 23:58 | Link to Comment ekm
ekm's picture

It's like the fire in a house that starts on the first floor.


Poor people will climb upstairs and further upstairs until there's nowhere to go and have two options:

1) Get burned at the top of the house

2) Dive from the top of house

3) Wait for the fire department to pick you up from the crane ladders.


There is only one problem: The fire actually is happening at the fire department. It's called the Fed.

The Fed has only the first two options left.


It's quite a cruel description, but that's what it is. It's quite simple, it is what it is.

Tue, 10/30/2012 - 03:54 | Link to Comment Offthebeach
Offthebeach's picture

"We had to destroy the "free" market to save it
Anyway, Fed paychecks come in every two weeks, better than any clock. Pensions are secure, the Gulfstreams fueled and clean, personal praetorian guards, descrete, polite and freshly armed with hollow point .357's.

Mon, 10/29/2012 - 23:54 | Link to Comment Bear
Bear's picture

I think the markets are only a hoopla side show, the real reason for QE ... to dig the banks out of the black hole they created for themselves. 

Mon, 10/29/2012 - 23:58 | Link to Comment edifice
edifice's picture

Law of diminishing returns. That's all. 

Tue, 10/30/2012 - 00:20 | Link to Comment prodigious_idea
prodigious_idea's picture

Yes, if the pattern holds, the next uptick s/b slightly less than 5%.

Tue, 10/30/2012 - 00:21 | Link to Comment old naughty
old naughty's picture

What is that? Someone please explain to Ben.

Mon, 10/29/2012 - 23:59 | Link to Comment lordbyroniv
lordbyroniv's picture

The Bernanke needs to up the monthly QE amount from $40 Billion per month to $400 Billion....


that'll buy us a week or two.

Tue, 10/30/2012 - 00:02 | Link to Comment ekm
ekm's picture

Like that it gets even worse.

The more tradeable securities are removed from the market, the worse it gets.


To make even even worse, the faster the securities purchasing is increased, the bigger the acceleration of the collapse when (not if) finally occurs.


Tue, 10/30/2012 - 00:31 | Link to Comment TideFighter
TideFighter's picture

I agree, but I think they'll slow crash this bitch and not hit the wall at full speed. 

After all, they are smart crash test dummies.

Tue, 10/30/2012 - 00:29 | Link to Comment TideFighter
TideFighter's picture

I heard that in some ares the housing market was up...about 4 feet.

Tue, 10/30/2012 - 01:15 | Link to Comment q99x2
q99x2's picture

Q(E)99x2 and I'll get that market going.

Tue, 10/30/2012 - 01:16 | Link to Comment hedgehog9999
hedgehog9999's picture

All kidding aside, itis a very interesting chart, if I was doing my Masters right now it would make for a good subject to research in more detail......

Another way to look at it is the Japanese market after a gazillion QE's and their market has not yet retested the highs in the early '90s........ pushing on a limp string they call it.......

What kind of morons run this financial joint?



Tue, 10/30/2012 - 04:27 | Link to Comment bunnyswanson
bunnyswanson's picture

These people who are calling the shots are ruthless thieves. 

(How The Federal Reserve Transfers our Wealth via inflation. 


Taxes are going up locally every year, it's inflation.  Taxes are going to go up and never back down again.  This pace is what surprises me.  It would seem they'd relinquish some of the treasures down to the common people if only to pacify the masses subtly while steering the ship in teh same direction.  Very worrisome that this is taking place.  Media is the reason.  It is their movie and we are in it.

Tue, 10/30/2012 - 02:36 | Link to Comment ZFiNX
ZFiNX's picture

Jokes on you. That entire series of waves is actually the first wave. Fractals, bitchez.

Tue, 10/30/2012 - 05:51 | Link to Comment VonManstein
VonManstein's picture

ummm. i didnt know QE~ was going to end? or that it had started (officialy)so how can we put reference points on the chart? QE1/2 are marked start to finnish. with big "corrections" in between. we have no finnish this time and havnt even started

Tyler may be right but still a little premature i would say.  how can he call it over here?

i think one more ATH could be on the cards. then again thats just me saying what others have said, its possible though, anything is.

my charts say that the SPX will top out in november and crash for 6-18 months and that gold will go the other way

Tue, 10/30/2012 - 06:48 | Link to Comment poldark
poldark's picture

Yes, I thought the same, we are now in QEternity. Ben can now print as much as he wants.

Tue, 10/30/2012 - 06:56 | Link to Comment Spastica Rex
Spastica Rex's picture

He can, but where it goes is another matter.

Tue, 10/30/2012 - 06:59 | Link to Comment poldark
poldark's picture

I do not know why people keep talking about the fall of the dollar.

Within the G20 no currency stands alone. If a currency falls out of the agreed bandwidth of the USD it will be bought/sold by the G20 central banks.

Tue, 10/30/2012 - 07:18 | Link to Comment VonManstein
VonManstein's picture

maybe look at the weekly DXY over past decade.



Tue, 10/30/2012 - 07:01 | Link to Comment XtraBullish
XtraBullish's picture

We had a twenty-year bull market in paper creation and now we are in a twenty-year bull market in paper DESTRUCTION. Watching the "Chasing Madoff" docu-drama last night reminded me of what Harry M. said back in 2003: "I was astounded by the level of corruption and fraud on Wall Street - it was EVERYWHERE."


Tue, 10/30/2012 - 07:02 | Link to Comment poldark
poldark's picture

Mussolini said fascism is when the power of the government and corporations merge. So like that the Bilderbergers are fascists.

Tue, 10/30/2012 - 07:14 | Link to Comment UGrev
UGrev's picture

Reminds me of my level of expectation of each 5MB,  15 second,  porn clip I tried to download over 28k dial up. Finally, I just gave up trying to find something good. THEN I GOT CABLE!! shit... gotta go.. 

Tue, 10/30/2012 - 07:44 | Link to Comment Whiner
Whiner's picture

All systems "go". And starting the count down....3,2,1..0. Ooops! Ah, Houston shut down you trackers. Call in the chaplains. We have a problem.

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