Is This Why Markets Can't Catch A Bernanke Bid?

Tyler Durden's picture

While top-down macro headlines, anchoring-biased surveys, and election-oriented government-aided statistics suggest a world of unicorns and teddy bears where everyone and their pet rabbit 'Dave' should be buying stocks with both hand and feet for the 'upside' when the fiscal cliff is 'solved' and 'Bernanke has got your back'; why-oh-why is every rally faded? In Size? Perhaps this is the answer? Goldman Sachs Analysts Index (GSAI) - a quantified bottom-up look at firm-by-firm views of the current and expected economic reality aggregated across all of the company's analysts - is bad and getting worse in a hurry. The main index slumped to 32.9 in October from 44.1 in September, with all sub-components falling 'suggesting depressed business activity from the bottom-up'. Perhaps worse, the employment index remains weak and price indices suggest a deflationary future. This index of real economic activity is its lowest since the 2008-9 recession and sends a considerably more pessimistic message than many of the business 'surveys' from the Philly Fed or Chicago PMI. Perhaps it is this reality on the ground that is stalling the wealth-building stock-levitation that is so economically required by our central planners - as it seems the broad improvement in September was transient.


It's all going so well? The Sisyphean Market...


Goldman Sachs Analysts Index suggests the economy is deteriorating rapidly...


Via Goldman Sachs:

The GSAI tumbled 11.2 points to 32.9 in October from 44.1 in September. This is the lowest level since the end of the 2008-09 recession, and the underlying components fell broadly as well. The sharp deterioration in the headline and underlying components seems consistent with the predominantly negative sentiment from disappointing Q3 earnings (especially on the revenue side) thus far. Compared to other business surveys such as the Philadelphia Fed and the Chicago PMI, the GSAI sends a more pessimistic bottom-up message and suggests downside risks to ISM (Exhibit 1 above). (As a reminder, we construct the headline GSAI using the following weights: 30% for new orders, 25% for sales/shipments, 20% for employment, 15% for materials prices, and 10% for inventories. These weights parallel the Institute for Supply Management’s pre-2008 practice, substituting our materials prices index for their supplier deliveries index. The GSAI includes service as well as manufacturing industries. As with the ISM indexes, a reading above 50 theoretically signals growth while an index level below 50 signals contraction. However, our analysis suggests that a GSAI of 50 appears more consistent with trend growth than with no growth.)



In addition to the headline index, most of the underlying components of the GSAI also fell sharply. The sales index gave back its gain in September, falling 12 points to 36.4 in October from 48.4, registering the fifth consecutive month below the 50 mark. Similarly, the new orders index fell 15.4 points to 26.3 from 41.7, contributing 4.6 points alone to the headline drop. The inventories index saw the lone gain, rising 1.6 points to 43.3. Consequently, the orders-inventories gap fell back into negative territory at -17.0 versus flat in September. The sharp reversal in the sales, new orders, and orders-inventories gap measures suggest that the broad improvement in September was likely transient, and that activity and demand will likely remain depressed despite tight inventories.


The employment index fell for the second consecutive month to 39.3 from 45.3 in September. This is the lowest index level since February 2010, and—similar to weakness in the employment component in the Empire State and Philadelphia Fed surveys—continues to point to a slow recovery in the labor market. While the September employment report showed encouraging improvements particularly from the household side, the pace of improvement is unlikely to sustain.


On the inflation front, all three price indexes dropped sharply. The materials prices index fell 16.7 points to 25 from 41.7 in September. The output prices index fell 7 points to 38.2 from 45.2. The index for wages and labor cost fell 5 points to 60.0 from 65.0. While the wages index continues to look high relative to the materials and output prices indexes, it has reverted from a high of 66.7 in August. This week's Q3 employment cost index further suggested no inflationary pressure from the wage side. Overall, the trends in the three price indexes continue to support our view on slowing core inflation through 2013.


Qualitative comments in October reflect more pessimism than those from September. In particular, companies across sectors noted weaker than expected earnings and/or lowered guidance amidst the disappointing Q3 earnings season. The European crisis and the upcoming US "fiscal cliff" resurfaced as the two key risks weighing on business outlook and the broad economy. For instance, some industries such as Communication Services and Defense cited pressure specifically from heightened fiscal uncertainty and government spending cuts.

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vinayjha's picture

Economy has been deterioting since 2011. Stock market is still at multi year high inspite of small sell off. Bernanke will be out if Romney wins thats uncertainity with this election.

vast-dom's picture

Don't forget Tyler: Sisyphus pushed that rock for an Eternity. Can our markets hold out that long? Looking more and more likely....and i'm not backing down fighting the fed into insolvency if i must.

Cheesy Bastard's picture

I prefer to think of the market as Icarean. 

redpill's picture

And the sun is getting pretty damn hot.

Precious's picture

Because at this point the fucking thief with a diploma, Bernanke, is laying low thinking about job security.

Stuck on Zero's picture

Sisyphus er Bernanke has stolen and should be sentenced to the same punishment as Prometheus.


Silver Bug's picture

The QE is working less and less everytime. The can is getting mighty big.

Calidreaming's picture

Fuck Bernanke -   asshole dickhead

Precious's picture

He's a fucking thief.  Stole from the poor to give to the rich. 

falak pema's picture

stole from the poor to give to the rich to such as extent that its going to boomerangggggg! 

buzzsaw99's picture

A joo banker doesn't spend money to help the economy, especially not his/her own money. What they do is try to trick poor people into borrowing and spending beyond their means.

beaker's picture

what was that little story that Tyler ran a couple of days ago about JPM and a few other banks needing to add capital?  Everytime these banks get their tit in a wringer and have to raise capital, these markets get hit.  Especially gold.  Anyone else notice this?

Yen Cross's picture

    Sessions: Growth of food stamps 75 times greater than job creation under Obama - The Hill's Floor Action

 Don't worry we can foodstamp our way out of it. /sarc

I laughed when I read that RTRS attributed the unemployment rate(7.9) uptick to more longterm unemployed looking for jobs again.

Manthong's picture

“I laughed when I read that RTRS attributed the unemployment rate(7.9) uptick to more longterm unemployed looking for jobs again”

And I laugh when they hold the AA meetings in an open bar.   : D

selectricity's picture

Looks like GS analysts tend to be a lagging indicator.

VonManstein's picture

big bags of Rice in the local supermarket (london) have increased by £2 past 3 months >  about 30%

its fucking bad

Caviar Emptor's picture

In a biflationary economy, expanding economic activity begets contraction, not inflation as seen in the previous economy. 

Beware, the next phase in the downsizing of America is around the corner

q99x2's picture

Repent for the end is near.

A revolution won't start until the upper middle class (lawyes, doctors, colleges, politicians) gets squeezed until then sell art to banksters. After the revolution throw the banksters into jails and get your art back.

Yen Cross's picture

 If Jerry "Moonbeam" Brown gets his way in Cali with Prop30. (sales and income tax increase) you're gonna see a lot of pissed off "upper middle class".

Offthebeach's picture

Colleges? They're more on the gov teat then hogs on a dead farmer.
Lawyers? All creatures of the court. More gov, more lawyers. If revolution, they'll be in fat city looking over Hellfire drone warrants. Or making g sure Big Sis shoves her nightsticks lawfully while you are under safety detention for 10 years.

Doctors are getting fat with the gov.

Professional LOVE big gov.

Quinvarius's picture

A country's fiat currency is only as good as the economy it uses as a host.  No economy, no tax revenue, no debt service. 

Winston Churchill's picture

Don't know about the Bernanke put,I think the Bernanke bill comes next.

$60 tn down the crapper trying to levitate the zombie banks, and the stock


Humpy Dumpty.....

Caviar Emptor's picture

Nxt comes a new White House Call, to bolster the Bernanke put, in the form of a new stim package. No matter who wins

Quinvarius's picture

Wall street spent all of October screaming sell on MSM.  Same thing they did right after QE1 was announced.  Thats fine.  They got blind sided by the obious coming of QE3.  The COT reports show them getting long, despite the hoopla.

I am calling BS on GS.

Winston Churchill's picture

Whatever, only way I'd buy anything in this 'market' is with a 90% discount.

Even then, I'd think long and hard about it.Cannot trust anybody's figures

anymore.The BS is piled so high ,you can't see over it.

bigkahuna's picture

They are not catching a bid because the jack-ass banks that have bid it up (via the bernanke) in the prior are now attempting to stealthfully exit their positions and pocket some profits. Come on in retail investors!!!

virgilcaine's picture

The Bots are going to run for the Exits leaving noone left to hold the turd market up.  This is the Fed's 'Freddy Kruger'.

The Crash isn't going to be like Grandpa's 2 Yr decline 1931-33, no. no.. MUCH faster than that.  I spoke of the APPL Hedge fund... 'Roach Motel'.. well they are fleeing..scattering , 10 left so far..790 to go.


WAMO556's picture

Methinks that Drunk Drivers Against MADD Mothers (DDAMM) is a whole lot more conducive to freedom then those idiot MADD people. Mothers want more police stopping more people on the road and taking away more freedom. The last thing anybody wants is pulling up to frigging check point run by cops and them asking for your papers. At least sometimes they say please. If YOU don't give them what they want, stand by for a ass whipping. Oh yeah, and here is a stupid question: how come we got the Border Patrol roaming around the interior, asking stupid fucking questions like: are you a American citizen? If these idiots were doing their jobs, they would still be on the Border.

Imagine that, the Border Patrol that doesnt patrol the border. What ass clown is running this three ring circus?????

And we got not only Mexican nationals voting (for Obama, of course) but we have a whole host of international illegals voting. Just imagine WHO these NON CITIZENS are voting for. YUP, you guessed it.

A wee dram of Jack has loosened me tongue.

In Vino Veritas Est

Tombstone's picture

Are we to trust in Goldfish Snacks now?  Whatever GS does or says is usually geared toward the probability of them earning huge profits down the road.  You can bet that investment firms, banks and brokers are all self-serving and have only one thing in mind...generating profits for the big guns at the expense of Joe investor.  Looking at the GSAI chart it surely looks like it is headed toward a test of the lows.  That would mean a huge drop in stocks is in the making.  Is the socialist triumvirate of Barry, Benny and Buffoon going to let that happen? 

virgilcaine's picture

What a great Democratic process!,, the entire Economy stops still for 6 months before the Election from indecision and then 6 months after due to new policy.

e-recep's picture

the GSAI chart is concise and spot on.

BeetleBailey's picture


I never have seen some douchebag run for office using his wife as a placard. What a CUNT Obama must be in person.

Imagine the flak Bush would have gotten for using his wife.

Of course, John Kerry couldn't use Mrs. Heinz Ketchup....the lantern jawed fucker...

Obama....Fuckin wimp....

falak pema's picture

fortunately for him his wife is no f**king whimp.

falak pema's picture

watch that EURUSD roller coaster : 1.2836

Gold : 1675 Ag : 31.29 

All commodities down except palladium.

GreatUncle's picture

A question out there for any budding economists might wish to answer.

When something actually starts to make sense for a change.

"If I was worth a million dollars and spent 50% on government bonds / gilts etc. what is my total worth now? Is it 500K or still a million?"

A principle I think Bernake needs to understand before he sinks the country further is by creating any liquidity through QE and wherever you wish to store the actual numerical value "THE TOTAL NUMERICAL NUMBER IS INCREASED". FACT.

Now I don't really care what you do, say or anything because the value in the whole economic system has been increased. FACT.

If anybody understand my concept, the existence of newly created worth wether it is traded or not affects the total value of the economic whole. Even without trading it there may be a delay before the   consequences are felt.

I would call it QUANTUM EXCONOMIC TRADING myself.

As each phase of the creation process adds to the cumulative worth so what is that dollar actually worth in your pocket now then "in the grand economic total"?

Is it more, less or the same. ---->>> Think it will be less myself. Now lets say you have 4 trillion in worth tied up like he has you try and remove it and any economy will contract to where it would be without it.

The REAL NASTY BIT is as you wait for the time you can actually ever remove the value even without trading anything the QUANTUM ECONOMIC TRADING kicks in by the existence of the value.

Mwhahahahaha you are so royally screwed and nothing you can do except bust or CTRL-P forever. Neat trick that, think I am right too.

A decade and look where Japan is? I can't believe they wanted to be in this position and if you had been give the chance to bust a decade ago should you have taken it or waste a decade and likely far longer.

It also explains the law of diminishing returns using QE as the cumulative value rapidly increases :-)

Hohum's picture

On economics statistics:  red light.  Repeat ad nauseum.

blindman's picture

let me say f.. g.s., they are the anti social planners.
central and ..? did i say f.. gold mound... s.? oh yes, i did. there was something else but f.. that.

Grand Supercycle's picture


These daily charts are still breaking down & overdue sell off expected after Obama victory - - SP500 / CRUDE / COPPER / GOLD / SILVER / EURUSD / AUDUSD

USD will rally.

hedgehog9999's picture




nastaking's picture

Google has unveiled its first 10in Nexus tablet, simply called the Zerofire E5 Android10. Manufactured by Samsung

NitneLiun's picture

Cleary, the root of all of our economic problems is the obstructionist Republicans in Congress. If only they would let Obama work his magic, it would once again be morning in America. I mean raising taxes on the rich and making them pay their fair share is the solution to all of our problems, right?