Chart Of The Day: Decoupling Has Ended

Tyler Durden's picture

Via Lance Roberts of Street Talk Live,

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PUD's picture

Some 45 percent of those polled said the holiday season brings so much financial pressure, they would prefer to skip it altogether. Almost half said their level of stress related to holiday expenses is high or extremely high.

That’s probably because nearly the same amount — some 45 percent — say they do not expect to have enough money set aside to cover holiday expenses.

Although those percentages are high, they are an improvement over a survey Think Finance conducted last year. However, it should be noted that survey focused only on consumers who earned less than $50,000 and used alternative financial services, while this year’s survey also polled consumers in higher income brackets. That suggests the financial anxiety may be more widespread than it had been in prior years.

It’s easy to understand why the holidays are a source of worry when you consider how many Americans are living paycheck to paycheck. About 41 percent said they would only be able to get by for two weeks without a paycheck, while an additional 25 percent say they could only survive a month.

The holidays are expected to only make the situation worse. About 59 percent of those in the survey expect to carry debt with them into the New Year, including more than half — some 54 percent — of those who earn more than $100,000 a year.

The Think Finance survey comes as more Americans cranked up their use of credit cards in the third quarter, while also becoming less diligent about paying their bills on time, according to analysis of consumer credit data by TransUnion.

Mentaliusanything's picture

Who boxed a third recession in starting about...... wait for it ....... NOW.

The reports of the economy'e demise appears to be grossly mis reported in the MSM.


Deo vindice's picture

Looking at that 2nd graph - the U.S. looks like its heading down fast enough to 'couple' again. It's just lagging a bit behind.

DoChenRollingBearing's picture

They go down, this time we go down.  It looks like the whole world rides along in sympathy, China included.  Looks like the fallout will even hit Peru...  FED, ECB: Jodidos son!

Mr Lennon Hendrix's picture

Thus why China has bought 775 tonnes of gold this year.

DoChenRollingBearing's picture

LH!  DCRB's central bank bought some just today as well.

Although I had to work for it...

Orly's picture

Love me some Lance!


Mr Lennon Hendrix's picture

What are the trades?  Go long the best smelling pile of crap fiat?  The dollar?  How long can we drive in circles in America before oil costs +$150/b?  How long until the fiat system breaks down?

Fiat currency has zero intrinsic value and while finance spins its wheels in the mud people are going after solid collateral like monkeys after bananas.  Soon their will be supply crunches for food, oil and metals.  Then the fiat ponzi will die and anyway holding inked paper will have to eat their losses, litterally.

Orly's picture

Sounds like you answered your own question then?

Mr Lennon Hendrix's picture

Yeah, sorry....I'm just in a bad mood.

Orly's picture

Well, if it weren't for the "fiat," "ponzi" go to zero Apocalyptic buzzwords, I wouldn't be so reluctant to put in my two cents.  Next you'll say that technical analysis is voodoo or some other silliness.

I think the best thing to do is stay high and dry with US government bonds and anything backed by the Fed, such as mortgages and soon municipal bonds.  Even Lance Roberts, who wrote this piece, says that the UST 10-year note is going to a yield below one percent.  That's huge.  (Catch him and his team on the radio KSEV 700AM Houston/Tomball 6pm-8pm Central US...or get some archived podcasts...and I have nothing to do with him or the radio station...)

Bond exposure and money markets are the safest way to play it.  Stay out of "risk," such as stocks, risk currencies like the Euro and precious metals.


Being Free's picture

@Orly,  "anything backed by the Fed"

Just curious....Do you think there is a limit to Fed's ability to "manipulate" the market?

EnslavethechildrenforBen's picture

Transfer of wealth

Disparity in wealth

Wealth transfer

Wealth inequity

Nothing ever changes

Long lead bullets and high powered scopes

laozi's picture

@Orly Even though I am on the PM boat long term (since the current monetary policies eventually will weaken $, Yen, Euro, ..., bla bla, you have heard this I'm sure), I think you are correct short term.

There is a huge delevering going on, since the financial sector increased from 10% leverage/GDP in 1950 to 130% leverage/GDP 2007. Households also increased leverage to 100% of GDP, historically unprecedented. The deleveraging will take some time and will be brutal.

And I do not think that Benny dares to act preemptive here, he must wait until next crash before the he brings the nukes (since he already used the bazooka). The REALLY heavy printing is still ahead of us.

The next crash might be a good opportunity to stack PM, or if too expensive: oil.

Orly's picture

We don't really know because none of this has ever been tried.  I do get the feeling that Dr. Bernanke is frustrated with the Congress and all the juvenile antics coming out of Europe.  He does have the greatest luxury in the world in that he is able to simply "invent" money, so in theory, there really is no limit to his ability to manipulate markets- if it were a static, unemotional beast.

He knows it is, though, so he is being very careful and deliberate in trying to reflate the bubbles.  I wish him luck!


Being Free's picture

Problem I see is that the debt market is a "complex system", and purturbing it to such extent based on essentially linear theory is a dangerous exercise.  The models that they use are all backtested/validated to a system that was principally responding to internal market forces and now that is no longer the case.  As you note, this type of Fed intervention has never been tried before.  I don't see it ending well; if the "emotional" markets get any wiff of Fed inefectiveness...

In all honesty, I can't see why B would be frustrated with congress, his Fed policy is what is enabiling the total lack of rational fiscal policy.

Oh well.  Good luck, and thanks for the comments; always good food for thought.

Mr Lennon Hendrix's picture

Fiat is the definition of the current monetary structure.  It is not a a buzzword.

Arthur Borges's picture

My understanding is that druglords love the euro because of the EUR 500 banknote, which saves time, effort and money on smurfs and shipping costs.

Orly's picture

Looks like the EURUSD pair will fall back into a long down channel @~ 1.2765, then it could be off to the races to the downside.  I had expected it to ramp because of equity selling exhasution but it looks like it is running out of steam much quicker than I thought.

1.251 is not out of the question if the pair fails to maintain above the channel.


fonzannoon's picture

Orly if u put the eur/usd at 1.25 where does that put the S&P for you? gotta be somewhere in the vicinity of 75-100 pts lowe, no?

Orly's picture

It is very difficult to say because there has been a huge divergence in the two over the past few months.  While the SPX has ramped significantly, the EURUSD has basically been treading water in the 1.28-range.  For some reason, the PTB will not allow the EURUSD pair to fall below 1.28.   1.27 gives them the heebee-jeebies and they pull out all the stops to make sure that it stays in that range, as they did this past week.

The last time the EURUSD pair was at 1.25, the SPX was at about 1300, so they are not very far off in that regard now.  But what happens when the ECB loses this invisible peg?  After they have been ramping all risk in order to keep the Euro afloat, if the old "risk-on" trick fails (i.e., QE from the ECB...) and the Euro does tank, it is quite possible to see the SPX at 1100 or lower.

Personally, I think much lower as the Euro re-enters that down channel because the prospects for the EURUSD pair get dimmer every day as it moves through the channel and people would run for cover as quickly as possible.  I have a feeling that SPX 880 is not out of the realm of possibility.

At that point in the game, drastic, drastic action would have to take place and then all bets are off.  It could be a dissolution of the Eurozone entirely, the split of the Euro into North and South (sounds a little too familiar...), or it could be that the Euro itself would go out of business but the trade pacts and zoning would remain intact, or they could do as Norway is doing and allow countries to run concurrent currencies, using Euros for international banking and local currency for local barter.

With all risk-off and the UST 10-year below 1% yield, it would be a totally different world than we know right now.


fonzannoon's picture

Ho lee shit Orly! I was not expecting that. 880? Wow. 

Orly's picture

That would mean about a 78% retracement from the move from 666 to the highs on the SPX in March.  A 61% retracement would give about 970 and a 50% retracement would have the SPX at about 1070.

It just depends on how freaked out equity investors would be and with mom and pop already checked out and into bonds and Joe Blow ready to redeem all his IRA and 401k money, a 78% retracement is certainly not out of the question.  Now when that would happen and how long they can keep this thing afloat is anyone's guess but if the Euro can't be propped up any longer, it would be the Pound going into the tank and who knows what else.  The Pound breaking down hard would not be a wonderful thing for equity investors.

It would be a mess, to say the least.

fonzannoon's picture

I agree with you fundamentally. I notice the Fed/ECB tend to step in very quicky lately, even if it is with just big ass rumors to stop the bleeding before it gets serious. Somehow just their words tend to put a floor under things. I also think Slaughter is right, when the fed goes for 85 bil unsterilized in Dec that is nothing to dismiss. Although I think it will ultimately get pushed aside. But I appreciate your insight. If that is your take on things I am definitely taking notice.

Mr Lennon Hendrix's picture

Bears unite!


You are going to get floored when Bernanke revalues the dollar.

fonzannoon's picture

when they revalue the dollar i will be floored but i won't get floored. i'm planning on it.

EnslavethechildrenforBen's picture

The dollar gets revalued every millisecond. Gas will soon be a hundred dollars per gallon. Then Americans will actually DO something about our criminal gov

Orly's picture

"The dollar gets revalued every millisecond."

Yeppers.  That's the 4X market.


Harbanger's picture

People holding bonds and stocks are going to get crushed.  We may get a couple more dead cat bounces, but the markets are over owned.  Long term the markets are going down hard.  (Long term is months not years away) If you want to get rich in this environment, you need to trade options.  Use call options now to catch some of the bounce, but when it starts to roll over you need have some put options against all the major indices.   You will become extremely wealth.  Just my opinion, I'm not a prof. trader.

lasvegaspersona's picture


you are the first on ZH I have seen consider the possibility of Euro survival in spite of various countries going BK. The Euro was structured to survive as it is independent (in theory at least) of any nation. I could see some countries trying to go back to original currencies but as they consider that , my bet is that most will elect to stay with the Euro and finally have to reform the socialist experiment. They will ultimately recognize that they can't put a chicken in every pot and have a currency that is stable at the same time. THAT is where I see this mess ultimately heading...back to reality...after years of simply cannot go on. We all know this, but it has been crazy for so long it will be shocking when it falls apart. Then we will all say...well of course it had to happen.

Mr Lennon Hendrix's picture

The 10yr to yield 1% and the DXY to 100!  King Dollar!

lol how funny is that ^^??  What else is the alternative?  Stocks "rally"? 

It is all a shitshow.  All "investments" on WS are a fucking shitshow.

ReptilianSlaveMaster's picture

anyone use shadow stats? seems like a crap / less wittier version of zero hedge

Whoa Dammit's picture

Does this mean the PHD economists lied about unicorns too??? :-).

tooriskytoinvest's picture

Orlando Health to cut record number of jobs to save money --400 jobs cut!--OBAMACARE IN ACTION--Happening Nationwide! Over 2000 cuts just now. THIS IS HUGE!

LetThemEatRand's picture

Next thing you know they'll start moving manufacturing jobs by the millions to low wage countries and printing money to maintain the bonuses of the "productive class" whose entire business strategy is to increase profit in the short-term without regard to who is going to be left to buy their shit.

adr's picture

I would conservatively say that 60% of what is put on store shelves is not sold to consumers. There is a huge export industry in making retail product disappear.

Average retail sellthrough is less than 7% per week. If you make it to 12% your product is seen as selling like mad.

The new corporatism doesn't need customers to produce a healthy bottom line. Only a skilled accountant lacking morality and conscience. It's the ultimate bankster fantasy, money just compounds wealth without producing anything of value.

venturen's picture

Bernanke announced they now only measure core employment...Core employment is 100% (it is a measure of how many employed people are employed!) Why bother measuring those people without jobs. What else do you need to know. Heck if you don't measure food, energy and housing as inflation...why keep records!

davidsmith's picture

Pour on the Fed purchases (and write down those mortgages!!!)!

q99x2's picture

Time for the Bernank to put the peddle to the mettal. Japan has just outdone him.

My next speech is a persuasive speech to return to the gold standard. Wonder where I can find information on that. No the hard part will be staying within the time limit. Just to let those of you who think college is teaching NoWO Chaosist theories know it ain't so.

Caviar Emptor's picture

But but ..."the bubbly BRICs"! ...and and..."China will pull us out of recession"!....oh and.."the healing housing market"!...and of course.."they'll all buy flat screen TVs and shop till they drop"!!.....

Well? C'mon, all you aspirational, upwardly nubile, metrosensual, Donald Trump wannabees! 

BlackholeDivestment's picture

Decoupling Double Trouble And Tiny Turbo Tim want's the Corzine Vapor Vipers to eliminate the Debt Ceiling.

Well SEC me Mystery Babylon.

Looks like D.C. better get ready for a 9.0

adr's picture

The banks and the financial media are oin a great job in finding a whole lot of bagholders to prop up the hosuing market. Somehow they believe the con that housing is once again an attractive investment.

Orly's picture

Thanks for the link.


Incubus's picture

2008: Bailout

2013: Failout

mt paul's picture

when will this madness end


really getting tired 

of buying gold and silver

running out of seal skin bags

to store the stuff in ...

glenlloyd's picture

I don't agree with his assumption about the US being unlikely to have debt crisis because it can print.

It can get away with it for a while but not in perpetuity.

falak pema's picture

what a joke : "we who created this financialista duck soup, can avoid the mess of Euro zone." Dream on.