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It's Not The Economy, It's The Deja Deja Deja Deja Deja Vu Pre-FOMC Rally, Stupid

Tyler Durden's picture




 

Today's rally marks the fifth of the last six pre-FOMC days with a strong performance for stocks (the one sell-off into an FOMC meeting this year was when consensus did not expect anything - post QE3 and pre-election). The current differential between Treasuries and stocks is as wide (and expectantly hopeful) as it was when we were 'gifted' QE3 - and that marked the top in stocks for the year so far. It seems heading into this meeting, consensus expects the QE4 Treasury-based fill-'er-up that we discussed the day QE3 was announced and given the crush in earnings expectations, the broad market's current year-highs in P/E valuations just looks remarkably over-optimistic. With today's heavy block size seen at the highs as the short-stops were run, one can't help but see this as professionals lightening up into retail hope as opposed to looking to extend the rally.

 

10Y vs S&P 500 into each of the last six FOMCs... (and lower pane shows a 'model' view of current equity richness to bonds near its highs of the year)

 

Meanwhile - valuations on the major US equity indices are pushing back to the year's highs with this latest rally... incredible... with the Russell already the year's highs!

 

Charts: Bloomberg

 

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Tue, 12/11/2012 - 15:48 | 3052791 jeff314
jeff314's picture

fuck you Bernanke

Tue, 12/11/2012 - 15:52 | 3052809 Silver Bug
Silver Bug's picture

It's QE to infinity. Just keep stacking. This will all blow up one day.

 

http://silverliberationarmy.blogspot.ca/

Tue, 12/11/2012 - 16:22 | 3052882 metastar
metastar's picture

Deja Vu - Nothing more than a mini market brain seizure.

Tue, 12/11/2012 - 16:25 | 3052895 Sylvia Plath
Sylvia Plath's picture

... especially if there is no QE4... 

 

Tue, 12/11/2012 - 17:15 | 3053122 flacon
flacon's picture

Sylvia, I agree. I think the market is going to be horrified tomorrow at 12:15pm. 

Tue, 12/11/2012 - 17:28 | 3053179 NotApplicable
NotApplicable's picture

You seem to be missing the fact that they have NO alternative.

Sure they'll call it something else, but make no mistake, they have no choice but to monetize everything and anything in order to keep up appearances for another day. Remember, they haven't destroyed enough of the economy yet where they could successfully declare martial law. They've got to make people a lot more unsure of the future, and panicked first.

As for "the market?" Well, I can only laugh and shake my head at the idea that one exists.

Back to the article...

Tyler, are those "Dejas" linear, or geometric in their effect?

Tue, 12/11/2012 - 16:08 | 3052851 WhiteNight123129
WhiteNight123129's picture

sod-off Bernanke

Tue, 12/11/2012 - 15:49 | 3052792 catacl1sm
catacl1sm's picture

Ready for a drop. got it.

Tue, 12/11/2012 - 15:52 | 3052810 VonManstein
VonManstein's picture

this is so similar to july 4th 2011.

Look at XAUEUR XAU and SPX on that day. SPX broke the 61FIB from recent highs with a good bar and gold(s) dropped and bottomed.

Pattern similar too.... spooky

Tue, 12/11/2012 - 15:54 | 3052817 Getting Old Sucks
Getting Old Sucks's picture

Music stopped a long time ago but they're still dancing humming the tune.

Tue, 12/11/2012 - 16:10 | 3052855 WhiteNight123129
WhiteNight123129's picture

+2

Tue, 12/11/2012 - 17:30 | 3053195 NotApplicable
NotApplicable's picture

Some apparently hum well enough to fool the others. Will be interesting to see who loses their seat because of it.

Tue, 12/11/2012 - 15:56 | 3052820 kralizec
kralizec's picture

Markets.  Pfffffffttttt!!!

Tue, 12/11/2012 - 15:59 | 3052826 Cursive
Cursive's picture

Up is down, down is up.  Nice world the central bankers and political class have created.  It's gonna be one hell of a hangover when the hopium wears off.

Tue, 12/11/2012 - 16:16 | 3052874 Luckhasit
Luckhasit's picture

Haha, i haven't seen tapdancing like this since i watched Mr.Bojangles.

Tue, 12/11/2012 - 16:18 | 3052879 EmmittFitzhume
EmmittFitzhume's picture

Another episode of Weekend at Bernankies

Tue, 12/11/2012 - 18:26 | 3053412 GernB
GernB's picture

Except in this case instead of Bernie being dead the market is.

Tue, 12/11/2012 - 19:34 | 3053632 EmmittFitzhume
EmmittFitzhume's picture

The market is Bernie, getting hauled around like nothing's wrong!  The Irony!

Tue, 12/11/2012 - 17:03 | 3053075 Catflappo
Catflappo's picture

Yeah, fuck you for the second time in a dozen posts Bernanke!

Tue, 12/11/2012 - 17:12 | 3053111 rubearish10
rubearish10's picture

One of hundreds saved ZH posts I refer to when feeling alone:

 

http://www.zerohedge.com/news/its-just-getting-stupid

Tue, 12/11/2012 - 17:24 | 3053166 SheepDog-One
SheepDog-One's picture

WHOOP pop the Bolinger's and scoop up the caviar its PARTY TIME we got the free money men meeting again YAY!!

Tue, 12/11/2012 - 17:53 | 3053302 e.blair
e.blair's picture

Am I crazy to be shorting FB tomorrow?

Wed, 12/12/2012 - 02:43 | 3054911 MeelionDollerBogus
MeelionDollerBogus's picture

if you can hold a real short and you're not using options, I wouldn't be too scared.

The problem with options of course is expiry. My FB Put play on the last dip expired before being profitable. Meh. It happens but I picked the right price & direction - just needed 10 more days.

Tue, 12/11/2012 - 20:58 | 3053948 Who is John Galt
Who is John Galt's picture

Why has gold not popped?

Tue, 12/11/2012 - 22:20 | 3054355 Crooks
Crooks's picture

Because they want you to be poor, not rich!!

Tue, 12/11/2012 - 22:26 | 3054375 akak
akak's picture

Not enough oil in the pot?

Tue, 12/11/2012 - 22:28 | 3054381 Clowns on Acid
Clowns on Acid's picture

JG - because Platinum is being bought and against gold. Platinum is a very startegic metal as well a pm. Supply is more concentrated, and war games in N. Korea and Mideast (US sends F-16s to Egypt - who cares if Muzzie B'hood gets 'em) has drums beating.

Wed, 12/12/2012 - 07:07 | 3055101 GFORCE
GFORCE's picture

It's the stupid stupid. God am I sick of this f**king cliche! Alongside "crossing the rubicon" it must be the most overly used phrase in finance.

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