Deja Vu All Over Again
Across many of the desks we hear from there is a distinct feeling of incredulity at the moves in the last week or two. Bullish or bearish, it seems the velocity and scale of the runaway moves after every utterance from D.C. has wrong-footed many across every asset class. However, one thing remains constant, a very strange case of deja vu all over again with last year's market and macro-economic behavior. The following two charts are showing spooky similarities between this year's 'fiscal cliff' hopes and fears and last year's 'debt ceiling' ecstasy and anxiety. Perhaps it will be useful to all those claiming that the market efficiently predicts a resolution - it might be useful to temper that enthusiasm given the moves we saw last year and the market's clear ignorance.
Heard on CNBC today "no way we get a sell the news event here"... "the market is telling you we get a deal"
US Macro Surprise Index (via Citi) is seemingly tick for tick with last year's...
and the market itself seems to oscillate in a very similar greed-and-fear-like manner as noone surely believes we actually go over the cliff... right?