From Risk On/Risk Off To Reality On/Reality Off

Tyler Durden's picture

While most market participants are well aware of the broad risk-on / risk-off tendency in asset markets over the course of the last few years; this year - most notably as the facts of companies' earnings came under scrutiny in the last quarter - we saw a new pattern emerge. As equity markets levitated on hope of another injection of central bank largesse, so reality was suspended and valuation multiples simply didn't matter as "it's all about the future", but as Q3 Earnings Season began and exhibited its worst tendencies in years, starkly highlighting 'what lies beneath' so stocks traded in a 'Reality-On' mode. This then rapidly disappeared from view as Q3 earnings season ended and 'Reality-Off' mode was re-engaged. We can only assume, given GE's warning, how bad Q4 will be and the question then remains, will stocks re-engage 'reality-on' and retest reality lows?



Chart: Bloomberg

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punxsutawney phil's picture

TRAVEL: $3,629,622

The biggest expense is President Barack Obama’s round trip flight to Hawaii via Air Force One.

A Congressional Research Service report released in May 2012 said the plane typically used by the President, a Boeing 747, costs $179,750 per hour to operate. The U.S. Air Force has listed the cost of travel as high as $181,757 per flight hour.

Travel time for Air Force One direct from Washington D.C. to Hawaii is about 9 hours or as high as $1,635,813 each way for a total of $3,271,622 for the round trip to Hawaii and back.

MyBrothersKeeper's picture

No problem sillyhead.  Don't you know that Bernanke's printer is kept on Air Force One?

economics9698's picture

Does that number include travel for Reggie Love or Kal Penn?

francis_sawyer's picture

Let's just switch the Nations Capital from Washington DC to Honolulu... Then let Hawaii secede ~ they never wanted to be a state anyway... The US just stole it....

malikai's picture

Don't you wish you could take the company car on holiday, too? It's nicer and the kids love it!

GetZeeGold's picture



OK.....just who the hell is EVA again?

malikai's picture

Man the printers!

aint no fortunate son's picture

"We can only assume, given GE's warning, how bad Q4 will be and the question then remains, will stocks re-engage 'reality-on' and retest reality lows?"

Uh, no - as you said, there's a fat pipe between 33 Liberty and Dearborn Avenue that ain't never gonna get cut

Fuck bernanke

SheepDog-One's picture

What gets me is we heard for most of last year that it was all just 'suspension of disbelief for election season', and then afterwards reality would come back into play well that was bullshit its even more surreal now after the election.

fonzannoon's picture

sheep last year they were twisting. You and Kito and eventually I thought QE was a bluff that would not come about. They went from no LSAP tp 85 bil a month, indefinitely. That should keep us going for a bit. Then they will jump to 125 bil etc. At some point we just nail the wall at full speed.

SheepDog-One's picture

Yep one overnite it just all ends, no one knows when.

gjp's picture

Agreed, Sheep and Fonz.  So I guess the answer to Tyler's question, will Q4 reality matter to the markets, is a resounding no.  Earnings and any other fundamentals don't matter any more.  The only fundamentals that matter are whether the rest of the world still accepts dollars and whether Wal-Mart's shelves and Exxon's pumps are full.

BandGap's picture

Used to stay up late waiting for it.

Wonder what the final straw will be.

Everybodys All American's picture

I liken it to an avalanche waiting to happen. Everyone knows its' snowing (printing money) and the village at the bottom of the mountain (US citizens) is in it's way. It snows and snows and snows nearly every day for months. Till one sunny day the smallest slip occurs and the mountain of snow comes rolling down.

Everyone will say they saw it snowing. A few will say they thought it would be bad. Very few will think the entire village could be wiped out.

Jason T's picture

2013: year of aggregate demand VS margins.   

Dr. Engali's picture

Just nine more trading days to hold this pig together. Dear Santa Pleeeeaaaaaaassse give the bankers a big year end rally so they can trickle on us with their year end bonus.

Stoploss's picture

Merry Christmas central planning mutha fucka's.

The beasts tummy starting to growl?

Disenchanted's picture





Reality off since 1913...

Smuckers's picture

The investing masses will begin to comprehend the situation - approximately 4 seconds after they see the Fed has tied their equities in clever knots around their ankles.


Killuminati's picture