The New Normal In Nine Charts

Tyler Durden's picture

From macro to micro; from momentum to valuation; and from money supply to expectations, the 'new normal' in which investors find themselves is one currently dislocated and 'different' from the past. However, as we have seen all too often in the past, these dislocations do not last forever. And with positioning (here, here, and here) as bullish as its ever been, it seems there is little room for error in economic reality catching up to stocks 'hope'-filled expectations.


Top-Down - US equity valuation appears notably divergent from New Orders...


and overall macro performance...


which both seem to indicate a 12.5x Fwd P/E is more appropriate than ~14x?

Especially as Revenue Growth looks dismally recession-prone...


as does the stagnant earnings growth...


with margins appearing to have topped out...


and the situation going forward is nothing but awful as negative pre-announcements continue to surge...


which leaves the S&P 500 looking anything but cheap against 40 year average valuations.

As Barclays' Barry Knapp notes, relative to historical valuation metrics, equities look modestly cheap to cash flow (low capex is the likely reason), fair to earnings metrics and notably elevated to balance sheet and debt based measures (EV).


which, given how weak revenue growth is looking this quarter, leads him to continue to believe current implied EPS growth (~18%), well above Barclays' 7% estimate, is too high.


But, in the new normal, a drop back to the reality of 1325 on the S&P 500 seems so out of the realm of possibilities to most buy- and sell-side strategists as to be worthy of ridicule; as opposed to the likes of Gross, Dalio, Singer, Grant, Bass, and Klarman who all see our current farce for what it is - entirely unsustainable!!

When all that seems to matter (as clearly macro-, micro-, and flows do not) is the ninth chart... global central bank largesse...


Though of course, there is a limit to what 'valuation' even the greatest fool will stand (unless the whole market becomes AMZN)...


Charts: Bloomberg and Barclays

Bonus 10th Chart: The Long-Term trend on the S&P 500 seems to be stifling progress for the pump-effect is having less and less impact (flatter and flatter slopes of nominal recovery)...

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Fidel Sarcastro's picture

Uncle Ben says "BULLISH bitchez"

Skateboarder's picture

Awesome chart porn... the numbers say we're in a recession cycle but we can't see or feel it... amazing!

*raises glass*

To 15k DOW.

GetZeeGold's picture



Sky's the limit. We're clearly rolling here.


Who needs an economy when you have equities?

bobthehorse's picture

The new normal?

That's easy.

Endless Japanese-style recession.

Deflation. Deflation. Deflation.

kentmills's picture

Civilization peaked with Buffy the Musical.

Gamma735's picture

              Why is the path unclear?
                    When we know home is near?
Understand we'll go hand-in-hand
                    But we'll walk alone in fear.
                 - Tell me!
             Where do we go from here?
                    When does the end appear?
                    When do the trumpets cheer?
                    The curtains close on a kiss, God knows
                    We can tell the end is ne - ar.

               Where do we go from here?



From Buffy The Muscial- Once More with Feeling, Where do we go from here.

mmanvil74's picture

Where were the nine charts that predicted the double digit ramp up in spy over the last two months? On a long enough time horizon the bears will eventually be right...

Bear's picture

And get ready for a new all time high in a week ... You just can't make this stuff up

crawl's picture

$85B/month = more green at close.

Strangely enough, measurements of economic activity are rendered useless.  Interesting charts, but the power of the FED's printing press is greater than any disappointing announcement that normally would have negatively impacted the markets.

Why bother fighting the Central Bank?  Easier to go with them than against them.  Ask any shorts out there.  It's brutal.

Gamma735's picture

The money printing system will work until it completely fails.

ebworthen's picture

Only the insiders will know when the next correction is - and there will be one so they can take some profit.

How else can they pants CALPERS and the money stuck in 401K's and IRA's?

Hammer that really long plebian money being held hostage.

Ramp it up some more with Ben's Snake Oil.

Lather, Rinse, Repeat.


Bicycle Repairman's picture

Got to wait until enough sheep are in the pen.  And they count the sheep in real time.

Dr Benway's picture

Given the amount of outright fraud in the market, quaint traditional valuation tools hardly seem applicable any more. Earnings per share? Who cares.

For even more charts, check out my newly updated presentation on Australian financial market fraud:

OddFieldIsStrong's picture

Dr Benway, thanks for the extremely impressive analysis. A 6.5 billion hole to bury the grannies! I really hope the pension funds/retirement funds are wise enough not to get sucked in.

I am wondering if enough shorts target a smaller/vulnerable LIC, perhaps we would bring it down (to make it harder to raise new capital which it needs for the ponzi) and cause a cascade through the whole lot of cross-held LICs. I am quite tempted to give it a try, but given what you said about ASIC and the still ramping share price, this ramping/ponzi could go on a whole lot longer than I could keep the short on.

Which of the LICs would you see as most vulnerable (having a need to raise capital shortly, most likely subject to a ASIC bust etc)? How long do you think this ponzi will go on? 

Dr Benway's picture

Thanks OddFieldIsStrong!

I'm not recommending anyone short LICs. The manipulators have billions under management to misuse, access to leverage, and currently can set these share prices at will. Nor of course would I recommend anyone under any circumstance going long these ponzi schemes. The LICs are a putrid festering pile of crap, best course of action is just stay away. As with any ponzi, although its demise is mathematically inevitable, the precise moment is harder to predict. At some point no more sucker money can be persuaded to join the scheme. ASIC will do nothing effective to stop this fraud before it blows up.


OddFieldIsStrong's picture

Do you know of any major pension funds holding these LICs? It would be such a world of hurt.

I am across the ditch, and with the NZ government really pushing KiwiSaver, all I see is a grand scam for the connected to suck wealth out of *all* workers. The reporting regime imposed on the KiwiSavers funds are atrociously loose, and even then there had been a few incidents of wrist slapping already by our so-called-regulatory agency. 

Have you tried to get a newspaper (competitor to the Sydney Herald) to pick up on your analysis? 

Dr Benway's picture

Yeah I fully agree with you. The whole forcefeeding money from pensions into share market created such an abundance of problems, apart from destroying price discovery. The situation is the same here regarding major pension funds and reporting requirements, the super funds can operate in near perfect secrecy. Because of this, its hard to tell what their exposure is to the LIC sector, they definitely own to some extent, as AFI and ARG are ASX100 companies and would be held for index exposure. And the super funds already have holes, from other crossholdings within their asset base leading to inflated net assets and buy/sell prices for units. Regarding contacting media, I don't think there's any point, as there is no free press in Australia and no one would touch this, regardless of its accuracy and serious implications. Australia has just been corrupted too far to turn around.

MrX's picture

from the looks of things we are definitely headed into charted territory...I for one am headed for an all time high

GetZeeGold's picture



An hour in the Choom Wagon......and this crap will start to make sense.

GetZeeGold's picture



Beat that dead horse. I think he's just faking it.

Freddie's picture

Tyler's keep talking their book and what used to be a rational world.

You cannot fight the Fed (and their endless fraud).  Ob-MAO's market only goes up like Mugabe's did.

AssFire's picture

So what you are saying is..that clinking noise that takes me to the top of this roller coster is about to stop??

Colonel Klink's picture


Did someone say Klink?

chump666's picture

Still a rally (stocks) on, EUR retrace last few hours is profiting cues, USD is looking weaker by the min.  Looks like mild profit take is kicking in, nice and stabilized by HFTs just doing their thing, nothing could ever go wrong.  But...

Japan is f*cked, Europe is done and dead, just a zombie corpse in a necromantic dance with Mario, Germany will lose it again like it has a hundred times in history, China is toxic waste dump and most probably collapsing in a heap, America is post empire and f*cked.  Middle East wars, Japan/Chin goes hot.  Everything is f*cked actually.  So...stocks, well, central planned juicing will only last so long, Faber's call on an all out bond collapse despite monetization could be a tasty trade.  Which may send stocks into an oblivion sell, smashing lows and drifting into a multi year bear market.

It would be quite orgasmic.

Freddie's picture

For all the problems Europe, China, Germany, Japan, Greece etc have - they have one major advantage.   They don't have Obam-MAO.

ebworthen's picture

So this is why there were so many fund managers on the MSM this week pumping the markets and saying people "have to buy equities because bonds are in a bubble".

Uh-huh, right boys, riiigghhht.

chump666's picture

A major primer, amongst other events for our manipulated stock market:

gmcniff's picture

The fact the AMZN's P/E has been so high for so long tells you all you need to know about the relatonship between the market and a stock's fundamentals...similar to our government and the Constitution.




Newsboy's picture

Yes it gets worse, but the chances of worse-than-ever-in-human-history are getting really loaded up, too.

cnhedge3's picture

You cannot fight the Fed (and their endless fraud).  Ob-MAO's market only goes up like Mugabe's did.

StoleYourMoney's picture

No recession, until it hits their portfolios...

Motorhead's picture

Charts, bitchez!

q99x2's picture

No problem. IRS is going to fix everything with legalized Enron accounting this year. With Fraud as the main driver of the economy you can't go back. What else can they do?

They could bring back liar loans and let people buy homes with student loans. But I think we are in the clear the chips off the table stage. Probably legalized massive fraud for corporations outside the banking industry is my best guess.

Everybodys All American's picture

Mark to market accounting has been gone for years now in the banking structures. That's all you need to know.

LongSoupLine's picture

Fuck you Bernanke, and your piece of fucking shit illegal money printing and laundering syndicate known as the fucking Federal Reserve.

Eat shit and die you fuckers.

Cult of Criminality's picture

Another new normal is;

Look out your east coast window in Florida to see our subversive geo engineering in action. Major cloud seeding on what was a perfectly clear sky 45 minutes ago is now shit.

 For Live chart look out the window

Cult of Criminality's picture

We have Live 24 tracking software and these aircraft of course, are not on it and through telescope and binoculars I have counted more than thirty spraying aircraft.

Grand Supercycle's picture

Get Ready Bears...

Wile E. Coyote overdue sell off awaits as SPX daily & weekly charts continue their protracted topping process from current extreme levels.