French Stocks To Drop 33% On Macro Recoupling

Tyler Durden's picture

The world's macro data is pointing a significant slowdown, and yet - as we noted here - stocks remain sanguine; buoyed by the promises of central planners everywhere that no harm will come to them. Deutchse Bank's Jim Reid, like us, is a little skeptical that this chasm of un-reality can remain for long. His perspective is from the correlation of PMIs and YoY changes in equities (based on data back to the 1990s). The current implied results for the US, UK, and the big 4 in Europe is more than a little worrying - with the French in most trouble.


US 10Y Yield vs The Dow vs ISM Manufacturing PMI


But Deutsche Bank does a little more work and regresses the factors over a longer period - based on changes in equity prices and changes in PMIs...


Via Deutsche Bank,

As we always stress this is a simple model but one that has over time proven to be a reliable guide to market performance. Rarely do the two variables stay out of line for long, something normally gives. At the moment the US equity market is 7% above where the ISM suggests it should be (was fair value last month before Monday's disappointment), with the UK, Spanish, German, Italian and French markets 13%, 13%, 14%, 19% and 33% above where their respective PMIs suggest they should be.




Source: Deutsche Bank

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McMolotov's picture

Too bad the French don't have Le Bernank.

hedgeless_horseman's picture



Viva Monte Carlo!

CAC 40 X7 Short GR

QS0011223540 CAC7S

malikai's picture

See my post below.

It looks (almost) over.

DJ Happy Ending's picture

Ben will print a bid for them. No worries.

Fleecer's picture

Where's the story about bitcoin being hacked last night?

malikai's picture

That was Instawallet, not Bitcoin.

Cursive's picture


mtgox was getting slammed with DDOS too

malikai's picture

True, and once again Gox failed.

But DDoS's are about as common as 8AM gold.

Dollar Bill Hiccup's picture

If Christine just let her beard grow ....

Cursive's picture


They do.  Have you seen the Fed's H.8?  Le BernanQE funneling Eurodollars to domestic subsidiaries of foreign banks.

It is a bargin my friend's picture

Fuck the French, arrogant ,smug, self interested wankers....thats all I have to say on the matter

ihedgemyhedges's picture

Well, at least the French women have hair down there unlike the Kardashian baldie type trash here in the United Skanks of America........

NihilistZero's picture

First post I've ever seen in my time on the internetz extolling the virtues of "le pubes" LOL!

jubber's picture

...But French 10Y Bonds hit an all time low today

Rip van Wrinkle's picture

The French Social Security Fund is piling in as I type. And when that fund dries up, it'll be the pension funds.

Key-Rick's picture

But the historical data don't include the one variable that we have now which didn't exist then - Uncle Ben's printing press running balls to the wall.

SDRII's picture

the death struggle is on to take the yen through the previous low. Doing yo mans work during US trade. pump pump pump pump

Dollar Bill Hiccup's picture

PMI, a quaint notion.

Listen Kevin Henry, if you want to enjoy this summer out in the Hamptons, you better start hitting the BUY button.

The Mitzubishi Zeros have already done their bit this morning.

hugovanderbubble's picture

Jubber, easy cos they are buying France selling Spanish Italian and Portuguese ones.

Monedas's picture

"A snake is an animal .... which, in theory .... has the capability .... to eat itself !" .... Monedas   1929   Comedy Jihad World Tour

gjp's picture

yeah the U.S. is this most reasonably priced market.  Sure, that makes sense.

The U.S. and the UK have the biggest trade deficits, the lowest manufacturing share of GDP, and the biggest concentration of financial fraud.  I think those facts are more meaningful than indexes of economic reports from government statisitcal departments.

fonzannoon's picture

It's cool Jack Bogle said the US would have two 50% drops in the next decade and at the same time stocks will return 7% per year avg.

Jason T's picture

hence why they call these things "corrections"

americanspirit's picture

Merde! Allons enfants du patrie - le deuxieme revolution est arrive. Ou sont les guillotines?

Key-Rick's picture

Ils ne sons pas ici!  Sacre bleu!!

Free_french's picture

Some typo...


Merde ! Allons enfants de la patrie. La seconde (not deuxième because there is no such thing as a third) révolution est arrivée. Où sont les guillotines ?

ydderf1950's picture

the best way to short the cac?

Free_french's picture

There is a fly in the ointment...

They consider a Y/Y change !


What about a CAC undervalued a year ago ?

But I would be happy with a 33% drop...

I would buy... l'enculé de "creux" avec une sacré nom de dieu de putain de louche...

lolmao500's picture

Meh. This was the old world order. Now? ISM and the stock markets have nothing in common... the stock market is in an alternate universe.

Free_french's picture

I don't know if you are following the french news in the USA... But two days ago we had a big "choc" learning than cahuzac was a liar, a TimmyTurboTax cheater and corrupt... But to to add insult to the injury has been discovered today that François Hollande's responsible for the fund raising during the campaign has got some participation and interest in two firms in the caïman (and it seems that how it is managed stinks....  with french income tax book...) More news to come...


Hollande is under 30% of people's trust... as our dumbass at the head of the state...

Nobody trusts him anymore ;-) and that's a good thing...


You have here a recent poll : (he was there at 27%)


Some people begins to feel the pain, now... They begin to roll over from the social safety net...

Two people tried today to burn themselves alive... (unfortunately they are not bankers)


Today it seems also than Hollande knew in december than Cahuzac was cheating and a damned liar...


So they all have problem... they have to deny these allegations... As the offical speech was that they have learned as us two days ago the news... Le rétropédalage ne va pas être évident à faire...


On va rire...