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Eight WTF Divergences
Following up on last week's twelve WTF charts, we thought it might be appropriate to look at the current equity market's efficient discounting knowledge relative to eight historically correlated risk-asset markets. What do stocks know that these markets are 'inefficiently' believing in?
1. Dr. Commodity appears to be less sure of the global growth expectations behind US equity prices...
2. The Treasury bond market is decidedly less enamored with growth...
3. Forward inflation expectations are diverging (less short-term inflation expectations relative to long-term)
4. And the credit market has been worried for 3 months...
5. As the USD correlation has brokem
6. And the Dow theorists are worrying with Dow Transports not amused...
7. But the bottom line is - Top-Down, Macro data is dismal
8. and Bottom-Up, Earnings expectations are bad to worse
So after all that - what do stocks know that everyone else doesn't?
Charts: Bloomberg
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I just spanked my Bernanke and shot Dimon mustard all over this chart porn.
You sure it wasn't Buffet Heinz ketchup?
(all I buy is generic or Hunt's now)
The sheep have been trained that all is well as long as the DOW is green.
I am beginning to wonder what other signs it will take... One thing is for sure: they are 6 years into papering over this abortion of a ponzi scheme gone bad. When this thing blows, it's going to be EPIC.
I like chart #8 the most :)
Does it tell anything?
This time really is different. The difference, of course, may be transitory.
Hunt's has HFCS-free catsup.
http://consumerist.com/2013/01/30/hunts-manages-to-sneak-high-fructose-corn-syrup-back-into-its-ketchup-after-2-years-without/
"What do stocks know that these markets are 'inefficiently' believing in?"
85 Billion smackers a fucking month (levered 10x), is what they fucking know, Tyler, and you know as well.
Fundamentals always win in the end, everything else is gambling.
This blog was loaded with HFT talk the last few years, and then all of a sudden articles like this are posted that use the word "market".
There is none. All that exists are computers fighting each other. Their headline reading algorithms have no reason to care about macroeconomics or more or less anything else. All they care about is what the other computer does.
The S&P is not a market. It would rise if there were mushroom clouds over every refinery in the US. It would rise if every one of the 500 companies reported huge losses 8 quarters in a row.
The algorithms have no reason to care about that stuff.
this is not a "market" and the hft's and algos are easily gamed and ran and ultimately only do their masters bidding...the former markets are now political tools in a propaganda war. "markets" feint pulse was snuffed out in march '09 and once in there is no possible exit strategy...ever. tptb are now behind the wheel and that is that...don't look for anything but more of the same in ever greater doses.
Don't think the HFT's are operating in all.
Dr. Copper seems to still be relatively free for some reason,in comparison with the others.
Its prognositication is not looking good for the patient.
The stawk 'market; is now a roach motel,little money can be traded in and out,big
money can never leave.The algos have the exits chained.
and Ameritrade site will BE DOWN WHEN SELLING BEGINS ! Don't forget that, folks, NO ACCESS on selloff again.
correct.
they only care about the bernanke put.
they may need to go through a learning curve on the bernanke call.
now that the japanese have given him cover to withraw qe slowly in response to japanese easing.
as pressure grows, imploding japan buys 99.99% of its own paper. and then they settle to zero amongst themselves, like u know, bis. except japan can, unlike bis. japan owns its own debt. bis does not (and there are attorneys there).
when japan goes south, does anyone question the magnitude of that event?
so, onward.
shambles. but japanese. they have settled already and have a clean slate. not the rest of the world. ihe rest of the world is relatively constrained. everybody owes everybody.
at the deapest level, since first out wins, must be japan just said "me".
but perhaps not.
may be japan will 'pull it off'...
after all, no central bank in the world wants japan to fall.
except perhaps the boj.
gotta love the macro.
pong.
game on.
:)
And That is the truth!
Food, Shelter and Water. No perpetual growth on a finite planet. These are the starting points. Failure to build on these means certain death.
Yet if I had to pick one of those nine puppies – gun to head and all that- on a risk adjusted basis, I’d go with the SPX.
Oil and high yield bonds make stocks look like lassie. Guess once that changes we’re in REAL trouble.
still not enough smackers to fight the keynesians' kryptonite-deflation. the bernank is going to have to go full retard like the japs
Stocks' answer: "I like peperoni pizza!"
Wait, what? That doesn't even make sense. No, could you repeat that? Stocks didn't understand the question. A bit out of it from the QE narcotics.
+1
Dave, stop. Stop, will you? Stop, Dave. Will you stop Dave? Stop, Dave.
Stock's answer: "42."
NOw THAT is a good post. Kubrick and Douglas Adams references to the economy and stock market.
PRICELESS!
Ah yes, The Answer to the Ultimate Question of Life, the Universe, and Everything. aka 42!
Stocks know what Ben did last summer.
The sovereign bubble illustrated.These divergences either converge, or they don't. For all our sakes I hope they do.
They will certainly coverge, but when and how? Will commodities ( the one i found most interesting) rise or stocks fall? What will be the triggering event or will it be a gradual change?
Careful about what you wish for. Convergence will be followed by something resembling a team swan-dive, into a bucket of concrete, DRIED concrete, from 10,000'.
logical explanation cannot describe this situation, it is a manipulated market.
Seems like you've provided a logical explanation.
When you're in a House of Mirrors don't expect things to look normal...
Stocks should have corrected, but were not allowed to (PPT). At this point TPTB are desperate, they know reality looks bad and so they need to *force* stocks higher and get the retail investor in to make it look like the recovery is continuing. They need to keep this bubble going whatever it takes, that includes manipulation of certain safe haven assets. If people see that Bitcoin, and gold & silver are not safe, they will put more of their money in either stocks or bonds.
The Bernanke put is dead so they can't allow a correction because there is nothing to turn things around. It will still turn around when there is something to scare people.
People don't have any money!
This is all about trying to squeeze out the BIG TURDS that we'd been (promised to be) fed for decades now. It's RETIREMENT/PENSION money that's losing air, all the returns are puking (duh- can't have perpetual growth on a finite planet!)- this is all locked up money being desperately pushed around trying to keep it from circling the drain (ultimately a futile effort). Not enough time to buy, WAY TOO MANY "retirees" who won't die off fast enough: it's the current crop that was totally sold on all this American Dream shit, they'd make a HUGE mess if the rug pulled from under them; the younger folks? I think they see what the future is going to be like- they are "adjusting."
The stock market knows nothing. You can print money and throw it at the system but you cannot control where it will turn up. What we see is liquidity sloshing around in the system and a crash can happen for no apparent reason overnight.
The "system" is choked for the only liquid that matters: oil.
The oil numbers being reported include condensate and natural gas liquids, which do not power trucks and transport in general. The "system", aka, engine, can't run as the fuel line gets pinched. And never will again.
There is no economics. There is only physics. Economics is obfuscation draped around physics. Economics is an invention. Physics were always here.
"There is no economics. There is only physics. Economics is obfuscation draped around physics. Economics is an invention. Physics were always here."
Fuck, the next thing you'll be saying is that there are no Unicorns! </sarc>
We've now come to see what our most polished trait has been- deception. The girl marries the Prince; The American Dream...
Physics is just an instantiation of mathematical rules. We live in a simulation of one possible physics. Gah! Physics believers.
Here's a divergence: Cunt disorderment Feinstein VS. 300 million guns in the US.
Oh and btw when I say fuk the US gov't what I really mean is fuck the US politicians that have been 'hired' to fuck us over.
Not to worry about the guns, worry about the gun owners. Feinstein said that vets were an unknown. Yep.
"Never mind the gun, beware of owner."
There are not many things that can disturb me to the point of nausea but even possibly picturing Dianne's cunt in my mind is making me very queasy.(two n's because she is special I guess) That just has to be a rotten can of tuna. Yeah, well good luck banning guns and the accessories. Go away disgusting Bbitch.[sic]
I was at the Big Reno Gun show yesterday(very large gun show), folks were standing in line for 5 hours to buy over priced ammo. Mags were listed as twice what they were 6 months ago(not many were buying those). Dian, Obama, Joe and the rest of the gun grabers mackanations have awoken the sheep and they are turing into sheepdogs.
TPTB should have made guns/ammo/magazines crash in price along with the PMs. Then everyone would think nothing is wrong and stop buying. A few of us, of course, would jump at such an opportunity.
Yup, the problem ONLY started when the "other team" got the ball...
Perpetual growth on a finite planet. Stay behind for remedial education until you grasp this concept...
I have question for those who believe that "they" have been 'hired' to fuck us over: turmoil is the opposite of "status quo," why, when TPTB have been served so well by the "status quo," would TPTB decide to put themselves in peril by causing such an upheaval?
Continuing to point fingers at a target misses the real driving currents.
"So after all that - what do stocks know that everyone else doesn't?"
http://www.youtube.com/watch?v=fvZqWq0ZNjk
Momentum chasers, they will all chase the market higher until they don't!
http://www.youtube.com/watch?feature=player_embedded&v=fg7OrF9TupY
Is it just me, or do these charts, upon a quick perusal, resemble a child's drawing of the monster Godzilla ? There goes Tokyo . . .
Intermarket analysis is soooo 2006.
It’s hard to say which is increasing faster; the S&P500 index or the parade or rah rah trend and momentum chasing financial advisors on the MSM telling everyone to get back into the stock market, NOW! There were three of them chiming in unison on MSNBC today. One jackass money manager actually used the argument that people who haven’t jumped back into stocks are “thinking about it too much”. In other words, all you have to do to get rich is look at the trend and jump on it. At that point I was looking for a row of overstuffed animal dolls hanging from the ceiling because it honestly felt like I was listening to barkers at a carnival side show.
+1 but I have to ask a question. How can you stand watching MSNBC? I have never been able to stand it for more than a few minutes. I can't stand Fox either.
Pink Floyd was way ahead of their time.
http://www.youtube.com/watch?v=-4wx_rJFhHE
"Wanna take a bath?"
Go ahead and jump in retail muppet...Believe the lies of the presstitutes and court jesters.
edit: btw Manipuflation, FWIW I posted on another thread the other day that I now realize that The Wall was a prophetic piece.
"Goodbye Blue Sky"
http://www.youtube.com/watch?v=ukVNEwRLOUc
The markets all about squeezing money for pensioners. And it's these people that watch MSNBC, which (via "ratings") gives all these worthless talking heads money for talking...
I don't believe there are many people that actually have money to play. I think it's all more of a distraction- pay no attention to the man behind the curtain. They're helping buy time for impact- and at that time there will be more people who will say that they suspected there was a problem, and it's this retrospection of "suspicion" that bleeds off a lot of the anger (facilitates more apathy, which means less violence against all the talking heads and their masters).
Nobody wins the Giant Ass Panda. If they do, you're fired. We only have 12 of them left.
When this shit turns, I'm gonna short this motherfucker all the way to zero.
Yeah, well, when you cover , you'll be able to buy 3 bitcoins with your gains. The 3 bitcoins wil buy you 1 loaf of stale Pumpernickle, and you don't even like Pumpernickle.
Yes but you can trade a loaf of stale pumpernickel for 6 turnips.
. . .
Those are your 3 Bitcoins
The toilet is plugged with QE, so the shit keeps growing and circling higher and higher. That is Bernanke's thesis in a nutshell: THOU SHALT NOT APPLY A PLUNGER.
Note for future reference: Anybody who invested in the Zimbabwe stock market ten years ago became a nominal millionaire.
Gee isn't it neat that every asset class is moving exactly the way central bankers want them to? What a huge coincidence.
I'll be happy about the drop in Gold and Silver today if it portends another 40% correction in the cotton candy markets.
About ten more days like today for gold and I'll buy some moar. As Dundee would say, "Now that's a fucking dip"
dearly beloved, we are gathered here....
inhalants i say! they are on inhalents!
they are so high on themselves, they think they are real.
boy, are they in for a surprise.
japan went all in, and no one can call.
japan set the outter limits for the next move. relative easing dictates, well, relativity.
in order to weaken, the next participant must not be shy.
nice move japan. good luck.
Fuck em. Beating down BTC and AU and AG in 72 hours? I do believe that there is a trait that BTCers and Goldies(we are not bugs) share in common and that is resiliency and tenacity. I'm not selling anything. I'm buying.
Does anyone think that there just might be some "folks" out there who don't much care for either of our philosophies? If you are in the affirmative on the question, then should BTCers and Goldies put the rapiers down just maybe?
My BTC CGI professional friend emailed me back on what he thought on BTC of late. This is what he said:
"Yeah gox needs to be replaced by more competition. They sure are cocky to shut down like that. I think it will end badly for them."
"Project Mayhem...heh, I like it.In the end when the exchanges are eventually banned, the P2P nature of file transferring these will always live on. I think in 2-4 years from now people aren't going to care about any of these bumps in the road.
What are the next banks, countries to crash? Portugal? Japan? Interesting rides are just getting started IMO."My friend is also into PM. Do not let them divide and conquer us over our foolish pride.
It's not (just) about pride, it's about survival and protecting one's hard earned savings. I'd rather lose it all than give it away to the oligarchs.
I'm moving from the steady 2nd to the accelerating 3rd gear in terms of PM purchasing...
Any Asset -- real or virtual -- that takes fiat out of circulation is by definition a 'Good' thing. Duh!
What did the bitcoin market know at 260?
Same thing it knows now at 100
Not a farking thing.
Y'all need to quit worrying about all these divergences! Everything will re-couple back UP to S&P or Dow soon enough!
(/SARC!!!!!!!!!!!!!!!!!!)
PIE HIGHER!
mmmm, bubbly.
All we need to remember is one thing ------------ Money without something to exchange is meaningless.
So you can accumulate or print all the money you want but if theres nothing to buy you can wipe your ass with it.
THATS IT ------------
A PILE is a PILE is a PILE...
One needs to APPLY the PILE for it to have any real meaning/value. If you never sell an "investment" was it really ever an "investment?"
Good business practice is to have your assets work as hard as they can. I see too many that do not get this. Figure out how to apply your assets while you can still leverage them. The name of the game from here on out is to dislodge idle assets (PILES) with an urgency to promote growth: if you can show ANY growth in productivity then you're in front of the pack.
The banksters have DHS on overtime in preparation.
They're just bout ready to pull the plug and kill us.
DHS is all about protecting TPTB. The masses will, because they've been programmed as such (think of Fruitless Freddie) to lash out at one another. Once things get tight we'll all start gnawing on one another. Shit like DHS is for setting up a firebreak to keep all this from spilling over into TPTB's camps.
the s&p is correlated to the heat of the printing presses. gold and silver will correct further until the world figures out china can still grow at 7% without the west so gold and silver in dollars are really worth a lot more as a function of the worthless dollar and euro.
if silver goes anywhere near 20 bucks or gold to 1200 in the rush to buy dollars i will sell everything to buy junk coins and jewelry.
"china can still grow at 7%"
Put down that crack pipe!
7% means a doubling every TEN FUCKING YEARS. China is stumbling, there is NO way (other than through massively falsified data) that they will be able to show any growth numbers past the next couple of years. IF, a BIG "if," China had ample energy reserves then I'd say that they could go on a bit longer, but they will deplete their savings as they continue to import (more and more) energy- this is exactly how it has played out with every civilization throughout time.
Chart 5 is the WTF chart. (Semi)Long-term currency appreciation AND market levitation?! You'd think we got some Austrians running this joint. I'm quite puzzled at how they are pulling that off.
The truth is that things are correctly priced, people dont want to admit it because they didnt buy the dip or they have a long short that will never be unwound except with them taking on debt.
Stop posting, you are too stupid to play here. Move along little troll, move along.
They've lost the momentum now, and they know it. Plan B is another slow melt, this time down (for the third year in a row) while preparing to do it all again. Get ready to refinance as the rates are going to be REALLY LOW!!
ZH should really charge for posts like this. Thanks much.
Tame commodity prices - bullish. Lower long rates - bullish. Low inflation expectations - bullish. So with all these silver linings the shit must be getting ready to hit the fans? Really?
Do you NOT understand the forces in play here?
There are only TWO ways that this scenario can exist:
1) Price suppression;
2) Smashed consumer demand.
As far as "price suppression" goes just think of how well QE has propped up the big banks.
And for "smashed consumer demand" one only need to look at the historic levels of folks on food stamps and the high levels of unemployed.
Lastly, consider how this trend plays out. Hint: margins are NOT going to be increasing; pay attention to margins!
Question: If these are not markets, then why does every chart above show SERIOUS divergences?
Let's say that Fatso with a Bad Haircut, aka Mao Falseflag, pulls a biblical wipeout. Say that between that and moar deflation we spend a year in limbo. Most whispered meme (MWM) would be who needs commodities. Frontrunning that would cause a trough like the one we saw last week, I believe. Of course if Kim-O happens to underdeliver and Portugal doesn't sell, then gold will be back to $1600 in another week. Vote me.
Hi Tyler,
can you post the same charts back from 2000? How big is the disconnect?
cheers
Shock the Bermonkey!
what coincidence
that Monday is the day of TIPS of the FED.
You have to stop examining PERIPHERAL, extranneous information and expecting to draw logical conclusions.
MANIPULATION-MANIPULATION-MANIPULATION-MANIPULATION-MANIPULATION-MANIPULATION
The ONLY way to make any sense of this fucked up disconnect is to dig deeply enough to reveal DETAILS of the manipulation of this casino. Period. And good luck with that......
No, one need not do any digging to figure out what's going on. Step back and look at the BIG PICTURE. The picture that you're seeing is the result of the end of growth. The premise of promoting perpetual growth was as flawed (and consequences ignored) as there could be: let's just pretend there are Unicorns, and after accepting that we never question it, we embrace that there are unicorns EVERYWHERE! (we just need to work harder, believe harder and <fill in the blank> will deliver them to us)- must not question the existence of unicorns!
Re “underperformer” High Yield ETF..
http://finance.yahoo.com/news/high-yield-bond-etfs-battle-130053638.html
I personally prefer “JNK” because of its reassuring name, and I also like the fact it is issued by Barclays who were such a beacon of moral fortitude during the last crisis.
That's right. It's not just the QE money itself that is propping the market, but the realization by investors worldwide that the Fed WILL NOT allow the stock market to fall more than a couple percent (yes, the Bernanke put). Plus, stocks offer a fair amount of inflation protection.
This is the Mises crack-up boom, and smart investors know it. As we've seen, large transnationals are safer than sovereign governments. Nominal values will keep going up, while real values will stay roughly the same floating on a sea of liquidity. If I had any fiat left after two years of losing my ass shorting this market, I'd be throwing it into stocks now too. Everyone is now realizing that the Fed will stop at nothing and is riding the wave hoping for the best.
It's the final chapter, the only game in town, whatever you want to call it. It's desperation, the last gasp attempt at the world's elite to preserve their wealth.
"If I had any fiat left after two years of losing my ass shorting this market, I'd be throwing it into stocks now too."
I'd be buying a backhoe... to go with my tractor (which I have because I stayed away from the markets).
One cannot preserve anything. Once can only help foster. As fickle as she is I'll still opt to take sides with Mother Nature.
If not for the fact that it's going to hurt a LOT of people I'd see all of this as only entertainment.
I hate to admit it, but I have never heard of Ludwig Von Mises until I did a search of Mises crack-up boom. This is scary stuff that the fed is doing now. They should be putting on the brakes now because the people are starting to flee cash by investing in the markets with the fed being the backstop. Once the panick hits and people start dumping all their cash for anything because they have lost all faith in the dollar, it will be all over.
https://mises.org/daily/4016
Recall that last week I posted a blog that "Something Wicked This Way Comes". Which went unnoticed or ignored. So I repeat the warning:
TPTB are planning a huge (false flag) event in the May-Nov time-frame. They and their elite friends are preparing, and they're pulling all the stunts, tricks and PR games to keep the sheep from panicking. Because that would accelerate the timeline and interfere with their preparing.
At an offshore event of business people that I attended, a remarkable number of affluent and connected business people who are troubled by the changing of the country into a surveillance & police state, into more central planning and taxation, and who have friends in "high places", have expressed this view: "The stage is being set. Something Big is coming our way".
If the rumor is to be believed, "... a former POTUS has 60% of his assets in PM bullion". I know which was was referred to, but can't/won't say it here. It was also alleged that a former POTUS and his family own ~ 2700 acres in Paraguay. You connect the dots.
ADVICE: Limit you exposure to paper/tertiary assets (on an opportunistic basis), but get into and stay in REAL ASSETS! Plan for the worst, hope for the best. And don't forget to enjoy nature, family & friends -- to keep you sanity, wit, humor and zest for life.