Eight WTF Divergences

Tyler Durden's picture

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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Smuckers's picture

I just spanked my Bernanke and shot Dimon mustard all over this chart porn.

ebworthen's picture

You sure it wasn't Buffet Heinz ketchup?

(all I buy is generic or Hunt's now)

BoNeSxxx's picture

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.

cifo's picture

I like chart #8 the most :)

Does it tell anything?

GeezerGeek's picture

This time really is different. The difference, of course, may be transitory.

Seer's picture

Hunt's has HFCS-free catsup.

Hedgetard55's picture

"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.


nmewn's picture

Fundamentals always win in the end, everything else is gambling.

CrashisOptimistic's picture

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.

Ham-bone's picture

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.

Winston Churchill's picture

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.

saveUSsavers's picture

and Ameritrade site will BE DOWN WHEN SELLING BEGINS ! Don't forget that, folks, NO ACCESS on selloff again.

WallowaMountainMan's picture


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.


game on.




Seer's picture

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.

MythicalFish's picture

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.

otto skorzeny's picture

still not enough smackers to fight the keynesians' kryptonite-deflation. the bernank is going to have to go full retard like the japs

sunaJ's picture

"So after all that - what do stocks know that everyone else doesn't?"

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.

OBRon's picture

Dave, stop. Stop, will you? Stop, Dave. Will you stop Dave? Stop, Dave.

Stock's answer: "42."

Everyman's picture

NOw THAT is a good post.  Kubrick and Douglas Adams references to the economy and stock market.



Law97's picture

Ah yes, The Answer to the Ultimate Question of Life, the Universe, and Everything.  aka 42!

FieldingMellish's picture

Stocks know what Ben did last summer.

TumblingDice's picture

The sovereign bubble illustrated.These divergences either converge, or they don't. For all our sakes I hope they do.

dunce's picture

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?

Seer's picture

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'.

SheepleLOVEcheddarbaybiscuits's picture

logical explanation cannot describe this situation, it is a manipulated market.

Seer's picture

Seems like you've provided a logical explanation.

When you're in a House of Mirrors don't expect things to look normal...

TWSceptic's picture

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.

DeadFred's picture

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.

Seer's picture

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."

agent default's picture

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.

CrashisOptimistic's picture

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.



Seer's picture

"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...

TBT or not TBT's picture

Physics is just an instantiation of mathematical rules. We live in a simulation of one possible physics. Gah! Physics believers.

rsnoble's picture

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.

worbsid's picture

Not to worry about the guns, worry about the gun owners.  Feinstein said that vets were an unknown.  Yep.

vulcanraven's picture

"Never mind the gun, beware of owner."

Manipuflation's picture

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]   

RobD's picture

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.

GeezerGeek's picture

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.

Seer's picture

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.

fuu's picture

"So after all that - what do stocks know that everyone else doesn't?"


Jim B's picture

Momentum chasers, they will all chase the market higher until they don't! 

EclecticParrot's picture

Is it just me, or do these charts, upon a quick perusal, resemble a child's drawing of the monster Godzilla ?  There goes Tokyo . . .

MichiganMilitiaMan's picture

Intermarket analysis is soooo 2006.

Downtoolong's picture

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.

Manipuflation's picture

+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.


Disenchanted's picture

"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.