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The Only Chart Required To 'Price' US Stocks

Tyler Durden's picture




 

The world remains transfixed in the belief that the Federal Reserve can 'prime' the economic pump one more time via monetizing trillion-dollar deficits ad nauseum, inflate its balance sheet to unprecedented levels, and still successfully exit from this largesse leaving behind a 'better' place for mankind. Judging by crescendo of cognitive dysfunction, the nominal price level of US equities can dismiss current weakness since we just have to wait a little longer (and print a little moar) and the old normal growth will rise phoenix-like from the ashes of our post-debt-super-cycle world. The truth is far simpler - US equity markets are not valued on earnings (LTM, current, or forward); they are not priced off discounted dividends; there is no discounting of macro upturns; or great rotations. Since the crisis began, there is only one thing that matters, as Gluskin Sheff's David Rosenberg notes from this stunning chart, "the NYSE Market Cap, this cycle, actually went up dollar for dollar with the expansion of the Fed's pregnant balance sheet."

Via David Rosenberg,

[Re: the Talking Heads on CNBC] on what impact the Fed's repeated interventions have exerted on the markets, both directly and indirectly. Well, we have done the work in house and the answers are that the 10-year note yield would be hovering close to 3%, the generic high-coupon close to 7%, and the S&P 500 closer to 1,200.

 

In fact, it could be argued, as the chart below reveals, that the NYSE Market Cap, this cycle, actually went up dollar for dollar with the expansion of the Fed's pregnant balance sheet.

The Potemkin Rally

 

Source: Gluskin Sheff

 

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Mon, 04/22/2013 - 13:46 | 3484513 Cognitive Dissonance
Cognitive Dissonance's picture

White line Flat line fever.

Mon, 04/22/2013 - 13:51 | 3484554 Burt Gummer
Burt Gummer's picture

I just went long 10 /ES contracts. Ask me a question.

 

http://www.youtube.com/watch?v=ZS2Z19yTuPI

Mon, 04/22/2013 - 14:00 | 3484578 Manthong
Manthong's picture

..and in related news from a product of modern education, central planning, Amerikan culture and the east coast..

http://gawker.com/fucking-shit-news-anchor-fired-after-first-day-on-job-477006567

Mon, 04/22/2013 - 14:03 | 3484629 Jekyll_n_Hyde_Island
Jekyll_n_Hyde_Island's picture

That video is fantastic.  Hearty chuckles here.  I would pursue a wrongful termination lawsuit on the grounds that cause was generated by a symtomatic negligence of pre-existing tourette's syndrome. 

Mon, 04/22/2013 - 14:16 | 3484716 akak
akak's picture

If the Fed's balance sheet is "pregnant", I shudder to think about the baby!

Mon, 04/22/2013 - 14:33 | 3484811 Manthong
Manthong's picture

Mexican.. er,  Spanish for pregnant is embarazada.

Even guys feel that way now.

Mon, 04/22/2013 - 15:07 | 3484938 hedgeless_horseman
hedgeless_horseman's picture

 

 

David Rosenberg notes from this stunning chart, "the NYSE Market Cap, this cycle, actually went up dollar for dollar with the expansion of the Fed's pregnant balance sheet."

Obligatory flashback...

"All right, we're gonna be displacing and falling back like crazy sons of bitches. So you got to be Johnny on the spot with the ammo, or we're dead."

Mon, 04/22/2013 - 16:08 | 3485261 Fish Gone Bad
Fish Gone Bad's picture

That graph really creeps me out.  I knew it all along, but still, I am creeped out. 

Mon, 04/22/2013 - 16:12 | 3485280 GOSPLAN HERO
GOSPLAN HERO's picture

Looks like a Mossad training film.

Mon, 04/22/2013 - 15:17 | 3485005 Dre4dwolf
Dre4dwolf's picture

If the Fed's balance sheet is "pregnant", I shudder to think about the baby!

 

 

RELEASE THE CRACKEN

Mon, 04/22/2013 - 16:37 | 3485373 NoDebt
NoDebt's picture

Nah, nah, that thing that pops out of the guy's stomach in the movie "Alien".

Mon, 04/22/2013 - 15:29 | 3485055 marathonman
marathonman's picture

Damien, from 'The Omen'?

Tue, 04/23/2013 - 00:02 | 3486730 StychoKiller
StychoKiller's picture

Make sure yer scissors are sharp...

Mon, 04/22/2013 - 14:23 | 3484755 kchrisc
kchrisc's picture

What no comments on what he was saying "fucking shit" about?!

I say that the copy that he was reading referred to PMs as not being in a "bubble" or a hedge against the banksters.

What say you all?             hujel

Mon, 04/22/2013 - 14:48 | 3484890 Manthong
Manthong's picture

... he saw his future

Mon, 04/22/2013 - 13:56 | 3484584 MillionDollarBonus_
MillionDollarBonus_'s picture

It's amazing how ZHers cannot see the green shoots in the economy when they are staring them right in the face. The S&P 500 is pricing in future growth, which it infers from a range of economic indicators. Lets take a look at some of these indicators:
1. The housing recovery is accelerating with mortgage rates at all time lows and purchase programs targeting mortgage backed securities
2. The VIX remains depressed despite doomer shorts crying about a potential 'market crash'. This puts pension funds at ease and let's equity investors but with confidence
3. Interest rates are at all time lows, begging the question: where is the inflation that doomer libertarians have been crying about?

Mon, 04/22/2013 - 14:03 | 3484627 WhiteNight123129
WhiteNight123129's picture

+ 1

Epic tongue in cheak BS MDB, well done. I think today you are showing olympic strength in your ~baffle them with BS~ narrative.

 

 

Mon, 04/22/2013 - 14:05 | 3484637 akak
akak's picture

He did drop the ball in not mentioning the " market's refutation of gold as a safe haven", and its imminent plunge to $35 an ounce.

Mon, 04/22/2013 - 14:08 | 3484667 Scro
Scro's picture

He's a funny little retard.

Mon, 04/22/2013 - 14:55 | 3484917 Smiddywesson
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NM

Mon, 04/22/2013 - 15:03 | 3484952 FL_Conservative
FL_Conservative's picture

Like Mongo with the 12-inch forehead.

Mon, 04/22/2013 - 16:49 | 3485428 ross81
ross81's picture

Timmayyyyyyyyy

Mon, 04/22/2013 - 15:45 | 3485112 Jekyll_n_Hyde_Island
Jekyll_n_Hyde_Island's picture

Here's my impromtu bio on MDB -- He's in mortgage, hence the juvenile obsession and simultaneous misapplication of interest rates to economic commentary.  He's profited heavily from every round of QE -- if mortgage booms are happy meals, he's got more plastic toys in his house than a porn star.  He's also profited heavily on riding equities because he has a great referral system set up with his investment guy and his mortgage borrowers; thus entrusting large amounts of personal funds to the very markets we know are erratic and unsubstantiated. 

  It's sick, misguided loyalty that generates such ejaculations of senseless inane babble in hopes to participate with and critque the ZH investment community, much like a fat, short, bald man walking up to a sexy bombshell in a virtual bar and insulting her.  Wear a condom next time MDB and read a book that isn't written by a croonie or a motivational chralatan. 

Mon, 04/22/2013 - 14:04 | 3484631 Jekyll_n_Hyde_Island
Jekyll_n_Hyde_Island's picture

I consider myself somewhat of an accomplished bullshit artist -- but occasionally, I like to listen to a real pro.  Please continue, MDB.

Mon, 04/22/2013 - 14:57 | 3484926 Smiddywesson
Smiddywesson's picture

MDB, you are a maestro, second only to Robotrader.

Mon, 04/22/2013 - 16:07 | 3485256 Jack Napier
Jack Napier's picture

Please do not feed the trolls, k thx.

Mon, 04/22/2013 - 14:05 | 3484643 econature
econature's picture

1. Mortgage rates are artificially low, supported by false confidence in the dollar.

2. Who cares about the VIX if the market tanks???

3. Interest rates are also artificially low due to government manipulation. The Fed will never raise rates, but the market will. Inflation is in food, energy, and housing, etc., none of which are calculated in the Core CPI.

 

P.S. - "begging the question" does not mean "raising the question: http://en.wikipedia.org/wiki/Begging_the_question

Mon, 04/22/2013 - 15:00 | 3484932 Smiddywesson
Smiddywesson's picture

     "The Fed will never raise rates, but the market will. "

Implying that there even is a market is hilarious.  Wake up Neo, there is no spoon. 

Mon, 04/22/2013 - 17:07 | 3485489 RockyRacoon
RockyRacoon's picture

From  your source (Wikipedia):

Many English speakers use "begs the question" to mean "raises the question", "evades the question", or even "ignores the question", and follow that phrase with the question, for example: "this year's deficit is half a trillion dollars, which begs the question: how are we ever going to balance the budget?" Apart from philosophical, logical, grammatical and legal contexts, some authorities deem such usage to no longer be mistaken.

Yeah, it sucks, but common usage has bastardized the entire concept.

Mon, 04/22/2013 - 17:42 | 3485577 rhinoblitzing
rhinoblitzing's picture

Has the VIX been flattenned out with all the VXX products and weekly options. Comments?

Mon, 04/22/2013 - 14:09 | 3484660 Jack Burton
Jack Burton's picture

I like it MDB! This is indeed where we are headed, and the fed is steering our ship well and true into a new boom based on a giant boost in equity share prices that will price in the recovery we all see going forward. I for one am greatful to CNBC for keeping ME informed of the coming rise in share prices so i can profit from my investing in the recovery and our faith in the American economy going forward. With war looming against Iran and a coming conquest of Syria, US stands to gain new markets and new energy sources that will beat back the price of energy. Both will serve to juice America's expanding manufacturing base and our roll a the world's number one GDP producers!

 

 

Mon, 04/22/2013 - 14:49 | 3484892 Roandavid
Roandavid's picture

That was pretty good, kind of like Pepsi is to Coke.  But when it comes to truly offending a thoughtful person's sensibilities, there is nobody like MDB.

Mon, 04/22/2013 - 15:26 | 3485041 Jack Burton
Jack Burton's picture

He means to point out that what he says is absurd, he says it to mock the mainstream media because that is just the line they push. MDB is mocking the views he puts down in his posts. One must be aware of that when reading him.

Mon, 04/22/2013 - 15:42 | 3485115 Spastica Rex
Spastica Rex's picture

Or maybe it just likes attention. Any attention. Attention from anonymous posters on an economics blog.

Nah, that would just be retarded.

Mon, 04/22/2013 - 16:47 | 3485423 Pure Evil
Pure Evil's picture

Or, maybe it's got nothing better to do all day than spank the proverbial ZH comments monkey all day.

Mon, 04/22/2013 - 17:40 | 3485573 rhinoblitzing
rhinoblitzing's picture

Did you leave off the </sarc ?

I mean... what possibly could go wrong?

Mon, 04/22/2013 - 14:46 | 3484880 JimBowie1958
JimBowie1958's picture

MDB, lowering the unemployment rate (for example) by reducing the statistical pool of manpower is not a green shoot. You didnt say it was, but it is commonly refered to as one.

As I understand it, and I am hardly even a dilletante with macro-economics, the money being mass-printed by the Fed is going to banks that have little interest in investing into the economy when they can make far more in the short run by playing the Wall Street Casino at leverage. So they are sitting on this money or playing with it, but it isnt going into job creating industries.

When the business climate changes and the banks get more confident in the capitalization and the economy being on the upswing (if this happens) the risk is that the banks will unleash all this pent up 'vault money' and dump it into the consumer markets then causing inflation plausibly followed by hyperinflation as people lose confidence in the USD.

So, by the time you actually see inflation kicking off into hyper-inflation, the damage would have already been done.

 

Mon, 04/22/2013 - 15:06 | 3484963 Smiddywesson
Smiddywesson's picture

Ding!!!!  We have a winner.

"...the money being mass-printed by the Fed is going to banks that have little interest in investing into the economy when they can make far more in the short run by playing the Wall Street Casino at leverage."

When does the music stop?  My guess is when the banks can survive a market plunge.  Until then, the Fed won't allow the plunge. 

Mon, 04/22/2013 - 17:09 | 3485498 mayhem_korner
mayhem_korner's picture

 

 

How well stocked are they to survive a plunge if they still require Uncle Ben to pull $40B/month in toxic mortgage securities off their balance sheets?  Would the TBTFs even be solvent at this point without the punch bowl?

A major collapse in equities prices during QE is, in my worthless mind, one of two potential kick starts to the GREAT RESET.  The other is a PM default by COMEX and/or the LBMA.

Mon, 04/22/2013 - 15:15 | 3485002 Tombstone
Tombstone's picture

You should work on CNBC with BS that good.

Mon, 04/22/2013 - 15:17 | 3485009 Dre4dwolf
Dre4dwolf's picture

GO pay for some realestate listings, type in your zip-code and tell me how many pre-foreclosures/bank owned auctions are there? now look at all the major cities zip codes

 

The housing "recovery" is a complete fabrication, the worst is still yet ahead!

Mon, 04/22/2013 - 15:26 | 3485043 Getting Old Sucks
Getting Old Sucks's picture

MDB, been to a supermarket lately?

Mon, 04/22/2013 - 15:33 | 3485068 Abi Normal
Abi Normal's picture

I sure hope you're being sarcastic???  If not, then you get the Golden Stupid Award...

The S&P is being propped up by debt spending by the Fed, MBS buying by the Fed, Treasury buying by the Fed, the Vix is is not seeing the reality due to the crapload of bad information being put out there and the interest rates are Fed manipulated.

You think going into further debt will solve our already unsustainable debt is going to fix anything?  If so then you're the bigger fool than I thought.

Mon, 04/22/2013 - 15:49 | 3485148 css1971
css1971's picture

how did you get strikethrough to work? Never works for me.

Mon, 04/22/2013 - 16:54 | 3485446 Pure Evil
Pure Evil's picture

 

 

Your right it's not working.

Mon, 04/22/2013 - 17:08 | 3485494 RockyRacoon
RockyRacoon's picture

CD is a magician, and they never reveal their tricks.  Just enjoy the patter.

Mon, 04/22/2013 - 15:56 | 3485166 zerofools101
zerofools101's picture

confirmation bias.  if stocks were worthless, why would anybody pay money for it? even if it were freshly printed?

Mon, 04/22/2013 - 15:55 | 3485167 zerofools101
zerofools101's picture

confirmation bias.  if stocks were worthless, why would anybody pay money for it? even if it were freshly printed?

Mon, 04/22/2013 - 13:46 | 3484517 notbot
notbot's picture

Good news! QEternity means higher (nominal) stocks

Mon, 04/22/2013 - 14:03 | 3484636 101 years and c...
101 years and counting's picture

fed balance sheet heading to $4 trillion this year.  5X4 = 20K on the dow.

Mon, 04/22/2013 - 16:49 | 3485432 andrewp111
andrewp111's picture

The DOW may go to 20K, but I don't believe the ratio will hold the flat line at 5 forever. It didn't in Japan over the last 20 years. The pattern will only work until something breaks.

Mon, 04/22/2013 - 17:11 | 3485502 mayhem_korner
mayhem_korner's picture

 

 

When the DOW goes to 20K, so will a loaf of bread.

Mon, 04/22/2013 - 13:46 | 3484518 stinkhammer
stinkhammer's picture

run Forrest!

Mon, 04/22/2013 - 15:35 | 3485077 Abi Normal
Abi Normal's picture

Ruunnnnnnnn!

Mon, 04/22/2013 - 13:46 | 3484519 Croesus
Croesus's picture

No brainer analysis, here.

Why wouldn't stocks go up, with constant "Fed insemination".

The question the markets still don't seem to have an answer for yet:

"Is it possible, that the Fed is shooting blanks?"

Mon, 04/22/2013 - 13:45 | 3484523 i_fly_me
i_fly_me's picture

Now that's what I call a fiscal cliff.

Mon, 04/22/2013 - 14:06 | 3484659 econature
econature's picture

We built a very sturdy bridge from the fiscal cliff to the currency cliff for the lemmings.

Mon, 04/22/2013 - 13:45 | 3484528 El Viejo
El Viejo's picture

I love math. It doesn't lie.

Mon, 04/22/2013 - 13:58 | 3484597 Jumbotron
Jumbotron's picture

I love math. It doesn't lie.

 

Yeah...but LIARS use math.  Ask Keynes, Krugman and Bernanke.

Mon, 04/22/2013 - 14:03 | 3484619 El Viejo
El Viejo's picture

There will always be those who believe what they Want to believe. They are not nearly as quilty as those who profit from knowingly telling of lies.

Mon, 04/22/2013 - 13:48 | 3484541 asteroids
asteroids's picture

Guess what happens when QE ends or better yet the FED takes back and starts to shrink that liquidity. BOOM!

Mon, 04/22/2013 - 15:28 | 3485031 Getting Old Sucks
Getting Old Sucks's picture

I don't think it can end.  Perhaps they stop printing but for them to raise rates destroys the GOV.  They will keep rates at zero and hold their balance sheet till the end.

Mon, 04/22/2013 - 15:36 | 3485081 Abi Normal
Abi Normal's picture

shaka-laka!!!! BOOM

Mon, 04/22/2013 - 13:51 | 3484542 Pareto
Pareto's picture

Could anything look more discouraging?  The patient is dead, as velocity approaches zero.  Its the kind of chart that makes you want to say "awwwwwwwww fuck it anyways."

Mon, 04/22/2013 - 13:51 | 3484548 madbraz
madbraz's picture

If the SP500 was at 1,200, the 10 year yield would be at 1%.

 

It will get there.

Mon, 04/22/2013 - 13:57 | 3484561 Jekyll_n_Hyde_Island
Jekyll_n_Hyde_Island's picture

Top quality economic muckraking; perhaps a metaphor between Upton Sinclair's The Jungle and the print factory the FED has become?

  It should bother all that digest this news feed that such a simple correlation can explain that equity margins are not collaterally basketed with earnings, but budget expansion.

  The average American seems to be following suit: "So honey, if we borrow more here, we can have 3 cars and 6 snowmobiles..."

Mon, 04/22/2013 - 13:54 | 3484563 Wm the Shrubber
Wm the Shrubber's picture

As we reach for the green again today!  Caterpiller, schmaterpiller!  Housing -who cares?  IBM - fuhgettaboutit!  And that BLS report was so 10 days ago!  Every macro print coming up short - all the reason for more liquidity optimism.  This market does not go down until there is some exogenous excuse for a free fall.  If fundamentals were ever allowed to hold sway, the S&P would have to back up to at least 1050.  It'll come.....

Mon, 04/22/2013 - 13:58 | 3484588 otto skorzeny
otto skorzeny's picture

the fed's exit strategy will resemble the fall of Saigon with Dimon and Blankfein clinging to the skids of Ben's Huey.

Mon, 04/22/2013 - 15:17 | 3485011 francis_sawyer
francis_sawyer's picture

Ben must be telling Obama that "Profit to Earnings" ratios are looking good...

Mon, 04/22/2013 - 13:56 | 3484581 venturen
venturen's picture

BINGO!!!!

Mon, 04/22/2013 - 14:00 | 3484593 BlueStreet
BlueStreet's picture

Hopium can overcome any chart. Figured after IBM layed an egg it would have an impact but nah, Nasdaq stocks will save the day now.  Financials are rolling over, R2K can't catch a bid but still they are hoping.  It's a joke. 

Mon, 04/22/2013 - 13:58 | 3484596 MrBoompi
MrBoompi's picture

Let's all borrow money and buy stocks with it!  What could possibly go wrong?

Mon, 04/22/2013 - 14:01 | 3484603 Jack Burton
Jack Burton's picture

This is really what we would expect  due to Fed intervention. Benanke makes no secret about the fact that he is all alout juicing equity share prices in the name of his "Wealth Effect" theory. This being that Americans will see their net household wealth rise on the strength of their 401K accounts, and the 1% will spend more, expand their businesses more and hire more on the strength of their massive wealth increase from their majority stake in the US equity markets.

Bernanke is printing and keeping interest rates down to destroy savers. He is printing to raise the wealth of the 1% in hope they create jobs. He is juicing 401K stock index funds in hopes the big jump in 401K wealth will push average workers to spend all their income and to even borrow against hopes of even more risies in the indexes.

Bernanke's plans so far have only made the 1% fabulously wealthy. And destoryed the savings income of all the American seniors and thos closing in on 65. People saved for retirement outside the stock markets and Benrnanke does not like that, thus he has let loose the dogs of war against savers. The zero interest onl folks get on their savings has destoryed many prudent old folks who worked hard, put off consumtion and saved hard earned money. This is HOW an economy is supposed to be capitalized, BUT not under the great "Money Printind Bernanke"!

This system deserves to collapse full on. Benanke is a war criminal and an enemy of the people.

Mon, 04/22/2013 - 14:01 | 3484621 otto skorzeny
otto skorzeny's picture

as long as he keeps it juiced until I cash out my 401k's

Mon, 04/22/2013 - 14:18 | 3484702 Jack Burton
Jack Burton's picture

Indeed otto! I screwed myself by not taking into account Bernanke's money printing stock market boom. I was out well before the 2008 bust and did not jump back in based on faith in bernanke, so I missed this entire run up. Instead, I am one of the savers Bernanke has destroyed. This is all my own fault, I should have had more faith that Government and the Fed would never let the 2008 correction stand, that they would juice those prices in a huge run up!

Though, I held index funds that now stand only a fraction higher than when I sold them in 2007. All I can really complain about is having not gotten back in again to ride the Fed run up. No losses in my savings, but no gains either the last few years.

"Do not fight the Fed" this really has been the best of advice up to now!

Mon, 04/22/2013 - 15:22 | 3485021 Smiddywesson
Smiddywesson's picture

I know your pain.  We all enter the tabernacle of trading being either too risk tolerant or too risk intolerant and spend the rest of our careers trying to find a healthier balance.

The risk intolerant feel the pain of watching the other apes pick all the banannas.  The risk tolerant feel the pain of losing all their banannas.   Neither on is better than the other, just different and terribly flawed, as are all humans who try their hand at something apes never evolved to do, to trade.

I never made any progress until I stopped calling myself names and accepted my risk type.

Mon, 04/22/2013 - 14:18 | 3484727 insanelysane
insanelysane's picture

or until the govt confiscates any 401k over $3 million in market value.

then the crash and the $3mill market value is worth $3.50.

anyone see a damn lockness monsta?

Mon, 04/22/2013 - 14:21 | 3484712 Dr. Engali
Dr. Engali's picture

Jack your analysis is  off. That is the story they want to believe when in actuallity the Bernank is giving the insiders a chance to get out and the police state a chance to mobilize. They don't give a rats ass about jobs right now. Make no mistake his job is to slow down the inevitable collapse. You are right about one thing though...the Bernank and his crew are all crimminals and should be tried as such.

Mon, 04/22/2013 - 14:22 | 3484749 Jack Burton
Jack Burton's picture

Yes, I was only laying out the "story line" that the fed would have us believe. We know this is a lie. The Fed knows this is not about a broad economic recovery, but about getting the printed billions from the printing press into the hands of the insiders. As they say, those who have benefited from the Fed's policies are ONLY those closest to the Printing Press. The run up has made them wealthy, nothing is trickeling down to the real mainstreet economy.

My point was that the Fed and the Media are selling their policy as this fake job creation program, when it is only a welath transfer system.

Mon, 04/22/2013 - 14:34 | 3484822 forwardho
forwardho's picture

Agree Dr,

5 yrs ago they got caught with their pants down. Nothing was in place to control 300 million hungry citizens? 

They bought time with all those trillions, time for NDAA,  time  for the expansion of  the patiot act, time to get the UTAH center up and running, time to stockpile billions of rounds of ammo.

The enhanceing of our lives was never  the plan.

 

 

Mon, 04/22/2013 - 14:49 | 3484889 kchrisc
kchrisc's picture

Disregarding other obvious shit, but not much of a "wealth effect" when your "stimulus" negates it via price inflation.

Or did I think too deep?!      hujel

Mon, 04/22/2013 - 17:31 | 3485550 rhinoblitzing
rhinoblitzing's picture

2 Things: 1)Middle Class 2) Jobs

Santelli has been screaming this for years. They make fun of "NWO" "Tin Hatters" but it seems to me all about flattenning out the working class across the globe. Only thing is it is creating a new type of slavery - where there is to much supply.

I hear they are offering one way trips to Mars. Perhaps the moon is too close to home?

Mon, 04/22/2013 - 14:00 | 3484613 NEOSERF
NEOSERF's picture

That green recession bar should extend all the way to the right...

Mon, 04/22/2013 - 14:02 | 3484617 The Invisible Foot
The Invisible Foot's picture

Fed chairman's favorite word, "Nominal".

Mon, 04/22/2013 - 14:10 | 3484646 WhiteNight123129
WhiteNight123129's picture

There is nothing, nothing surprising about low interest rates and Equities rising in money printing. Watch when the money enters in teh real economy and sell everything at that point. At that point we have last hourrah and tremors of inflation start to show-up...

 

 

 

Mon, 04/22/2013 - 14:08 | 3484661 csmith
csmith's picture

The Fed is a one trick pony. It does one thing:  it buffers collapse, as this graph concisely shows.

Mon, 04/22/2013 - 14:25 | 3484770 kchrisc
kchrisc's picture

Wow! Incredible chart.

QE and DJI to the moon!               hujel

Mon, 04/22/2013 - 14:26 | 3484776 Winston of Oceania
Winston of Oceania's picture

I'm not a doctor but isn't that a code blue? Let it die already and put away the paddles...

 

Mon, 04/22/2013 - 15:24 | 3485035 nomorebuyins
nomorebuyins's picture

The doctor taped the paddles to the patient's chest and left the room. Something burning?

Mon, 04/22/2013 - 14:32 | 3484815 realtick
realtick's picture

why stop at 1989?

http://tinyurl.com/bsr9j7a

 

Mon, 04/22/2013 - 14:39 | 3484855 bobbydelgreco
bobbydelgreco's picture

anyone who considers this news is a moron

Mon, 04/22/2013 - 14:41 | 3484861 philosophers bone
philosophers bone's picture

OK, the gains in the market are nominal as has been pointed out by many.

But what I want to know is whether there were any "strings attached" to the Fed QE buying of the bonds and MBS from the dealers - in other words, was it a condition of the Fed purchases (from dealers) that the dealer then pump up the markets through ETF purchases or some other mechanism?  Or, asked another way, is the US Japan?

Put Ben or Janet under oath and ask them this question as well as for the disclosure of the actual documents/agreements.  I don't expect the truth, but at least then they can be jailed for perjury.

Mon, 04/22/2013 - 14:55 | 3484921 css1971
css1971's picture

Hey, that looks just like the Greek Athex index.

Mon, 04/22/2013 - 14:59 | 3484930 Quinvarius
Quinvarius's picture

Which would have been a great plan before the Cyprus template began to metastasize into the new banking crisis.  The Fed can't do enough QE to replace everyone with more than 100k in deposits pulling it out and putting it into gold and cash.

Mon, 04/22/2013 - 14:58 | 3484931 Herdee
Herdee's picture

The Deflation camp is well established.No Velocity means no Inflation.Deflation is a lot harder to beat than Inflation.The millions upon millions of unemployed people are aging and becoming larger all the time.Dreaming about a well paid job?Forget it,you're most likely doomed to be a service sector employee(a modern day bloody slave at WalMart).And by the way,where's the tax revenue going to come from to support the gangsters in Washington?The recovery is nothing more than a bad joke and everyone knows it.Your politicians in Washington,the Lobby groups and the Banksters in New York are all a bunch of goddamn crooks.

Mon, 04/22/2013 - 15:04 | 3484958 Quinvarius
Quinvarius's picture

There is no deflation.  There is a banking solvency problem.

http://research.stlouisfed.org/fred2/series/BASE

Printing money makes velocity drop.  It is an illusion in the math they use to compute it.

Mon, 04/22/2013 - 15:13 | 3484992 Benjamin Glutton
Benjamin Glutton's picture

Save the deadbeat depositors bitchez!

Mon, 04/22/2013 - 15:03 | 3484949 css1971
css1971's picture

So with 85 billion a month going in, it'll keep going  up and reach a plateau as the 85billion decreases as a percentage of total market cap.

 

Mon, 04/22/2013 - 16:13 | 3485292 Smiddywesson
Smiddywesson's picture

Great observation, we are getting diminishing returns but accumulated damage.  Sounds bullish.

Mon, 04/22/2013 - 17:24 | 3485535 rhinoblitzing
rhinoblitzing's picture

What Plateau? BOJ is just getting started, and EU has thier POMO...

Mon, 04/22/2013 - 15:07 | 3484959 kchrisc
kchrisc's picture

Now showing: "Frankenstein Stock Market and Bubble of Death" starring the Ben Berstank and Jamie Dimon.

Watch as they heroically push boulders up a hill to revive the stock market but then have them roll down and crush and destroy the village and people below. Then watch the dramatic finger pointing and escape from responsibility. Lots of comical suspense as the sheeple pray for and demand accountability from the government who is really working for the banksters. High drama and great comedy for the whole family.

Also watch for a cameo by "I was in charge but not responsible" Cozine.

Now showing on a propaganda channel near you.

hujel

Mon, 04/22/2013 - 15:23 | 3485025 Quinvarius
Quinvarius's picture

Bernanke tried to wedge his wallet under the rock to keep it from rolling back.  But Jamie Dimon saw it, screamed "free money!", and grabbed it.  So the rock then rolled back and crushed Jamie Dimon before taking out the village.  In the end, it was revealed that Lloyd was on the other side of the rock pushing on it to try and squash Jamie the whole time.

Mon, 04/22/2013 - 15:21 | 3485016 francis_sawyer
francis_sawyer's picture

So this is what it looks like when jews print themselves money to buy stocks...

Mon, 04/22/2013 - 15:25 | 3485040 screw face
screw face's picture

The media is the message.

http://www.screened.com/news/under-the-influence-the-battleship-potemkin....

Ready your flotation devices.

 

Mon, 04/22/2013 - 15:27 | 3485046 Clowns on Acid
Clowns on Acid's picture

It is just NOT the Fed. It is the full power of MSM, the TBTF banks, and indeed the Obama Admin squeezing the US citizen into stocks.

As being purported on CNBC continually - Investors cannot SURVIVE if they do not invest in stocks and accept (the socio-political demands) greater risk. Don't want risk...then you don't want to SURVIVE.

The message from the politburo is clear. We will tell you how much risk you have to take to SURVIVE.

Mon, 04/22/2013 - 15:30 | 3485054 Black Markets
Black Markets's picture

The expansion will continue until the Fed owns everything.

Inflation will not pick up until the Fed owns virtually all the debt and speculation starts about what else they will buy.

The only certainty is that they can't stop.

The Fed spends $85bn/month the US Treasury outstanding balance expanded $84bn in March.

Eventually the Fed will own it all. Then what? What do they buy next?

ETF's? Equities? Commodities? Futures? What?

Mon, 04/22/2013 - 16:28 | 3485340 debtor of last ...
debtor of last resort's picture

By that time you will trade corn for sugar with your aunt, and the Eccles building is a whore house where you can have orgies with Yellen and Lagarde and get paid in silver

Mon, 04/22/2013 - 19:01 | 3485782 Abi Normal
Abi Normal's picture

Oh, oh, oh, I know...intangibles!!!

Mon, 04/22/2013 - 15:30 | 3485062 Manthong
Manthong's picture

hmm.. silver paper spot about 23.40

right..

Apmex is buying ASE's at about 27.00 and selling them for about 31.00.

it is happening, bitchez.

Mon, 04/22/2013 - 16:29 | 3485089 ebworthen
ebworthen's picture

S&P should be at 666.

Mon, 04/22/2013 - 15:39 | 3485095 Cyclerider
Cyclerider's picture

If all the Fed could get from expanding their balance sheet is a stock market valued 5x more than their balance sheet, I think we're in trouble.  According to this chart going back to 1989, the market cap has been at least 10x the Fed's balance sheet and at peaks it was over 20x the balance sheet.

Only crazy people think there will be a problem when all the juicing stops, right?

 

Mon, 04/22/2013 - 15:42 | 3485113 Abi Normal
Abi Normal's picture

On a long enough timeline...everybody will be scrounging for food to survive one more day!  All of this will end very badly and things will become very ugly.  I am prepped, but I am thinking why would I want to live in the darkest of ages?  This global house of cards is so manipulated with lies and distortions, knowbody knows the value of anything...except maybe LIFE itself, and that is being diluted every day we go 'FORWARD' with this Marxist in the WH...

Mon, 04/22/2013 - 16:11 | 3485278 22winmag
22winmag's picture

Bullets and beans today... spears and teeth down the road as necessary.

Mon, 04/22/2013 - 15:43 | 3485125 dcb
dcb's picture

but the fed is doing this to help the real economy

Mon, 04/22/2013 - 15:47 | 3485144 Stuck on Zero
Stuck on Zero's picture

We must keep up the illusion of infinite military, financial, and technical power. </gag>

 

Mon, 04/22/2013 - 15:50 | 3485155 youngman
youngman's picture

I predict the closer we get to knowing what is Obamacare and how it is going to "WORK"...we will see huge cost cutting layoffs and part timers being rehired....Obamacare will destroy small business and big business will figure out ways to play the game...part timers is the new America workforce..and millions will go without and just pay the penalty..

Mon, 04/22/2013 - 15:57 | 3485182 halcyon
halcyon's picture

Really, really stupid metric. Even for ZH.

 

Mon, 04/22/2013 - 16:21 | 3485319 polo007
polo007's picture

According to Reuters:

Economic growth since 2008:

link.reuters.com/tyd36t

G4 Central Bank Activity:

link.reuters.com/gaj75t

Japan US Eurozone GDP:

link.reuters.com/ruh54t

Mon, 04/22/2013 - 16:21 | 3485321 debtor of last ...
debtor of last resort's picture

The lender of last distort balance sheet is a bit distracting. For now.

Mon, 04/22/2013 - 16:22 | 3485324 polo007
Mon, 04/22/2013 - 16:24 | 3485328 polo007
polo007's picture

Dow Jones Industrial Average versus NYSE Margin Debt from 1996 to 2013:

http://www.scribd.com/doc/137204683/Dow-Jones-Industrial-Average-Versus-NYSE-Margin-Debt-from-1996-to-2013

Mon, 04/22/2013 - 16:46 | 3485331 polo007
polo007's picture

According to TGSF Advisors:

http://www.scribd.com/doc/135607854/Major-Themes-TGSF-Advisors

The last long cycle (from 1980 to 2000-05) was shaped by exceptional growth in supply on a global level. Strong growth in the working-age population across Asia and the opening-up of world trade led to considerable expansion in global production capacities. These factors created a highly competitive and disinflationary environment of plentiful supply, which was characterized by low interest rates, a credit boom and, in the financial markets, exuberant appetite for risky assets.

As the demographic cycle progresses, we are seeing the emergence of an aging population, which is less favorable to productive investment. Additionally, the developed world is facing a serious debt overhang and a long period of slow nominal growth. Meanwhile the rise in living standards among the emerging population heralds an unprecedented level of growth in demand. Taken together, the world supply/demand balance is dramatically changing against a backdrop of resource shortages which are likely to favor shorter cycles, increased government intervention in economic affairs and inflation.

Mon, 04/22/2013 - 16:25 | 3485333 polo007
polo007's picture

http://schaefferstradingfloor.com/margin-debt-on-nyse-approaches-record-levels/id=3937

Based upon statistics from the New York Stock Exchange (NYSE), Margin Debt is approaching all-time high levels. In this post, I present the data graphically and help explain what you should know about Margin Debt.

Per the NYSE, member organizations are required to report monthly their aggregate debits (amount borrowed by customers to purchase securities) in margin accounts, as well as aggregate free credits (cash balances) in cash and margin accounts.

The last time we witnessed Margin Debt at these levels was the summer of 2007. Margin Debt peaked out at or near the zenith in equity prices as measured by the Standard & Poors 500 Index.

NYSE Margin Debt Since 2000 - Schaeffer's Trading Floor:

http://www.scribd.com/doc/137210828/NYSE-Margin-Debt-Since-2000-Schaeffer-s-Trading-Floor

Mon, 04/22/2013 - 16:26 | 3485337 polo007
Mon, 04/22/2013 - 16:27 | 3485341 polo007
polo007's picture

U.S. National Debt Clock : Real Time

http://www.usdebtclock.org/

Mon, 04/22/2013 - 16:30 | 3485350 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Brilliant. So simple and obvious no one would notice. Congratulations on exposing the magic trick. I want to see Benny boy and the rest of the board explain this one away as coincidence and not manipulation. It is so simple a correlation even a caveman can understand it.

Mon, 04/22/2013 - 16:50 | 3485422 U4 eee aaa
U4 eee aaa's picture

If the Fed's balance sheet is "pregnant", I shudder to think about the baby!

 

Greenspan and Bernanke's love child ohh boy, he's gonna be an ugly one

Mon, 04/22/2013 - 16:48 | 3485431 icanhasbailout
icanhasbailout's picture

Can we get a blow-up of the flat post crash interval (the part hanging out at 5x) with Fed interventions marked off by date? I want to see how responsive policy is to the 5x target.

Mon, 04/22/2013 - 16:57 | 3485453 bagehot99
bagehot99's picture

So my question to MDB is this: If it's all going so well, what the fuck does that chart mean?

Mon, 04/22/2013 - 21:03 | 3486184 Bogdog
Bogdog's picture

I feel like quite the muppet after looking at that chart.

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