Chart Of The Day: Bernanke Has Officially Created The Bizarro Market

Tyler Durden's picture

Over the past year there has been some confusion about whether Ben Bernanke has managed to not only completely break the stock market (which, if one harkens back to hallowed antiquity used to discount good or bad news in the future, and "trade" accordingly), but also invert it fully. The chart below from Guggenheim will once and for all put any such confusion to rest.

As Guggenheim's Scott Minderd points out "The 52-week correlation between S&P 500 returns and the change in the Citigroup Economic Surprise Index has plunged from 0.45 to -0.13 over the past 12 months. A negative correlation indicates that weak U.S. economic data tends to push equity prices higher, while strong economic data tends to send them lower."

What's the explanation?

In a similar manner to 2005, when the Federal Reserve raised interest rates by 200 basis points in a year, the current plunge in this correlation indicates that the expectation of continued monetary accommodation has trumped economic fundamentals to become the main factor determining the near-term outlook for U.S. equities.

In short: a broken, inverted market, driven purely and entirely by hopes of an even bigger liquidity bubble, and even more greater fools to offload to.

And that, in a nutshell, is your "market."

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Burnbright's picture

Yep that is why their is no exit from QE.


yogibear's picture

Yeah, Yellen with put out the liquidy fire with a tanker car of gasoline.

TruthInSunshine's picture

She'll smother the red hot speculative flames with train loads of debt.

MillionDollarBonus_'s picture

Check out today's guest post at the Accredited Times which completely rips apart the feeble arguments against the Affordable Healthcare Act:

B.J. Worthy's picture

"People far wiser than you have decided what the level of taxes should be. Trust in their judgement."

Are you sure that's not an Onion piece?

Edit: never mind, my sarcasm detector was off.

Dick Buttkiss's picture

No, that's MDB playing with himself, as his fingerpricks are all over it.

Hence another up-vote for sarc that continues to befuddle so many ZHers.

g'kar's picture

Brilliant. Especially the name of the author welfarefortheworld.

long-shorty's picture

One up arrow for the awesome pic of the smiley woman, but very frustrated that ZH won't actually let me give you a second up arrow for the phrase "irrelevant chatter in the blogosphere and other non-accredited publications."

What humorless dudes gave you a thumbs down, MDB? It's only a matter of time until you get a buyout from The Onion and all of your hard work is rewarded.

knukles's picture

An inverse correlation simply means that Mr Market is totally convinced that the economy sucks and loves the flow of free money.

Ergo, if the economy rebounds on it's own (a la Green Shoots Part 22 Redux Again for the 1,000'th time) then the flows stops and then...
Oh you can figure it out, folks....

prains's picture

<----means Ponzi is ON

<----means Ponzi is OFF

long-shorty's picture

"if the economy rebounds on it's own..."

"If ifs were skiffs, we'd all be boating." - my dad

"If ifs and buts were candy and nuts, everyday would be Christmas." - John Boehner

A Man without Qualities's picture

Memo to the business leaders of America - the worse you do, the richer you get.  Now get to work...

Radical Marijuana's picture

"WORK," based on deceits backed by destruction, works.

There is "a broken, inverted market, driven purely and entirely by hopes of an even bigger liquidity bubble," BECAUSE the source of that "liquidity" is triumphant fraud by privatized making of "money" as debts, out of nothing, which resulted from the best organized biggest gangsters, the banksters, being able to persistently apply the methods of organized crime, (bribery, intimidation and assassination) in order to take control over the government. Thus, the Bizarro Mirror World is systematic! ALMOST EVERYTHING IS BACKWARDS.

However, to overcome this we need to embrace the principle of the conservation of energy at a much deeper level, as well as perceive the way we understand entropy was also inverted. That would enable us to move beyond the false fundamental dichotomy between Production versus Destruction. In fact, death controls operate within the flow of energy, and never destroy any energy. Therefore, the control of the economic and political systems through the death controls, backing up the debt controls, are aspects of the overall energy systems operating.

To understand the ways that the markets are going nuts, and becoming Bizarro Mirror Worlds, one must penetrate into how and why the methods of organized crime made and maintained the governmental powers, and directed how those were used, by effectively privatizing them. However, no facile impossible ideals, based on the same old false fundamental dichotomies, are going to be able to resolve those paradoxes more favourably, for more people, over a longer period of time, other than by embracing the ways that death controls operate in ways which control production, while the death controls themselves never actually destroy any energy.

The ultimate in the Bizarro Mirror World's abstract reflections are the ways that an ARBITRARY minus sign was inserted into the entropy equations of thermodynamics and information theory. Therefore, we understand the ways that the combined money/murder systems work backwards! Most of all we understand how the death controls work in ways which are backwards, and disconnected from the principle of the conservation of energy. That has enabled the triumph financial frauds to become so "successful," while all the opposition promotes impossible bullshit ideals as somehow being the "solutions" to those problems.

That is WHY we can end up creating a financial world where runaway Bizarro manifestations are growing at an exponentially accelerating rate, so much so that more and more people notice, and can not longer so easily deliberately ignore those facts. That is also WHY we can end up making statements which are correct. such as the otherwise apparently flat out absurd contradiction: "Where work = destruction."

Everyday, in every way, the gap is growing between science and technologies that have surpassed their old paradigms, and shifted to radically different new paradigms, which WORK, while what continues to "work" in the worlds of human ecology and political economy are lies, backed by violence, which are ineffectively opposed by spouting more of those same old lies, while advocating that there be no force, i.e., no violence. Thus, we have bullshit idealized politics promoting nonaggression, or non-violence, which is like promoting physics with no forces. In that context, it is no wonder that the controlled opposition against the established systems continue to be almost totally ineffective in arresting the runaway triumphant financial frauds creating a more and more Bizarro Mirror World, where EVERYTHING IS BACKWARDS.

While we are understanding every other kind of energy system better and better, as the working technologies demonstrate, when it comes to any energy systems involving human beings, ridiculous bullshit totally dominates the language that we use, and the ways that we think about those things! Therefore, we have a runaway BIZARRO MIRROR WORLD SITUATION, where apparent oxymorons, and superficially appearing absurd statements, actually best describe what is really happening. While one would think that applying basic energy laws to understand human systems should be obvious, and should obviously be done, the PROBLEM is that the biggest bullies' bullshit social stories have also almost totally dominated that. Therefore, our bullshit "economics" is triumphantly runaway systems of organized lies, operating organized robberies, being opposed by more bullshit "economics" based on the same old sets of false fundamental dichotomies, and their related sets of recommended impossible "solutions" to those problems. ... Indeed, again, I lament, that those problems have become so astronomical in size, and so extremely sick and insane, that it appears to be a waste of time to bother to write this reply, to attempt to understand WHY "work = destruction."

Dr. Engali's picture

The market has been broken for five years now. But hey keep doing moar of the same, it's going swimmingly so far. The Bernank is serving his masters well.

NaiLib's picture

The nail in the coffin for markets came in 2011 at the G meeting. Merkel came out to the journalists after meeting, looking like she had seen the plague coming saying:


"We will do _whatever it takes_ to fix this" It took 2 weeks and since then we have this strict channel in equities only interrupted once, and then back again.

Something was decided at that meeting, probably that BOJ BOE FED  and SNB would do for European banks what ECB cant do, namely print. The printing

in these central banks are mainly targetting Europe, since the collapse of Europe would have set the world on fire.


Now its out of their hands and they dont know what to do.

ChaosEquilibrium's picture

The European markets miraculously started lifting days after Geithner made several European Capital late 2011 or was it early 2012?


The Euro markets are highly correlated to the minute/second to the DOW futures and Cash market 95% of the time.....the other 5% it seems the correlation is broken on European "good news" when they naturally will rise.


I BELIEVE Geithner delivered Treasury and Fed software...the same programming used since 2009 to levitate U.S. markets......WHATEVER IT WILL TAKE TO PRESERVE WESTERN POWER, CAPITAL MAKRETS.....THE ULTIMATE  STATUS QUO.


I have no proof...other than watching the one-minute candlesticks of major equity markets and correlating to real time or overnight Macro!!!....but Italy, Spain and France are NOT behaving indicative of the underlying fundamentals!  SOMETHING IS ROTTEN.....VERY ROTTEN!

DUNTHAT's picture



NOTaREALmerican's picture

Another chart to prove the charts don't matter.

Well, the chart that does matter is the one showing the gamblers getting richer.  

JJ McApe's picture

Problem is, if you don't participate in the market you lose a lot of money. Look at the charts... in the last years you could more than tripple your dough and it is not going to stop.

Bernanke and the FED have ruined the markets that's true. But honestly - who cares? Everybody is making money in it so... just ride it as long as you can. I don't see any sign of tapering in the near future and the new FED Chairman is even more in the mood to print more.

But one thing is for sure - when - and not if - because at one point in the future they have to - pull the plug, it will be an ugly massacre in the markets. LOL I guess 2008 will then look like a childrens playground.

Long bullets & booze, better and safer than gold :D

NaiLib's picture

You comment "who cares" if living proof of that the United States of America officially has turned into Albania of the 21st century. Sorry but what you say is exactly what the Albanians said too.

NOTaREALmerican's picture

Re:   Sorry but what you say is exactly what the Albanians said too

Albania is still there, tho.    Regardless of what the peasants said.

Perhaps it's time for people to acknowledge reality instead of living in a fantasy.   The current US political system is as unchangable as Albania.   

So, who cares, is the best you can do.   

yogibear's picture

More layoffs amd bad news means greater and greater amounts of QE. 

Higher and higher markets = more layoffs and bad news.

Now Wall Street has it's recipe to take these markets much higher. Cut staff by 40% and fuel higher unemployment and we'll be at DOW 17,000 in no time.

Dinho360's picture

This combined with an all-time high market is when you know the Fed is creating an asset bubble. And they're too chicken even to get rid of just a little bit of their $85B a month. This is so wrong.

Scalaris's picture

An inverse correlation between abysmal economic data and rising prices you say?

Colour me so fucking shocked.

khakuda's picture

Today was a perfect example  After hearing Bill Gross, Larry Fink, Barry Sternlict, David Einhorn, Paul Singer and countless other brilliant people warn of melt up bubbles over the past week, the Fed hits the media to start laying the groundwork and justification for the next 5+ years of ZIRP to continue to juice the markets ever higher.

Rather than worry about bubbles, they pile on...

Clockwork Orange's picture

There is no 'market' left anywhere.  Its all just a front-running festival of facade.

Last man out, turn out the lights.

Let's make sure all those responsible stay in the country, too.

orangegeek's picture

Another day, another chart that says we're fucked.




The great asset exchange is nigh.  Ready, set......wait for it....wait for it....

highwaytoserfdom's picture

Muppet nation sheep have willed it.   Quote  the great Orangegeek "Another day, another chart that says we're fucked." 

TORNasunder's picture

Well, it appears the 'market' knows exactly what is going on.

War is Peace
Freedom is Slavery
Ignorance is Strength
Addendum: Bad news is Good news

The Dystopian future is today!

walküre's picture

They killed the mass consuming middle class. The elite buys their shit but it's not enough to support the economy. The dirt poor are on food stamps and can barely keep their cell phones and the internet on.

What did they expect would happen when they pumped trillions of fake money into the system that allowed 1% to get fantastically rich, afforded some civil servants a decent paycheque and the rest is left to their own devices?

Radical Marijuana's picture

They expect to be able to totally destroy the American Democratic Republic, so that it can not be any kind of future obstacle to the banksters' globalization. Their plan appears to be to finally end up with Americans having no more rights and freedoms than the average Chinese do now.

I repeat: As above, so below. As within, without. The lies are different at every level, but it is all still lies. The American "economy" has become systematically based on legalized lies, backed by legalized violence, governing everything, everywhere one looks. THAT IS NOT AN ACCIDENT! Moreover, the power of America is being used up and nullified through the processes of forcing the rest of the world to accept those frauds. Destroying the American middle class is one of the various fringe benefits, as far as the global agenda is concerned.

As an aside, beside the fundamental forced backed fraud of privatized fiat money, made out of nothing, as debts, which is the supreme achievement of the organized criminals that control the government to the USA, there are countless other examples. The simplest salient symbol, and the most extreme particular example was that hemp, the single best plant on the planet for people, for food, fiber, fun and medicine, was successfully rebranded as "marijuana, which is almost as bad as murder." Welcome to the Bizarro Mirror World, that operates systematically throughout everything, everywhere. OF COURSE, THE MIDDLE CLASS ARE BEING DELIBERATELY DESTROYED.  While I have some sympathy for their young children, I have very little sympathy for the mainstream morons in the middle class whose false consciousness identifies themselves with the ruling classes that are destroying them, and therefore, can not perceive that they are being deliberately destroyed.

Moreover, as it ALWAYS manifests in our Bizarro Mirror World, as one looks into the fractal structure of the frauds, the ways that atomic energy was developed was the spearhead of all the rest of the social insanities. Therefore, it should not be surprising to see that the American dominance over atomic energy to begin with was also systematically undermined and eroded, so that other countries, such as China, could rise up. The future that the globalists are planning is one in which most people in the world are treated like the Chinese are, which requires destroying the American middle class to an awful degree in order to achieve.

The way that atomic energy was developed can provide a case study of that process. For a review of that history, and more probable indications that the completely crazy and corrupt American government, as dominated by the international banksters, will continue to systematically destroy America, and work through control of American politicians, so that nothing better will be allowed to be done:

The Thorium Dream


Danger of existing thorium regulation to U.S. manufacturing and energy sector

MOST EVIL THINGS ARE NOT HAPPENING BY ACCIDENT! THEY ARE PART OF AN OVERALL AGENDA, WHICH IS CRIMINALLY INSANE, BUT WHICH NEVERTHELESS IS BEING ADVANCED, BECAUSE THE PEOPLE BEHIND IT ARE THE BEST AT BEING DISHONEST, AND BACKING THAT UP WITH VIOLENCE, WHILE THE VAST MAJORITY DO NOT UNDERSTAND.  The destruction of the American middle class is being done deliberately, in order to destroy the American Democratic Republic, and thereby wipe out all of the human rights and freedoms that could otherwise get in the way of the future plans.

A world where the political processes can successfully transform the single best plant on the planet for people into something that was regarded by most of the middle class as being "almost as bad as murder," despite having never killed anybody, is a world where every other possible huge legalized lie, backed by lots of legalized violence, is possible, and which therefore, will finally destroy the society in which those political processes were possible. As in the case of the development of the potential of atomic energy, not only did the fundamentals not matter, but rather, what actually happened was the perverted opposite of what the fundamental factors actually indicated! Tragically, all of that is still getting worse, faster, while writing comments like this appears to be a waste of time in that overall context.

new game's picture

r m i go back 20 plus years understanding what you say(more or less). wtf is taking them so long? boiling 6.9 billion frogs...

draghithebearslayer's picture

If what's claimed in this article was true, we should see negative rolling 52-week correlation coefficient from around 2010 upto today. Granted, in earlier QEs' we didn't expect QEnfinity could actually materialize. Still, that doesn't explain the negative dip in 2006.


FYI, correlation coefficient in -0.3~0.3 range really means that there exists little or no linear relationship. For it to be meaningful, an absolute value of correlation coefficient must be at least 0.3, if not more. -0.13 hardly means there's any real correlation between two data sets.

justsayin2u's picture

No bubble here - the market is still cheap - please place some orders so I can sell.

polo007's picture

Today, a small group of central bank chiefs can meet in private and wield unprecedented power over global markets, economies, and wealth distribution. They are held accountable to the ruling politicians that in most cases have no respect for the principle of sound money. Instead, in Europe, the UK, Japan, the US, and elsewhere, central bankers have become intricately linked to monetizing government debts, and financing the expansion of the welfare state. As such, disciplined and independent central banking, a cornerstone to any hope for sound money and credit, has been relegated to the dustbin of history.

Central banking, - ostensibly designed to combat high levels of inflation and promote economic growth, while overseeing the stability of the banking industry, has instead, morphed into technocratic planning boards that are constantly involved in rigging the value of the financial markets. Their principal modus of operandi is to encourage risk taking in the local stock markets, through massive injections of ultra-cheap liquidity. However, the result isn't better economic conditions, but rather the expansion of massive bubbles in various financial markets. In turn, central bankers have widened the wealth gap between the owners of equities, and the rest of the struggling population whose wages are sliding backwards, and is increasingly seeking out assistance through welfare programs.

Historically, the value of the stock market reflected the dynamics of the local economy, and would influence the social mood of the populace. A stock market that is booming would signal an up-and-coming economy that would be followed by increased business investment and the creation of good paying jobs. Rising share prices boost the fortunes of about 10% of households in the country, and triggers a greater propensity to spend for goods and services - otherwise known as the "trickle down" effect. Therefore, keeping a constant vigil on the behavior of the stock market, - has become the raison d'être of central banks.

In earlier times, stocks traded on the local stock exchange used to track or even anticipate the nation's business cycle. But that reliable role as a leading indicator began to seriously break down after the financial crisis of 2008. Since then, because of the hallucinogenic effects of "quantitative easing" (QE), - stock markets are no longer reflections of the health of the local economies or forecasting mechanisms of the business cycles. Instead, they are just slices of ownership in specific companies that are unreliable gauges of anything but the underlying strength of the companies they represent, their dividend payments and buybacks, and the schizophrenic mind-set of the traders who buy and sell the shares.