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Things That Make You Go Hmmm... Like "Nothing Being What It Seems"

Tyler Durden's picture


Investors all over the world are confronted by markets that have been dressed up for the amusement of the crew in charge of the ship, and nobody seems to recognize what they are looking at. Sure, they look like markets, but at the same time there is an unfamiliarity that is extremely unnerving to at least a few in the gathering crowd. The majority of the mob, however, have decided that they look enough like markets to charge in blindly in the expectation that all will be as it should. Things are not as they should be. Far from it.

Everywhere one looks are signs that the markets are just monkeys dressed up in fancy costumes...


From benign inflation, housing's recovery, improved unemployment, and sustainable profitability; Grant Williams destroys the myths of the disturbing disconnects between these "headlines" and the facts in his must-read letter...

Countries all seem far rosier when viewed through the prism of stock market performance and government bond prices than when examined realistically by means of a long, hard look at the underlying economies — particularly if the necessary adjustment is made to account for the extraordinary level of stimulus applied by all and sundry.

Which provides the perfect segue...

Raoul Pal and Remi Tetot of Global Macro Investor (one of, if not the, very best macro publications available anywhere) put this chart together for their most recent monthly and kindly gave me permission to use it.

It is without question the single best chart I've seen to explain the reality of all-time highs on the S&P 500 in relation to the application of trillions of stimulus dollars. This chart obviously applies solely to the USA, but no doubt we would find a similar pattern in just about all the major, QE-riddled markets.

The chart shows the S&P 500 deflated by QE — and it's breathtaking:

There's your all-time-high stock market, folks.

Just another primate dolled up like a sailor, I'm afraid.

Don't follow the crowd and dive into markets just because everybody else is doing so.

That's how monkeys end up getting hanged.


Full Letter below...

Ttmygh Dec 09 2013

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Tue, 12/10/2013 - 21:51 | 4234628 bunzbunzbunz
bunzbunzbunz's picture

Protect yourself with diversification: buy ammo, buy gold, have water, and get free bitcoins from http://freebitco.in/?r=25727

Tue, 12/10/2013 - 22:04 | 4234673 SafelyGraze
SafelyGraze's picture

"Grant Williams destroys the myths of the disturbing disconnects between these "headlines" and the facts in his must-read letter"


is there some way that we can subscribe to this letter?

Wed, 12/11/2013 - 10:08 | 4235758 Four chan
Four chan's picture

that chart is excellent. all that bad mbs being shifted to the public fed at face value, 

as banks got their zirp funds and bought everything besides treasurys which have also been heaped on the backs of the public.

the system called fed:

to enslave a free people to debt, and capture all assets through boom and bust the system creates.

happy 100th!

your present? well america of course and all its debt slaves!

Tue, 12/10/2013 - 21:53 | 4234638 ebworthen
ebworthen's picture

Fucking Greenspan throwing fistful after fistful of BULLSHIT on Kudlow tonight debating John Taylor.

Blaming "international events" for the U.S. housing crisis!!!

Un-fucking believable!!! That fucking asshole!!!

Liar!  Liar!  Liar!

Hang him!


Tue, 12/10/2013 - 22:22 | 4234721 What you talkin...
What you talkin about Willis's picture

It's those fucking butterflies with there flappy wings I tell ya.

Wed, 12/11/2013 - 00:47 | 4235072 Spitzer
Spitzer's picture


How did they deflate it with QE ?

Fed balance sheet pre QE divided by the index/post QE divided by the index ?


I have no idea...

Wed, 12/11/2013 - 02:35 | 4235216 Excursionist
Excursionist's picture

You're overthinking it.  Just look at the chart and realize you have an opportunity to buy SPX at a once-in-a-lifetime low price.

Tue, 12/10/2013 - 22:48 | 4234797 Son of Captain Nemo
Son of Captain Nemo's picture

Just hope that what you said becomes a reality. Especially those last 3 words -when everybody else loses there shirt in this "Land of Opportunity".

Because thats the only thing that will keep it from happening again until the next "Greenspan" comes along to try it again.

Tue, 12/10/2013 - 22:00 | 4234656 vulcanraven
Tue, 12/10/2013 - 21:59 | 4234658 Dr. Engali
Dr. Engali's picture

"That's how a monkey gets hanged"

And if you're a sock monkey the TSA confiscates your gun.


Tue, 12/10/2013 - 22:13 | 4234699 OutLookingIn
OutLookingIn's picture

The 1% are out the exit, buying everything in sight, and heading for boats and planes.

One look at the global auction scene; In the art world, a painting sells for the high bid of $140+ million. A large pink diamond, the "Pink Star" goes for the high bid of $80+ million. Desirable high end real estate gets bid into nose bleed territory. The 1 percenters can't get rid of their paper assets quick enough, turning them into ANYTHING that will hold tangible value.

Closer to the ending. Or, is that the beginning of the ending? Or, the end of the beginning? My head hurts.  

Tue, 12/10/2013 - 22:15 | 4234705 new game
new game's picture

chart reps my brainwaves right now-good night...

Tue, 12/10/2013 - 22:37 | 4234769 stant
stant's picture

and that nothing is what seems thing is over valued by about 40%

Tue, 12/10/2013 - 23:24 | 4234876 akak
akak's picture

Hmmmmmmm ......

Wed, 12/11/2013 - 07:49 | 4235444 honestann
honestann's picture

Looks right to me.  The artificial levels created by the artificially generated housing boom collapsed back to sanity in 2008, and have remained there since (once QE is removed).

Which exposes the real strategy of the federal reserve (besides spewing high-pressure zero-interest cash into the pockets of the banks that own the federal reserve).  The strategy is... fake people into thinking they are rich when they aren't (due to temporarily higher stock prices), and thereby fake [rich] people into spending, thereby getting the economy going again.

What quite a few of us here in ZH always point out that all this does is to pull economic activity forward that would naturally have happened later.  What is worse, the pulled-forward activity is much less efficient than letting investment occur when at the natural time.  So they not only "don't help" in the long run, they actually cause gross inefficiencies, thereby assuring the future will be dismal.

Never give anyone reigns of power (much less centralized power).  It always has, and always will, end very badly in the aggregate.  As it inherently must, and always does.

Wed, 12/11/2013 - 10:59 | 4235939 gookempucky
gookempucky's picture

Just throw another econo bomb into the fray--have to fix this for ya honestann--The artificial levels created by the artificially generated everything



Wed, 12/11/2013 - 12:57 | 4236416 starman
starman's picture


Wed, 12/11/2013 - 12:58 | 4236417 starman
starman's picture


Wed, 12/11/2013 - 12:52 | 4236418 starman
starman's picture

I "serve" around the very very rich, and they have been buying long term assets like houses and land up to 15million! Are they crazy or do they know something we don't?

Remember demand drives prices short term but affordability will demand the long term pricing!

Wed, 12/11/2013 - 12:57 | 4236419 starman
starman's picture

Ok my PC gone mad on me?

Wed, 12/11/2013 - 20:19 | 4238130 lo574
lo574's picture

Looks eerily like the employment to population ratio.  Sadly they're never coming back.


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