Dow Surges To Best Year Since 1995 As Bonds & Bullion Slump

Tyler Durden's picture

2013 is in the books... and quite a year it was...

  • Fed Balance Sheet +39%
  • Dow Transports' best year since 1997 +39%
  • Russell 2000's best year since 2003 +37%
  • S&P 500's best year since 1997 +29%
  • Dow Industrial's best year since 1995 +26%
  • USD, WTI Crude, and Treasury 5s30s curve Unchanged
  • 30Y Bonds' worst year since 2009 -13%
  • Gold's worst year since 1981 -28%

The last few days have seen VIX rising, stocks limp higher (with a mini melt-up into the close today), bond yields higher, and the USD lower.


Today was noisy in most asset-classes - precious metals collapsed and soared; VIX continued to surge; Treasury yields dipped then ripped higher into the close; and stocks ripped to new record highs and then dropped unceremoniouslyonly to be ramped handsomely to their highs... but the last few minutes were insane...


2013 was a tough year for PMs and a 'special' year for Stocks with the USD unchanged...


But in context - from the October 2007 peak in stocks...


Materials were the only sector that at some point saw a negative return on the year... otherwise the sectors never looked back...


While VIX is well down on the year (-20%) - from fiscal cliff anxiety at the start - the last few days have seen protection very well bid in a major divergence from stocks into the new year... (of course today's late-day ramp was 'funded' by a VIX dump)...


Commodities were a little crazy today - as usual since the Taper (and before) - with precious metals dumped and pumped intraday on very heavy volume...


Treasuries pushed notably higher in yield into the close but the belly remains the big underperformer post-Taper



There is one index of "risk" that has surged this year - ever so quietly and away from the calming eye sof Bob Pisani, SKEW (which 'measures' the options market's perceptions of large moves - as opposed to VIX which measures the market's view of 'normal' moves) has risen dramatically...


Charts: Bloomberg

Bonus Chart: The Bond Market's demise (in context)... It would appear the mainstream media has decided that anyone who held bonds this year (and continues to do so) must, by logical deduction since stocks were up 30%, be the greater fool. However, as we have noted in the past, there is a reason why gentlemen prefer bonds (sometimes) and a little context for this year's total return in US Treasuries might help manage the message a little better. Based on IBOXX USD Treasuries index, bonds lost 3.12% total return... not exactly cliff-jumping time... but then again who knows what comes next...


Bonus "New Year Special" Chart: The only thing that mattered this year...

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VD's picture

Fed books and's all merely a coincidence...economy is robust....dont believe the tin-foil hat wearing blog crazies!

Obchelli's picture

Tell whatever you want about Chairsatan Ben Shalom Bernank but he hit his S&P price target for EOY 1850 within 0.6 points.

And contrary to popular view that he will lose control - he isn't and looks like he won't. I know no man who could get away with such a crimes he commited. Even god is not punishing him. Contrary he and Obami get all credits for flying economy. It's ironic if Obami will go down in history as guy who turned around Economy (I know just stock market) But stock market IS economy for them...

Oh well!!! 


Happy New Year!!! 

DoChenRollingBearing's picture

The stock market had a great year, which I did not guess.  Nonetheless, trees do not grow to the sky.  I will sell a little bit more in the coming days.

Be careful who you trust!

Diversify!  (Gold is a good place to start if you have none or not enough)

And as Obchelli above wrote:


Happy New Year everyone!

Shocker's picture

So the Stock market is up this year, but the economy continues downhill.

Seems about right


AllThatGlitters's picture

Bullion recovered after the morning's dip.  

Live Gold Chart:

Live Silver Chart:

Was that a final head fake down before it explodes higher in the new year?

There is always big demand waiting for these dips.  What happens when the dip doesn't occur.  Hope all those poeple always waiting have their core position.

Debugas's picture

still hiping the gold ? lol

gold will stay in the range around 1200 for the whole next year

we had a bubble in gold which popped, live with it

Say What Again's picture

From above


  • Fed Balance Sheet +39%
  • Dow Transports' best year since 1997 +39%
  • Russell 2000's best year since 2003 +37%
  • S&P 500's best year since 1997 +29%
  • Dow Industrial's best year since 1995 +26%
  • USD, WTI Crude, and Treasury 5s30s curve Unchanged
  • 30Y Bonds' worst year since 2009 -13%
  • Gold's worst year since 1981 -28%

Tyler, can you please add to the list the annual increase in the median salary in the US?


Son of Loki's picture

"Trickle Down Economics."



Say What Again's picture

Here is a chart from Wikipedia showing the inflation adjusted median income.  Since "inflation" is at or near zero, there is little adjustment required.

Doesn't look like most people had much of a raise over the last few years.


According to the NY Times;

"For all but the most highly educated and affluent Americans, incomes have stagnated, or worse, for more than a decade. The census report found that median household income, adjusted for inflation, was $51,017 in 2012, down about 9 percent from an inflation-adjusted peak of $56,080 in 1999, mostly as a result of the longest and most damaging recession since the Depression. Most people have had no gains since the economy hit bottom in 2009."




new game's picture

gold is gold, crapy year. oh well.

it will be at 1000-1500 this year.

oh well big f. deal.


VD's picture

uhhhh the above is pure /s ...  ...k¿¿¿

Say What Again's picture


So this is how it works.  The Fed "loans" the primary's $200B in the last 24 hours or so to juice the markets

Who owns the Fed:

The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.


Not bad.  They get a 6% return in an ZIRP environment.

"The Primary Owners of the Federal Reserve Bank Are:

1. Rothschild's of London and Berlin
2. Lazard Brothers of Paris
3. Israel Moses Seaf of Italy
4. Kuhn, Loeb & Co. of Germany and New York
5. Warburg & Company of Hamburg, Germany
6. Lehman Brothers of New York
7. Goldman, Sachs of New York
8. Rockefeller Brothers of New York

Peachfuzz's picture

"So this is how it works.  The Fed "loans" the primary's $200B in the last 24 hours or so to juice the markets"

Did I misunderstand the article on reverse repo's earlier in the day? I'm under the impression that the fed supplied the participants with 200 bill in 'high quality collateral', not cash. That scenario seems far worse to me than what you describe, reason being if these banks can window dress their books with lent collateral, it means they can attain even higher record leverage with the liquidity they already have. So instead of being able to levitate markets with 200 billion total, they're using leverage to infinity, as explained in this Unfractional Repo Banking article in November.

    This system allows the fed to use the cash from the reverse repos to purchase more hqc (there by keeping a lid on interest rates without directly printing the money to buy bonds). This was my takeaway from the article. Please correct me if I'm wrong.


Grande Tetons's picture

Plus one for your name. Clever.

Obama_4_Dictator's picture

Thanks, I really hope he get's that 3rd term, he's gotta finish what he started......

GrinandBearit's picture

And it only cost $4 trillion to get it here.

I'd bet much more, but no way of knowing since there is only so much TPTB allow us to know.

thismarketisrigged's picture

what a fucking terrible year.

thankfully it is over.


we can only hope that 2014 brings blood and tears to all these fucking asshole who continue to spew bullshit about how well the ecomnomy is doing and all these assholes who made money this year in the fucking bullshit market benefiting at the behalf of the main st ppl.


fuck wall st, bunch of criminals.

HUGE_Gamma's picture

I came here for the BONUS CHART!!! and was not dissapointed..

A toast to many more BONUS CHARTS in 2014.... and the next appearance of the Deer In the Headlights MEME

JustObserving's picture

Congratulations to the Fed and the NSA for easily the most manipulated year in history.  There is no volatility in the markets save the constant move up.  Markets to the moon and gold down to the depths of the earth onto China.

Unfortunately, illlusions do not last forever. But they can last long enough to bankrupt quite a few.  

Say What Again's picture

"We can manipulate the markets long enough to transfer all your equity to us"

"...and did I mention that we now own half the houses on your block?"

-- Ben

thismarketisrigged's picture

rick santelli telling it like it is.


this douchebag says we r in a mid cycle recovery and everything is getting better, and he tells this asshole the only reason ppl think things r getting better bc the s&p is up 30 percent this year, and no one is looking at the fact that the european banks r imploding and the job market is terrible, only bc the market is up 30 percent.

Gringo Viejo's picture

"Where all the white women at"? ....Sheriff Bart

new game's picture

G V there is afew unspoken for-keep lookin...

if all else fails try church.

Dr. Engali's picture

Thank you Ben for the free money. Now if you'll excuse me, I'm going to take some of the proceeds I've stolen from future generations and have a few drinks. Happy New Year fellow Hedgers. I hope 2014 treats all of you well.

Ralph Spoilsport's picture

Happy New Year Doc. Always enjoy your comments.

TheRideNeverEnds's picture

the skew index peaked 12/20 and it was right, we had a large move; 50 points straight up in the next week.  


every single chart, indicator and metric is extremely bullish; people keep interpreting volatility and other indicators to mean bearish when everything is so blatantly bullish its crazy add to that the fact we broke an intermediate resistance trendline to the upside on the close and there is about a 99.99999% chance that the market goes higher from here. 


also consider the market is still severely undervalued on the basis of historical average gains and adjusted for the expanded monetary base.   thats if the fed stopped printing today which they clearly haven't done, likely never will really exit the market.


face it, the free market is dead and we are going higher, get used to it. 


we zimbabwe now 

moneybots's picture

"Every single chart, indicator and metric is extremely bullish"


That is when people should start worrying.  This is not Zimbabwe.

disabledvet's picture

all inflation trading...and inflation cancelled out by low overhead liquidity creation. in other words any blowout in interest rates results in a huge increase in the value cash holdings and cash flows. that "resets" the system directly to the "means of production" which is DEFLATIONARY. Obviously Apple and Verizon have issued debt at VERY favorable terms here. I cannot speak to how well they'll be able to service that the case of Apple that shouldn't be a problem...nor for a lot of other companies that have zero debt period. I would be very wary of anything not rated triple AAA here though. Any sudden DROP in treasury yields will not benefit the dollar at all. And that would mean anything made in the USA goes on sale again. That includes a massive amount of energy production save electricity which can't be exported...except maybe to Canada... "and this could last for a while." (a couple of decades?) In any case USA Inc by a large does not have a cash flow crisis that i can see. That says to me "sell on the fact of an economic recovery." The Great Reset is well underway.

AGoldhamster's picture

As posted before open ... "any bets we see new ATHs?"

Goal achieved. All is sooo well.

Best "show" I recall since decades.

MFLTucson's picture

The American con game makes it yet another year but, 2014 will end this insane group of gangsters.

ThisIsBob's picture

Tyler, perhaps you should reconsider all the slobbering over the bears who seem to have free reign here.  (and... here come the down votes ...)

orangegeek's picture

lots of cheerleaders running the MSM feeding 7/24 sunshine to the herd


go shake your pom-poms over there


happy new year and Ctrl-P

Hindenburg...Oh Man's picture

I realize that we are seeing a rigged market, but to see .50 - 1+ percent gains, daily, on the NASDAQ, is kind of absurd to say the least. 

How is it possible to have a completely risk-free market, where the only color is green and the only direction is UP for all? 

khakuda's picture

We are now well along in yet another set of bubbles. The difference this time is that the Fed will not move to tighten policy no matter how big the bubbles build. Markets, to the extent they exist, will have to act to move against the excesses, but assets may have to get much more overvalued for it to become obvious enough.

I would not be surprised to see the equity markets up 30% in the next six months, at which point even the bulls will start to worry. The Fed continues to have entirely too much stimulus in the system and it should be obvious as asset prices continued to outperform fundamental improvements several fold. Five years and 1200 S&P point into this, it is inconceivable that this level of panicked emergency stimulus is still needed to boost asset prices to create a wealth effect, Bernanke's admitted purpose of QE. Pushing asset prices well beyond fair value creates even greater risks for the economy, growth and stability.

disabledvet's picture

unlike the twenties and 90's where there was economic growth to justify the "blow off top" it's really hard to see we have that this time around. what has moved equities to the moon has been a massive amount of debt creation...which of course is never good for economic growth "and only works until it doesn't." so far because of various micro factors this hasn't been a problem but a lot of "errors" have been appearing of late not the least being the collapse in the prices of gold and silver. to me the higher the equity market goes (all based on junk bond issuance priced at nose bleed levels) the greater the default risk. Otherwise "here's to you Detroit" appears to be the message from Crazy Town to ring in this "Happy New Year." What's the encore again? "Making Lehman look small?"

FubarNation's picture

I did my annual EOY stack.  Some yesterday and some today.

I've been stacking since 2000.

I have a sinking feeling that GC and SI are dead money.

But I rationalize by asking myself what the fuck else should I put my savings in?

xxxxx's picture

The more that sinking feeling deepens the closer to the bottom we are.

FreedomGuy's picture

I just read a stock market article that including the phrase, "surging consumer confidence" and "expectations for accelerating growth". Where do they interview these lemmings?

I will admit, I am sorry I missed out on the stock gains this year. I am also sorry I did not buy a winning lottery ticket this year and I bet on the wrong numbers on the roulette table last month.

I have a small amount of money in my 401k tied up mostly in money markets to preserve capital. I have never done this over an extended period in my life before.

The reason is that I firmly believe we are in a political economy, now. It really isn't about the next phone from Apple. It is not even really about earnings and growth. I think 3M had a 3% growth in earnings and about a 40% increase in stock price. There is no reality any more. I admit, i have no clue what to do. Everything looks like a roll of the dice to me.

What is most important is what the Fed says. Have Yellen say, "QE is done today and we will being to unload our positions." and the market will be 50% lower tomrrow. You know it. I know it. All investors know it. There are a hundred other things from other central bankers, ministers and political leaders that can crash the market over night They completely overwhelm BMW's international earnings.

So, bonds are still inflated, properties are inflated, stocks are inflated, metals are deflated...all because of government policies. Not one thing is based on real markets and real value. Nothing. So, what does one do? Any moment can brind reward or more likely disaster. You might as well pick roulette numbers.

But, today, we celebrate success and Obama will take credit asap even though he hasn't a clue how the markets work...or should work.

moneybots's picture

" is inconceivable that this level of panicked emergency stimulus is still needed to boost asset prices to create a wealth effect, Bernanke's admitted purpose of QE."


What wealth effect?  47 million are on food stamps.  Real wages and standard of living have been falling.





new game's picture

trickle down, come on man, they will be hiring with that capital to invest with CONfidence.

trickle a comin...

jomama's picture

if PMs are so worthless, why can't i take them out of the country?

BigSpruce's picture

Short stocks - long Ag.

BigSpruce's picture

Short stocks - long Ag.

MeelionDollerBogus's picture

Another great time to short the markets with spare cash

xxxxx's picture

Once again Zero Hedge got 2013 totally wrong!