Crushing The "US Is Decoupling" Meme (In One Simple Chart)

Tyler Durden's picture

With US equity markets hitting fresh all-time highs (as much of the rest of the world is 10-15% off its highs and falling), the meme that rules the "common knowledge" talking-head world is "US decoupling" or yet another version of 'cleanest dirty shirt'. Well, as much as we hate to steal the jam from many an asset-gatherer's donut, the BIS provides us with a simple quick efficient guide to show that no, not the BIS finds the US business cycle is entirely co-dependent on Asian (and Emerging Market) economic cycles. Perhaps it is snowing everywhere in the world?


The co-movement of the US economy and Asia (DM and EM) has increased dramatically since the financial crisis...

h/t @GeorgeMagnus1

As the BIS explains...

Standard measures of real economic co-movement between Asia-Pacific economies and those elsewhere had been observed to follow a downward trend, leading some commentators to suggest that the region was decoupling.


However, this process reversed in response to the International Financial Crisis, and co-movement increased to historically high levels for some economies. We examine co-movement patterns and show that these are very sensitive to changes in macroeconomic volatility over time.


Controlling for this, however, co-movement is closely linked to underlying trade and financial integration. If international links continue to strengthen in future, co-movement will strengthen in tandem.


Decoupling is more a fiction than a fact or a forecast


Full PDF defaming the decoupling myth here.

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Looney's picture

"US is decoupling" = "U" minus "S"   ;-)


P.S. Poor Reggie! He must be having hiccup-attacks while swallowing. I hope, he is a BITER!!!   ;-)

q99x2's picture

U - S = a "V" recovery.

max2205's picture

I just de coupled from my wife

q99x2's picture

Stock market indexes lead the economy by six months.

mumbo_jumbo's picture


i keep hearing this propaganda how the market is forward looking and yet we get a daily dose of the market did this or that based on that piece of news or this piece of news.

it's a fucking casino now, nothing more, nothing less.

TheRideNeverEnds's picture

Sort of, the market is forward looking and random at the same time.  Random in the sense that it cannot be predicted due to the number of participants.   


There are two things in the market that are certain; over time the options pricing models work out and the S&P will never again trade below 1800.  

simone's picture

Legends make eye candy comprehensible.

Dollarmedes's picture

I suppose 2014 is going to be a bad year for the US, what with all those Chinese loans coming due.

TheRideNeverEnds's picture

We will just take out bigger better loans to pay back the loans we took out to pay back the other loans... 


FieldingMellish's picture

I hate jam donuts. Now, Boston creams....

medium giraffe's picture

Maybe someone needs to point this co-dependency out to Fed Janet before she spouts any further ill advised isolationist rhetoric to justify the Fed's program. 

She's a fucking moron.

new game's picture

all i see is snakes, an ostrich, a dinosoar, a camel and a roadrunner...

Jendrzejczyk's picture

Can't believe you missed the Dodo bird.

TheReplacement's picture

Glad I'm not the only nitwit.

Dead Canary's picture

I see:


1. Sex

2. Sex

3. Sex

4. Sex

5. Sex


What's with all the dirty pictures?

ebworthen's picture

Didn't we hear that "U.S. is decoupled" nonsense right before the last crash?

The FED and Wall Street are the nexus of evil of central bank/bankster hegemony - that's why it's the last to fall.

joego1's picture

How can we be decoupled if everything I buy comes from china and the chinese depend on our counterfet money supply to keep their economy going?

TheCosmicTaco's picture

Holy shizzlesticks. Now here's another amazing fact:

Lao ladyboys suck!

kenezen's picture

I see no proof that we haven't decoupled.

I see international charts of international markets. I don't see chart indicating our national condition. No chart shows our real unemployment and under employment. Our real loss of "Private Sector Middle class"! The disparity in Private Sector pay as compared with Federal Government Wages From the Bureau of Economic Analysis (Federal Employees in 2009 made $123,049 in wage and pension average compared to $61,049 in average wage and salary in the private Sector) This shows the sad pay differential between services jobs since the late 70's as well.   Private sector in general is now Services Jobs because our Federal Government takes all prerogative for States to bring in real MFG. Like Japan, S.Korea, China and now Mexico has.  Mexico has GM, GE, Honeywell, Goodrich, Cessna  and too many other MFG. plants being built and their GDP flying. Hundreds of thousands of jobs.

Unless we compete we will continue to slide and the disparities between the Middle class and Public sector class will widen. These changes, not disputable through any historic search, are the most obvious results of Federal Socialism!