Equities Spike To Record Highs As US Macro Hits 2-Month Lows

Tyler Durden's picture

Treasury yields are up 1-2bps; the USD is flat; gold and silver are up modestly; but stocks are screaming higher to all-time highs in the Trannies and S&P. All of this is occurring as PMI and ISM missed expectations this morning and the US Macro Surprise index in the US (worst of all nations year to date) is at 2-month lows. What's behind it? FOMO, POMO, YOLO? All we can say is the S&P has never been this far above the Fed balance sheet (over 50 points rich) since QE began.

Equities are notably rich to Fed balance sheet and US macro is not supportive


As the disconnect grows...


Charts: Bloomberg

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hedgeless_horseman's picture



Where have we seen this before?

US Stocks are priced in USD.

If the value of the USD decreases 50%, the value of the stock increases 100%.

Nominal versus real returns.


The U.S. Dollar Index® is computed using a trade-weighted geometric average of six currencies.
The six currencies and their trade weights are:

57.6 %


13.6 %


11.9 %


9.1 %


4.2 %


3.6 %


Synchronized diving, anyone?

PartysOver's picture

Until it goes boom, just Buy.  Attempting to rationalize delusional stupidity is a fruitless cause.

wallstreetaposteriori's picture

The market is not going to peak until retail is holding the bag.... big upside meltup coming as retail jumps head first into all this BS.

hedgeless_horseman's picture



Retail cannot afford the bag.  Thank God for the Norwegian sovereign wealth fund, and the idiots at CALPERS, etc.

shitco.in's picture

The Norwegian's aren't stupid.  They WILL hold 5%, but won't be buying at these prices.

Cruel Aid's picture

calpers etc is the reason the Fed is doing this or a big reason. Pump or bailout /default.

Or they just hate Meredith Whitney and her City/Muni call

oops no shit statement?

spastic_colon's picture

and just think they were able to get the VIX back to 12 in order to smash ES higher before EOW

Headbanger's picture

VIX chart showing fives waves up followed by a completed pennant or flag pattern:


So this is it for the VIX smash and thus the equities orgasm this morning.

As I said, vinegar strokes. 

Cthonic's picture

Held a lighter up to my monitor but I'm still not seeing the message.

max2205's picture

What no NFLX bonus chart?!

Yen Cross's picture

  First of all a 50% devaluation in usd would destroy the global economy as oil is priced in usd.

markar's picture

It's only going to be the new domestic USD that will be devalued 50% ROW will recycle them at current value when as no longer need them.

hedgeless_horseman's picture



US Stocks are priced in USD.


If the value of the USD decreases 50%, the value of the stock increases 100%.


Nominal versus real returns.

This is intended as a simple illustration (not a prediction) that it would not take much of a USD devaluation to pump the sp500 from 1935 to 1964, as illustrated on Tyler's chart, with zero or negative fundamental improvement in the underlying macro economy.

DavidC's picture

Dollar index has hardly moved today HH.


hedgeless_horseman's picture



See this comment from below....

When you can control both sides of the ratio you can make it look like whatever you want, no?

The USD can go down, and the dollar index can stay pretty much the same.

shitco.in's picture

We should probably keep an eye on CHFUSD to see there is a reaction like 2008 or 2011.  This could move significantly and not change the index (as you posted before CHF makes up about 3%).  This could be a good indicator of a much larger event in the near future. 

NoDebt's picture

And just to add to that.... How come Germany's 10 year has a lower yield than a 10 year UST?  How about JGBs WAY below same duration USTs.

Is it because the world thinks Germany and Japan are "safer" than the US?  Doubtful.  That's your currency devaluation premium talking there.

Yen Cross's picture

  The BoJ owns a much larger percentage of the JGB market then the Fed. does of the Treasury market. The JGB market is completely manipulated by the BoJ or yields would be parabolic. That's why Tyler laughs about the days when there's no bids on JGBs.

Yen Cross's picture

  I realize what you're saying. It's just so far over the top to think the usd would somehow devalue 50% over a short period of time. Look at Japan and their economy is 1/6th the size of the us economy.

 Commodities/energy and bonds would destroy the global equity and financial markets. The ROW wouldn't continue to settle in usd. The bond market would blow up and yields would explode as traders ran for the door on the devaluation.

 Countries are already moving away from usd and setting up outside settlement channels, and a devaluation like that would just hasten the transition. Look at how the yen has devalued across the board vs currencies. The same would happen with the dollar. (F/X is $4 trillion a day market)

hedgeless_horseman's picture



Of course you understand, but I was trying to keep the math easy for the non-currency traders.  You might be amazed at how many people do not understand that a devaluation in a currency causes a greater percentage increase in the price of everything valued in that currency, including stocks and stock indices.

Yen Cross's picture

  Yes, the "nominal pricing" scam is pretty pathetic.

fonzannoon's picture

you cant have a devaluation on a reserve currency, because things can only be "devalued" when they are pegged to something else. 

Yen Cross's picture

  You most certainly can have devaluation from loss of purchasing power through central bank policies, resulting in lower terms of trade. (printing money & artificially low interest rates)

  That is why multinational corps like the dollar weaker so they have larger profits when they repatriate them back into usd.

ParkAveFlasher's picture

Yes, but it would be a slow destruction, sort of like a dismantling.  I think that tptb will succeed in the incremental dissolution of the currency and reinstatement of a new monetary regime of some sort.

markar's picture

It's only going to be the new domestic USD that will be devalued 50% ROW will recycle them at current value when as no longer need them.

LawsofPhysics's picture

And yet the pound and euro continue to go up against the dollar.  What is this more common core math?

Doesn't look like they are diving together at all.

hedgeless_horseman's picture



All the QE and the USD continues to hover right around 80? Why?  The forex markets are just as rigged as every other market.

_disengage_'s picture

When you can control both sides of the ratio you can make it look like whatever you want, no?

Oracle 911's picture

Calling USA Zimbabwe is derogating for Zimbabwe.

Seriously, does Zimbabwe ever  stormed a foreign country for its resources while bloating about democracy and freedom, or supported terrorists and other diversion groups (NGO's are that kind of groups) or erected embargo on ideological  basis?



Now you get it.

Clowns on Acid's picture

Wake up d_bag, of course Zimbabwe would "storm foreign contry" for resources. They killed off most of the white farmers didn't they?

Smarten the fuck up.

_disengage_'s picture

Wouldn't it be great if there was some kind of objective metric by which all currencies could be measured?

*cough* freegold *cough*

NotApplicable's picture

I was going to blame YOLO, but then I remembered how that does not seem to affect voters in Chicago, or any other area with a finely honed political machine.

Ignatius's picture

Use confetti to buy up ownership stakes in real companies/assets regardless of dollar valuation -- and be in that ownership position when it all falls apart -- is the best I can make of this.



Damn, I should have bought the fukkin all time highs last year. Oh wait, I get a new opportunity to do so nearly every single day. I win!!

Ness.'s picture

That's exactly what they want.

fonzannoon's picture

"Equities are notably rich to Fed balance sheet and US macro is not supportive"

I don't know why but I laughed so hard when I read that I knocked over my coffee. Breaking news.....



JenkinsLane's picture

"You mess with the bull, you get the horn."

DavidC's picture

I'm getting close to it as well. Over 5 years of this shit and no real improvement in the economy, the central banks destroying the citizenry with inflationary measures that they mistakenly (or deliberately) think will actually help them.

I'm tired and frustrated with it.


DebtSlaveZombie's picture

Ive been ultra bullish for about 2 years now and we are getting short term frothy (or Shothy).  Even though I think we are going to S&P 2500 and DOW 20000 by late next year/early 2016, short term we are due for a 8-10% pull back.  US Macro data...GDP growth...and other economic data are not agreeing at all and after mid year portfolio re-arrangements (this week) we are gonna have to take a breather.  This market is running red hot and due for a pullback.  I pulled 50% of my positions in the past week and will look to go all cash if we continue to rally.  I may miss out on 2-3% of the upside, but the risk doesn't pay here.  I will wait for this froth to come back in.  We will have another February soon.

DebtSlaveZombie's picture


Keep 30-40% in though, but take something off...geesh.  DONT GET GREEDY!!!

SanfordandSon's picture

Personally, I think we see a top when 0 H turns bullish, no offense...