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It's Not The Economy; It's The Flow, Stupid

Submitted by Tyler Durden on 12/15/2014 20:55 -0400

With The Fed due to make some highly amibiguous, always dovish promises this week, we thought a quick look at the world of stocks and bonds through the eyes of the Fed would be useful...

There's no decoupling economically...

And stocks are catching down to the Fed's Taper...

But what is really important is how close we are to un-taper... as it's the flow that matters...

For stocks...

and bonds...

The question is... will lower for longer make up for no moar QE? We suspect not given the charts above.

Charts: Bloomberg and @Not_Jim_Cramer

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Mon, 12/15/2014 - 21:00 | 5556208 dirtyfiles

what part of it moppets do not understand

Mon, 12/15/2014 - 21:17 | 5556268 CClarity

MOAR, just M_O_A_R!!!!

The beast of murmufuckation (murmuration) knows no other way.

Primal scream {> ......

Mon, 12/15/2014 - 21:19 | 5556279 kaiserhoff

Models will make you crazy if you don't come up for air now and then.

Mon, 12/15/2014 - 22:01 | 5556400 El Oregonian

Flow? Flow like a dead cat flows down a river kind of flow?

Mon, 12/15/2014 - 21:00 | 5556210 i_call_you_my_base

Will they keep "considerable time"? Or maybe they'll change it to, "protracted time"? Oh my lord, the suspense!

Mon, 12/15/2014 - 21:56 | 5556387 KnuckleDragger-X

Someday....

https://www.youtube.com/watch?feature=player_detailpage&v=NwNuQulK6N0

Mon, 12/15/2014 - 23:50 | 5556750 jeff montanye

appreciable time

http://www.hussmanfunds.com/wmc/wmc141215.htm

Mon, 12/15/2014 - 21:01 | 5556213 ebworthen

Raise rates Janet, you chicken shit lying banker whore!

Tue, 12/16/2014 - 03:25 | 5557039 Wait What

"Raise rates"

funniest thing I read tonight. thanks for the laugh.

Mon, 12/15/2014 - 21:22 | 5556282 Keltner Channel Surf

Love these charts, but when I see the phrase "Fed Balance Sheet"and the associated line moving up and down, rather than picture some arcane accounting entry made by an intern in the basement of the Eccles building, I instead view any increase to mean they bought stuff from 'primary dealers' (e.g., Goldman) at inflated prices to bribe them to goose the stock market which, in watching equity prices on POMO days from the magical time of 10:15 - 11:00, seemed to be an almost immediate impact.

Yeah, it may be a bit more complex than that, but this simplified account clears up a lot for me . . . like why the "10 YR UST Yield" line seems to flow with, rather than against the Fed's purchases.

Mon, 12/15/2014 - 21:39 | 5556326 Ness.

I appologize for the c/p post but we all need a reminder every now and again of just who controls our lives. Primary Dealers List. Primary dealers serve as trading counterparties of the New York Fed in its implementation of monetary policy. This role includes the obligations to: (i) participate consistently in open market operations to carry out U.S. monetary policy pursuant to the direction of the Federal Open Market Committee (FOMC); and (ii) provide the New York Fed's trading desk with market information and analysis helpful in the formulation and implementation of monetary policy. Primary dealers are also required to participate in all auctions of U.S. government debt and to make reasonable markets for the New York Fed when it transacts on behalf of its foreign official account-holders.

Bank of Nova Scotia, New York Agency
BMO Capital Markets Corp.
BNP Paribas Securities Corp.
Barclays Capital Inc.
Cantor Fitzgerald & Co.
Citigroup Global Markets Inc.
Credit Suisse Securities (USA) LLC
Daiwa Capital Markets America Inc.
Deutsche Bank Securities Inc.
Goldman, Sachs & Co.
HSBC Securities (USA) Inc.
Jefferies LLC
J.P. Morgan Securities LLC
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Mizuho Securities USA Inc.
Morgan Stanley & Co. LLC
Nomura Securities International, Inc.
RBC Capital Markets, LLC
RBS Securities Inc.
SG Americas Securities, LLC
TD Securities (USA) LLC
UBS Securities LLC.