This page has been archived and commenting is disabled.
Spot The Difference
With the S&P 500 having now tripled-and-then-some off the March 2009 lows, we thought it noteworthy to note that today, Bloomberg's Commodity Index dropped below those financial crisis lows for the first time.
As is evident from the chart, throughout history, the raw materials of 'business' and the stock of 'business' had high and positive correlations but since the Fed ended QE2, suffered equity weakness and then folded and re-engaged money-printing largesse with Operation Shift, the relationship between commodities and stocks has been utterly negative.
What happened the last time Commodities and Stocks were this anti-correlated?
Different this time? Or all smoke and mirrors? Time will tell...
Chart: Bloomberg
»
- 15790 reads
- Printer-friendly version
- Send to friend
- advertisements -
This violates the positive correlation relationship of bond and stock prices. So why did this occur? The typical market relationships assume an inflationary economic environment. So, when we move into a deflationary environment, certain relationships will shift. Deflation is generally going to push the stock market lower. Without growth potential in stocks, it is unlikely they will head higher. Bond prices, on the other hand, are going to move higher to reflect falling interest rates (remember, interest rates and bond prices move in opposite directions). Therefore, we must be aware of what kind of economy we are in, in order to better determine whether bonds and stocks will be positively or negatively correlated.
to summarize this : Manipulation is behind the scene pure and simple
The days of "MOAR" are numbered
It's a big club and you ain't in it BITCHEZ
". . . and the walls came tumbling down!"
Nursery rhymes are more transparent than central banks and western governments.
Same as it ever was. Look to the avant guarde "media". Artists tell the truth.
Deflation is affecting everything BUT what the POMO desk can defend, the ES futures market manipulation. We are in agreement but it seems the buying on dips will never cease.
+100
I so agree they just cant stop BTFD otherwise it will crash hard
Please, "deflation" is a fucking myth so long as the human population keeps growing and competing for a higher standard of living.
What part of all fiat (paper promises) will go to zero don't people understand?
Reserve balances (ie total dollars) increased 489% since 2005.
S&P has increased 173% in that same time period.
That's an ongoing crash in real terms.
It's the new economic paradigm. We don't need tangible assets and commodities anymore. Our economy is based on manufacturing tweets and selfies. Web 2.0 baby!
Bullshit. Deflation is a fucking myth so long as the human population is growing and competing for a better standard of living.
In addition, ZIRP is fucking QE!!!!
Go ahead give me a billion dollar "loan" at 0.25%. I guarranty that I will be a profitable limited liability corporation.
fucking morons.
This time=Different
when oil drops to $30 and gold drops under $1000, spx correlated value will = 400. which will be the ultimate bottom for spx within 12-18 months.
It's not just oil and gold, the entire industrial commodity market is crashing. The Dow will hit 20,000 about the time the last factory closes down.
debt spurred spending maxed, topped and ready to flat line while too much capacity. just like what is happening to oil patch.,; only bring to every industry except booze, smoke, blow and hookers and mariage cousleors snd laawyer when shit goes bad...
Nearly infinite abuse of what is actually quite finite real asset leverage. TBTJ banks starved the real economy while collecting IOER and engaging in glorified theft, frontrunning financial assets to extract trading profits via option manipulation abusing QE flow. But, we are up against very fundamental constraints created from decades of distributionally driven demand destruction (exponentially growing financial claims on real flows of value from labor and productive investment from savings via fractional reserve banking). There is 1 and only 1 semi stable path out of the financial asset ponzi.
This is what happens when central banks outright buy equities. Someday they will own everything that can be bought. PEAK ownership centered on the banks balance sheets. Most of the public will own lots of paper and ones and zeros in some computer.
Buying equities while at the same time shorting commodities to hide currency debauchery, fraud, and inflation.
Did you finally become leader of the Northern Tribe...?
"Most of the public will own lots of paper and ones and zeros in some computer that will have no purchasing power at all" -- fixed.
Yes, ownership has it's privileges when it comes to physical assets of real value. especially ones you can defend.
The last time I saw that level of 'decoupling' was in my 7th grade class, just before the summer break . . .
If people think this is bad, someone ought to post charts of the relationship between the Dow relative to the other major Indices for this period.... !
The Dow is the most misunderstood index, the full name is the 'Dow 30 industrials index'. The 30 biggest players are supposed to tells us what the tens of thousands of companies across the entire market are worth and other crack dreams.
Fair comment but the Dow trades similarly to the S&P 500, with or without the regular QE injections... My point is that regardless of what the DJI represents, it has outperformed all other indices to a greater extent than the commodity index and the relative charts for each Index is simply stunning
Thanks for the link. Here is a key phrase: " China’s GDP grew from $1 trillion to $9 trillion during the 13 years after the turn of the century. Growth of such enormous proportions is not remotely possible in an honest economy based on productivity, savings, investment and sound money."
I think that was perfectly written. HONEST is the key thing about the whole shebang. Honesty is lost on these fokkers.
Thanks for the link. Here is a key phrase: " China’s GDP grew from $1 trillion to $9 trillion during the 13 years after the turn of the century. Growth of such enormous proportions is not remotely possible in an honest economy based on productivity, savings, investment and sound money."
I think that was perfectly written. HONEST is the key thing about the whole shebang. Honesty is lost on these fokkers.
New Normal, bitches! Plunging copper and oil prices means the economy is doing great.
ZH is puhing it's click count with these damned pop up ads that now present themselves with EVERY page. Most of mine are Ameritrade. I have to click it to read anything on the page. I have 'block pop up windows' on but these are immune. Even if I do a comment...bang...I have to dismiss another one to read what I wrote.
ZH is either doing very well or it is a sign they have sunk to the bottom.
Turn off Java. That helps.
Java will not do it, I am in field so I know
install for free adblock and Ghostery for chrome or Firefox
for firefox:
Ghostery: https://addons.mozilla.org/en-US/firefox/addon/ghostery/
Adblock Plus:https://addons.mozilla.org/en-US/firefox/addon/adblock-plus/?src=search
For Chrome:
Adblock Plus: https://chrome.google.com/webstore/detail/adblock-plus/cfhdojbkjhnklbpkd...
Ghostery: https://chrome.google.com/webstore/detail/ghostery/mlomiejdfkolichcflejc...
There is not enough collateral to cover the enormous imbalance of debt outstanding without inflating further. Declining prices as a result of supply and demand imbalances ought to sort this out, however, central banks will never let this happen given the collosal measure of debt and counterparty risk. Keynesian monetarism will never admit defeat.
Whoa, It REALLY is different this time...
This is why I will NEVER stop swearing. Coxukkers!
Software doesn't require many raw materials.
Just remember that when this all collapses just as the Austrian School predicts, the central planners/bankers will never take responsibility.
Krugman will say "I told you so!" and say that stimulus needed to be much bigger. Other government officials will essentially blame free markets and traders, as if there were much free market left. The answers will be the same as always. They will call for more control (rules)' more money and more government agencies or police.
And your neighbors will helplessly agree and give them everything they demand.
Yep. And if your neighbors are told that PM owners/"preppers" are terrists, they'll hand you over for thirty pieces of fiat.
You have been warned.
CRB overlay on the S&P500
http://bullandbearmash.com/pending-stock-market-train-wreck-deflation-pi...
divergence is beyond brutal - see the pink elephant in the broom closet?
Bullshit. There is no "market" anymore. The Fed and their government puppets are the "market" and they will not sell, period. in order to have a massive crash, you need the a large majority of market participants to actually fucking sell.
Prepare for war as the supply lines start to shut down.
I would be wary of transports especially Fed Ex and UPS.
No one has really explained the collapse. Lot of Govvernment,, lot of debt.
It's not different this time as everyone knows. It's a bubble and bubbles always burst, some quite violently...
http://www.globaldeflationnews.com/anatomy-of-a-bubble-how-the-federal-r...
The 20th Century was a bubble, and The West will eventually mean-revert to 1913.
Don't ask me when.
i'm still a firm believer, march 2009 market levels, s&p 676, dow 1650, was the last true representive value of these markets.
looks as if the commodity index is close to march 2009 levels.
ever since march 2009, it's been all fed. fiat.
you have to take into consideration some % of the commodity index went to s&p index, after the annocement of qe infinity.