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2014: The Year The US Decoupled (Again)

Tyler Durden's picture




 

From the October 2007 highs in the US equity market, World Stocks (ex US) are down over 25%... while the US is now over 36% higher.

 

That huge divergence, however, has only come about since The Fed unleashed QE3 and once again 2014 (with world stocks down almost 7% and US stocks up over 12%) shows the US (stock market) decoupling from the rest of the world...

 

 

Now when was the last time we saw that kind of divergence?

 

 

Charts: Bloomberg

h/t @M_McDonough

Bonus Charts: The last 5 years...

 

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Wed, 12/31/2014 - 14:12 | 5609549 Jeff the Terrible
Jeff the Terrible's picture

Yeah we're do for a crash but how many times are going to cry wolf Tyler?

 

https://www.youtube.com/watch?v=VI6tBwVjyOY

Wed, 12/31/2014 - 14:18 | 5609569 pods
pods's picture

I would say probably not quite as many times as you spam your vegan video, that's my guess.

pods

Wed, 12/31/2014 - 14:26 | 5609598 NoDebt
NoDebt's picture

Japan exports their deflation to the US, the US exports its Depression to the rest of the world.

Wed, 12/31/2014 - 15:01 | 5609719 Wait What
Wait What's picture

the crash will happen when you least expect it, when no one is talking about it, and when ZH has about 25 members left to comment.

then suddenly the ZH servers will crash as everyone logs in to congratulate TD for his prescience.

this is how bubbles work; those who have never watched 1 from beginning to end don't have a clue about its dynamics, the noise, and the eventual consequences. I'm now watching the 3rd in the US since I hit puberty, and they've all ended the same way... in tears, 'whocouldaknowd' banter, and finger-pointing.

throw around your 'cry-wolfs' all you want, being right is an end state, not a transitory 1.

Wed, 12/31/2014 - 15:17 | 5609791 Your guess is a...
Your guess is as good as mine's picture

Because you know better than anyone here?

Wed, 12/31/2014 - 17:02 | 5610250 Pareto
Pareto's picture

Nope, but, definitely more cogent than you.

Thu, 01/01/2015 - 03:29 | 5611670 rex-lacrymarum
rex-lacrymarum's picture

 Watching the growth momentum of the money supply has often be useful in forecasting both bull and bear markets, because monetary inflation is the by far biggest contributor to nominal price gains in titles to capital. Even that method doesn't provide fool-proof timing though. However, there is a difference between forecasting a bear market and noting that a market is harboring a lot of risk. For instance, Babson warned of the risk inherent in the bubble of the 1920s more than once. Obviously, only his last warning was 'well timed'. And yet, given the extent of the decline that followed, all of his warnings about market risk - even the ones he uttered 'too early' -  saved those who heeded them a lot of grief. 

Wed, 12/31/2014 - 14:18 | 5609579 Seasmoke
Seasmoke's picture

I'm ABSOLUTELY sick of Tyler crying wolf.....when all of ZH no longer logs in ....(but I consider this means we are very close to collapse)

Wed, 12/31/2014 - 14:32 | 5609622 Pareto
Pareto's picture

Hey Jeff the Retard!  Thanks for the pointless redirect that has nothing to do with anything relevant to your complaint.  Its like stopping to ask a guy for directions, and instead of directions, he offers advice on how to comb one's hair, or, do craft beadwork - both of which are infintely more valuable than anything you have to say.

 

Fucking ass.

Thu, 01/01/2015 - 01:58 | 5611548 tplink
tplink's picture

my best friend's half-sister makes $77 every hour on the computer . She has been laid off for 5 months but last month her pay check was $14292 just working on the computer for a few hours. read... www.works3.com

Wed, 12/31/2014 - 14:13 | 5609551 Bill of Rights
Bill of Rights's picture
Ditching US dollar: China, Russia launch financial tools in local currencies

http://rt.com/business/218315-china-russia-ruble-yuan/

Wed, 12/31/2014 - 17:37 | 5610401 noben
noben's picture

How ironic that Chairman Mao's mug would be so ubiquitous on currency being traded around the world.

Don't see Greedspank's face anywhere.  Nor Bush's. 

What's that?  Dead leaders?  I thought ours died years ago.

Wed, 12/31/2014 - 14:17 | 5609558 ebworthen
ebworthen's picture

I remember well back before the collapse hearing pundit after pundit say the U.S. was fine and was different from other markets because "Amurika".  Then...BOOM! 

Tell people that used to work for Lehman Brothers that this time is different.

It's all levered up and ready to explode, someone has the match.

Wed, 12/31/2014 - 14:27 | 5609608 KnuckleDragger-X
KnuckleDragger-X's picture

The problem is the other markets need better computers. For a small fee I'll be glad to supply them with supercomputers that'll make their HFT's scream.

Wed, 12/31/2014 - 15:36 | 5609873 sun tzu
sun tzu's picture

I remember CNBS constantly spewing about the Goldilocks economy in fall 2007. We were in the sweet spot they said. 

Wed, 12/31/2014 - 14:16 | 5609562 Jack Burton
Jack Burton's picture

America can and does decouple because only America can print dollars. The Petro Dollar and Dollar as world reserve currency allows the US to print real wealth and economic growth simply with green electronic digits. The world rushes to produce oil and minerals, manufactured goods and business services in mass amounts and sends this all to the USA to make it richer, all that they get in return is fresh printed green paper or green electrons. America thus is decoupled from economic reality. Iran, if it wants in import anything, must first earn dollars, then buy using them. Russia, in foreign trade, must earn dollars, and now Euros, and then buy from abroad.

The USA is not obligated to earn any FX. They simply print the trade currency and spend it. It is the rest of the world who gets inflation exported to it with King Dollar.

Yes, the USA is decoupled.

Wed, 12/31/2014 - 14:22 | 5609587 Seasmoke
Seasmoke's picture

From Reality. 

Wed, 12/31/2014 - 14:35 | 5609630 Ignatius
Ignatius's picture

The US alliances make their own reality at this point.  Isn't that what Rove said to Susskind, "We're an empire now.  We make our own reality."

For the time being reality doesn't matter.

What a pickle.

Wed, 12/31/2014 - 14:30 | 5609619 Bell's 2 hearted
Bell's 2 hearted's picture

not at all

 

US just the caboose on global train 

 

 

Wed, 12/31/2014 - 14:30 | 5609620 Ignatius
Ignatius's picture

Alliances and raw power are more formidable than gold.  Why?  Because alliances work together and steal the gold or whatever else they have their greedy eyes on.  This is the reality that current gold savers/investors face, like it or not.  Alliances beat gold until alliances fail.  That's the implicit (sometimes explicit) and current US policy, and gold will flaunder until these circumstances change.

Wed, 12/31/2014 - 18:25 | 5610557 Pizza man
Pizza man's picture

Just a side note, we ain't the only major economy printing. Why isn't Japan's economy outperforming the US?

Wed, 12/31/2014 - 14:25 | 5609594 Bell's 2 hearted
Bell's 2 hearted's picture

King Dollar will do a hurtin' on corporate earnings going forward

 

DXY - at the moment - 90.25 trading at the highest in years

Wed, 12/31/2014 - 14:29 | 5609613 KnuckleDragger-X
KnuckleDragger-X's picture

The best toilet paper in the world.....

Wed, 12/31/2014 - 14:35 | 5609628 Bill of Rights
Bill of Rights's picture

....cleanest shirt in the pile of dirty laundry.

 

https://www.tradingview.com/x/lVqjOfqy/

Wed, 12/31/2014 - 15:24 | 5609816 Your guess is a...
Your guess is as good as mine's picture

Least smelly turd covered in burnt hair.

Wed, 12/31/2014 - 14:25 | 5609597 Son of Loki
Son of Loki's picture

For those heading to Asia for 2015 celebrations:

 

Subway in China may have been busted for serving expired foodAccording to Reuters, the world's biggest fast food chain — which has a staggering 40,000-plus locations worldwide — is "investigating media reports in China" that employees at a Beijing store "changed expiry and production dates on meat, drink and vegetable produce to extend their use."

 

http://www.eater.com/2014/12/30/7470469/latest-chinese-food-scandal-erup...

 

Best for foreigners to stick to the fresh stuff, like the "Catch of the Day" ... I usully go for the Pomeranian ... tender ribs and thighs and usually grown cage-free so you get all those health benefits besides..

 

 

Wed, 12/31/2014 - 14:28 | 5609606 alexmark2013
alexmark2013's picture
Chris Powell – There are no free markets anymore, just interventions   http://investmentwatchblog.com/chris-powell-there-are-no-free-markets-anymore-just-interventions/
Wed, 12/31/2014 - 14:30 | 5609618 KnuckleDragger-X
KnuckleDragger-X's picture

The black market is free, illegal but free....

Wed, 12/31/2014 - 14:27 | 5609607 Bell's 2 hearted
Bell's 2 hearted's picture

CRB (commodity basket) has taken out 2010 low and still heading south

 

oil dropping is not all Saudia Arabia (or US) playing games

 

global economy speaking .... LOUDLY

Wed, 12/31/2014 - 14:36 | 5609627 ebworthen
ebworthen's picture

Yup, and so much noise in the derivatives casino they can't hear it.

Wed, 12/31/2014 - 14:42 | 5609650 kevinearick
kevinearick's picture

Regeneration

I remember the glee in my friends’ voices when they joined the ivory tower to blow the original Internet bubble, their pompous attitudes when it peaked, and shame when it collapsed. Telephones can’t do work, no matter how big the net, and knowledge only exists in a closed system, which can only implode, which has its uses. A lot of females are going to get caught in this iteration. The empire doesn’t change; it simply rotates the players. Learn and move forward, that’s life.

Those Stan Smith tennis shoes weren’t that important, and the FDR crew initiated the greatest exploitation of natural resources in human history, with yet another actuarial ponzi. From the perspective of labor, there is no difference between Boeing and BATS, or any other corporation. They all pit middle classes, created for the purpose, against each other, the young against the old.

Putin and Obama have more in common with each other than their gatekeepers or followers, Italians don’t go to San Francisco to eat, and the product of Silicon Valley is leverage, on leverage, looking for a place to land, until it runs out of fuel, again. That’s Entertainment!

Casinos are made of money and the gravity of stupidity chasing it. It’s always a dime holding up a dollar. A neutron bomb is negligible relative to what the critters want to play with next. What is the relationship between energy and the sun? What is a sun? What are empire physicists doing at the Fed?

Tunneling…Mirror…Zero Time…keep titrating.

Middle classes come and middle classes go, in a circle, chasing artificial business cycles, and are upset when money returns to money, all with a monetary theory in a bubble. Another grant for yoga and crime prevention, that’s what the economy needs. Economies are built from the bottom up and destroyed from the top down accordingly.

I was trained by mobsters, which is why you will find me at the diner at 10am having a double, long after the work is done, listening to politicians tell me how to do it. Funny, it’s always a drug dealer and a feminist trying to tell you how to raise your children.

Wed, 12/31/2014 - 18:01 | 5610480 kevinearick
kevinearick's picture

If an expert can fix it, it’s an arbitrary, efficient, closed system, which will shortly become irrelevant, redundant make-work, which is why the empire trains, hires and pays experts, with toilet paper, which is worth no more than 10% of your time. If you have an open mind, you will recognize the false assumptions, which is worth 90% of your time, and why all of public education is about normalizing false assumptions.

The last thing your children need is more time in a failed public institution. My dad built substations, radio stations and TV stations, on the fly, and long dead he’s still the smartest person I ever met. Get those pieces of paper, but don’t take them seriously. When your children fail for getting the correct answer on a test, you have much better things to do than worry about them.

The best scientists in History had little to no public education, which is why labor moves in the opposite direction of noise.

RIP

Wed, 12/31/2014 - 14:49 | 5609669 Ewtman
Ewtman's picture

The credit bubble is bursting and no market is safe from the deflationary spiral that will ensue,

 

http://www.globaldeflationnews.com/anatomy-of-a-bubble-how-the-federal-r...

Wed, 12/31/2014 - 18:59 | 5610641 Graph
Graph's picture

 

 

Just now, on KCET, Ed Slott is providing a guarantee for one's  retirement future in front of appreciative audience of infantile giggling and chuckling 50+.

Wed, 12/31/2014 - 15:34 | 5609866 Spungo
Spungo's picture

Forget the US. Look at China. THAT is what decoupling looks like. Overall, I would say the US 2014 year was fairly normal. It didn't go up 30%, it didn't go down 30%. 2013 was the year of wtf stock levitation. 2014 was also the year of Canada decoupling. From the beginning of the year, it went straight up until August. Then it came crashing down to reality.

Wed, 12/31/2014 - 15:34 | 5609871 CanadaFrank32
CanadaFrank32's picture

Just want to thank TD for bringing all the information and not just the fluffy stuff. Happy new year ZH!

Wed, 12/31/2014 - 15:36 | 5609876 Temerity Trader
Temerity Trader's picture

<”…Sentiment is best used as a contrarian indicator... The stock markets are on the edge of a major reversal.>>”> 

LMAO! Another major reversal!! Yes, same type as in 2008, 2009….2014?  There is only ONE thing that matters, the FED.  If they continue to intervene and support the markets, there will be no reversal. Dow 7K is NOT an option. When total and complete Faith in Fed ends, you can short away. Does anyone see that’s about to happen?  Go short and if they print another couple of Trillion $, they will rip your face off (again). Bad news means nothing anymore, lousy earnings, no growth.  No matter what a person pays for stocks, it is certain others will pay even more.  Nobody will sell knowing the Fed has guaranteed the markets. Last GDP print was +5%. Not real bearish. The New Normal appears here to stay.

Wed, 12/31/2014 - 17:16 | 5610316 EndOfDayExit
EndOfDayExit's picture

As much as I enjoy your posts…  There is still hope. It is that linear extrapolation of recent trends rarely works. At least this is how it used to be.

Wed, 12/31/2014 - 20:34 | 5610884 weburke
weburke's picture

well, yes, markets will fall, it will hurt the non stockholders, regular folks, but the rich will hold through any decline, and it will rise again. not all of course.

https://www.youtube.com/watch?v=zH-cPckntEY

Thu, 01/01/2015 - 12:29 | 5612235 AynRandFan
AynRandFan's picture

Remember when we were exporting money to markets in EM countries like Brazil?  How'd that turn out?  Yeah, everybody is sending money here, and soon they'll take it back out.

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