What Makes The World Go Around (In 2 Uncomfortably Truthful Charts)

Tyler Durden's picture

It's not the economy (or fundamentals), stupid - It's The Fed!


So we had a rate-hike, and...surprise - markets puked

Source: NorthmanTrader.com

Still think anything other than The Fed matters?

The S&P 500 has just caught back down almost perfectly to The Fed's balance-sheet-implied level...


With 2016 rate-hike odds collapsing, how long before rate-cut odds start to soar? Or will The Fed do the ultimate to destroy credibility - hike rates (strong growth) at the same time as QE4 (support bonds at the long-end... what a joke)?

Bonus Chart: What did you think would happen?

Source: @Not_Jim_Cramer

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Bossman1967's picture

Ole Yellen will make everything all rite now BTFD sucker

knukles's picture

I wanted to go to the hospital to see my sister give birth to our first child but the Alabama game was on.

Consuelo's picture

Oh chit --- just snotted in my tea...


quintago's picture

Listen, they're raising rates because they know its SHTF time, with or without the FED. There's only so much crap you can pile onto the back of an ass.

When the SHTF, they can then lower rates again and tell everybody they're stimulating the economy. 

TheFutureReset's picture

I think they waited to raise rates until they saw an imminent scapegoating opportunity. It definitely didn't have anything to do with fundamentals showing strength. They'll scapegoat China as, "no one could have predicted China's slowdown". 

Yen Cross's picture

 lol. You caught me off guard with that one Knuks. ;-)

khnum's picture

Give my regards to uncle granpa

Winston Churchill's picture

Nice of you to look after the ugly one like that.

Nothing like family heh ?

junction's picture

What about the U.S. Supreme Court's role in wrecking America?  In the latest example of the Court's conservative wing changing established law, the Court looks to block unions in some states from collecting agency shop dues from some non-union members.  Yet this same court allowed Obamacare, which is a mandatory tax on many employees who cannot afford health insurance.  Obamacare is the reason why big drug store chains, big health insurance companies and hospital chains are making out like bandits these days.  And the Supreme Court also helped out hedge fund billionaire Paul Singer, overturning the New Hampshire Supreme Court decision against Mutual Pharmaceuticals, Singer's New Jersey generic drug company that sold a defective NSAID drug. 

Winston Churchill's picture

Everybody inside the beltway is the best money can buy.

TheFutureReset's picture

If men were angels we wouldn't need govt. But when you put them in power, they are demons. 

BullyBearish's picture

To avoid the noise and determine the fed's path going forward, simply do two things:

1. Look at how the fed removed liquidity in the past (evidence), and

2. Keep a close eye on the jobs numbers (the proxy being used by the fed to justify what they want to do)


As long as the jobs numbers are "good" you can bet on the continued removal of liquidity:


"There is circumstantial evidence that the Bank of England and the Federal Reserve had concluded, at a secret meeting in February of 1929, that a collapse in the market was inevitable and that the best action was to let nature take its course. Immediately after that meeting, the financiers sent advisory warnings to lists of preferred customers—wealthy industrialists, prominent politicians, and high officials in foreign governments—to get out of the stock market. Meanwhile, the American people were being assured that the economy was in sound condition.


On August 9, the Federal Reserve applied the pin to the bubble. It increased the bank-loan rate and began to sell securities in the open market. Both actions have the effect of reducing the money supply. Rates on brokers' loans jumped to 20%. On October 29, the stock market collapsed. Thousands of investors were wiped out in a single day. The insiders who were forewarned had converted their stocks into cash while prices were still high. They now became the buyers. Some of the greatest fortunes in America were made in that fashion." The Creature from Jekyll Island, G. Edward Griffin.

besnook's picture

the difference is this time all the mouths are out there screaming the sky is going to fall so you better get out now while you can. i don't recall that happened in 2000 or 2008.

BullyBearish's picture

If you look at a S&P chart covering 16 years you'll see that this time is truly different.  The fed believes they have the power/ability to stairstep this market down in a controlled fashion.  They'll use jawboning and short squeezes to boost it up before "allowing" nature to take its course once again and observe it moving down to new lows. 

They're hoping for a similar slow and steady ramp as their "successful" melt up, but on the downside.  What will transpire over the next 1-3 years likely will be proven to NEVER have transpired before, just as what has transpired to get us here. 

However, if they "lose" control of the busting bubble, they have plans to win in that event as well:

Federal taxes now take more than 40% of our private incomes. State, county, and local taxes are on top of that. Inflation feeds on what is left. We spend half of each year working for the government. Real wages in America have declined. Young couples with a single income have a lower standard of living than their parents did. The net worth of the average household is falling. The amount of leisure time is shrinking. The percentage of Americans who own their homes is dropping. The age at which a family acquires a first home is rising. The number of families counted among the middle class is falling. The number of people living below the officially defined poverty level is rising. Over 90% of all Americans are broke at age 65.

None of this is accidental. It is the fulfillment of a plan by members of the CFR who comprise the hidden government of the United States. Their goal is the deliberate weakening of the industrialized nations as a prerequisite to bringing them into a world government built upon the principles of socialism, with themselves in control.

The Creature from Jekyll Island, G. Edward Griffin

indygo55's picture

The problem with that whole NWO plan from the CFR is that there are a few people in the world who don't want to go along with that plan. On group comes to mind: Vlad Putin and Company.

Still Losing Money's picture

what are you talking about? vlad is in on the plan. he just wants to be one of the big boys instead of a follower, that's all.

besnook's picture

at first, i joked that the fed was going to hold the equity market steady until t he fundamentals caught up. lately i have quit joking. i think that's the plan.

Ham-bone's picture

Interesting to note that the 0-24yr/old population ceased growing across the OECD nations in 1982, the same year the Federal Reserve began what has been a 99.9% decline in the cost of credit and has resulted in spectacular increases in debt...all to maintain demand for a total population whose growth is decelerating and declning from bottom up.

The truth of what ails us isn't debt or interest rate suppression or so many other coping mechanisms...the nexus of our "problem" is an economic system premised on growth...but infinite growth in a finite world is a pretty tough trick to pull off.  So, it was just a matter of time before something gave out...

Global population growth started decelerating from the bottom up in the advanced nations and soon spread across advanced and developing alike and spread from the bottom up.  Interesting to note that the 0-24yr/old population ceased growing across the OECD nation in 1982, the same year the Federal Reserve began what has been a 99.9% decline in the cost of credit and has resulted in spectacular increases in debt...all to maintain demand for a population whose growth is decelerating.

  • Japan Peak 0-24yr/old population - 1955, 0-24 population has declined 41% since
  • German Peak 0-24yr/old population - 1973, 0-24 population has declined 34% since
  • S. Korea Peak 0-24yr/old population - 1981, 0-24 population has declined 37% since

These are just some of massive declines among these nations and all are estimated to see their 0-24yr/old populations decline by 50%-60% from peak by the time we hit 2050 (and this assumes good economic growth between here and there...if things get rough, those numbers are likely to be far lower).  Ultimately, these massive declines are working there way through the entire population…depopulation is well under way from the bottom up.


But China, Brazil, India...they'll save us, right???

  • China Peak 0-24yr/old population - 1992, 0-24yr/old population has declined by 26% since (-152 million from peak!!!)
  • Brazil Peak 0-24yr/old population - 2006, 0-24yr/old population has declined by 9% since
  • India Peak 0-24yr/old population - Est. in 2017...and estimated to fall indefinitely thereafter.

By 2050, China and Brazil estimated to be down over 40% and India at 10% but picking up speed to the downside.


The above explains why central banks have seemingly gone mad...why governments worldwide are throwing dollars or Yen or Yuan or Euro's into the wind.  Depopulation is coming from the bottom up and declining demand is inevitable.  Unfortunately, central banks actions have retarded the business cycle and free money has created massive overinvestment and overcapacity which is now becoming so apparent in commodities and elsewhere (here).


Will Zero Hedge or any outlet ever acknowledge how simple the issue we face truly is?  They are welcome to run this story or you can read about it yourself here...(btw, this is a non-profit blog and all proceed benefit Special Olympics).




Of course, the solution is likely also simple but god awful in it's implications...a global bankruptcy where all bad debts (aka, somebody else's assets and future income) are cancelled.  Reset and hopefully start with an economic premise which can stand the test of time and not the desires of a few.


Vlad the Inhaler's picture

Let the bag holder money lenders eat shit instead of bailing them out with bankruptcy.  Public depositors get paid first.

kiwimail's picture

Since the invention of machine guns and automatic weapons the world doesnt need as many military age people.

Kefeer's picture

Total B.S. theory, but was fun to read.  Corruption is what has always killed people and economies; the love of money is the root of all kinds of evil as one outdated and ancient book of TRUTH says and has proven to be right over and over.  But what could one who actually knows everything, know?!

matinee55's picture

let us know first, I got about 1 million in credit to blow before the "reset". 

screw face's picture








Jim Who

Yen Cross's picture

   I thought the Fed. wants the yield curve to widen/steepen, so as to imply inflation on longer dated bonds.

  If they support long dated bonds with QE-4 that would drive rates lower, and imply slower future growth, while simultaneously tightening the yield curve with higher short term rates, via lifting the fed. funds rate.

Scooby Dooby Doo's picture

Scooby loves the Fed! Without the Fed the USA would be 1/100th of itself.

Yea Federal!

matinee55's picture

fairy air ponzi money, who would have guessed it's out salvation. sarc

Hohum's picture

Occam's Razor.

besnook's picture

those charts confirm my theory that the fed is doing its damnedest to keep the market even until the fundamentals catch up.

bshirley1968's picture

Never going to happen.  Catching up that is.

matinee55's picture

until the muslim leaves office if it ever does?

Wile's picture

Northy Rocks!

Kreditanstalt's picture

The Fed is trapped: they DARE NOT make any more Bullard/QE4 noises now, after they've already telegraphed a "rate hike cycle"...!


Full Nelson's picture
Full Nelson (not verified) Jan 11, 2016 10:07 PM

I always thought it was pussy that makes the world spin.