Even The Wall Street Journal Thinks The Market Is Broken

Tyler Durden's picture

The Wall Street Journal this morning echoed many of the questions we've raised over the past several years about the sanctity of global markets.  How are equity markets signaling economic strength while bond markets trade at the tightest levels ever?  Why do gold prices soar while inflation remains "stubbornly" low?  The answer, of course, lies in the Central Banking grand experiment that has distorted almost every corner of global markets.  Per the WSJ:

What exactly is the market trying to say about the state of the global economy? Do the recent record highs in U.S. stock markets signal growing confidence in the recovery, or do soaring government borrowing prices and flattening yield curves as borrowing costs tumble at even long maturities signal market fears that the global recovery is a distant dream?

 

How does one reconcile this year’s 30% rise in the price of gold—usually considered a hedge against inflation—with long-term swap rates suggesting inflation will remain low
for years? And how does one explain the strength of European markets as many banking shares are trading at more distressed levels than at the height of the global financial crisis?

 

One answer to these disparities is that the markets have become so distorted by central bank activity that they are no longer transmitting very useful information about the economy at all.

As we've discussed on several occasions, low interest rates have created a number of distorted incentive structures that render typical market signals useless.  Perpetually declining interest rates have forced pensions to indiscriminately buy the long end of the the government bond curve in a desperate attempt to match asset duration with their liabilities (see our post "Pension Duration Dilemma - Why Pension Funds Are Driving The Biggest Bond Bubble In History").  Meanwhile equity markets continue to soar to all-time highs, despite lackluster or declining earnings (see "The S&P Is Now Set To Report Its Second Consecutive Annual Earnings Drop Since The Financial Crisis"), on the premise that low-single-digit earnings yields are somehow adequate compensation for equity risk...an assumption they base on the low yields of the completely manipulated long-end of the curve.  The circularity of the many arguments is truly mind numbing.

And meanwhile, proving the pure lunacy of global equity flows, Chris Chapman of Manulife Asset Management recently pointed out that equity prices are blatantly being determined by the market's interpretation of what Central Banks may or may not do.  Per a recent Bloomberg interview, Chapman pointed out:

“The message from the Fed has been conflicting and often not very clear.  So, it seems when the hawks talk up the possibility of a hike, the market discounts it as just trying to get more priced in to give themselves the option to hike rather than actually being interested in hiking."

But, at some point, of course, the madness will all end.  As the WSJ points out, Central Banks around the world have made just about every accommodation they can make (we tend to agree given the staggering $13 trillion of negative-yielding debt around the world, see our post "With Over $13 Trillion In Negative-Yielding Debt, This Is The Pain A 1% Spike In Rates Would Inflict") yet there is no end to the number of pending crises that can bring it all crashing down.  

The prognosis is therefore likely to be more of the same: a lackluster recovery, kept alive by increasingly extravagant central bank action—but with one proviso: The biggest risk to the markets is political.

 

This has been true for several years, of course, but the difference now is that with monetary policy approaching its limits, there is little central banks may be able to do to offset future shocks.

 

With a packed political agenda—including referendums this year in Hungary and Italy and elections next year in the Netherlands, France and Germany, all of which could raise fresh questions about Europe’s cohesion—there is no shortage of events that could throw the recovery off track. Perhaps that is why the price of gold, the ultimate safe haven, has been rising.

At some point we'll revert to a world where good news is good and bad news is bad but we suspect that a lot of pain will have to be endured to get form here to there. 

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falconer's picture
falconer (not verified) Aug 19, 2016 1:55 PM

Like the WSJ doesn't know why equities are up. They really do think we're all stupid.

JRobby's picture

W$J is a POS who cares what they say???????
Really?

knukles's picture

Hold the boat.  Before we all start jumping to illogical conclusions, let's hear what Paul Krugman has to say.

Here2Go's picture
Here2Go (not verified) knukles Aug 19, 2016 2:48 PM

I say... Let's not... (& jump to illogical conclusions anyway just for the fuck of it).

DavidC's picture

knukles,
Brilliant! That made me laugh!

DavidC

SomethingSomethingDarkSide's picture

Most people are in fact that stupid.  Idiocracy - we're living it.

Here2Go's picture

^^^sponsored by Carl's Jr.^^^

Killdo's picture

we definitely are - I saw that movie for the first time a couple of months ago and it felt like a documentary. 

So did Jane Jacob's book DARK AGE AHEAD. 

Both have been written about a decade ago

JRobby's picture

It's Murdoch owned, it's a POS. Go back to your cartoons down voters.

GUS100CORRINA's picture

Things will only get better when the 'TRUTH' becomes the norm and not the exception.

We can get better, but TRUTH is required.

It is going to take time because:

1) TRUTH IS TREASON IN AN EMPIRE OF LIES.

2) A Conservative gets mad when you tell him a LIE and a Liberal gets mad when you tell him the TRUTH. 'Quote from Teddy Roosevelt'

TRUTH is the Cure. It will mean PAIN initially, but HEALING will eventually occur.

 

reader2010's picture

"The point is to change it", 

FireBrander's picture

If the FED's plan fails, they'll blame the politicians for too much spending.

FireBrander's picture

Interest rates can NEVER rise or it's light out.

0% SEVEN year car loans...end that and kiss car sales goodbye.

3% "lifestyle" loans from banks...end that and kiss the "Vacation" Industry goodbye.

Our ecomony is 100% fueled by free, or near free, money...meaning everyone is broke...no free money, no shoppy, shoppy...

Never One Roach's picture

Furniture stores also....5 year zero interest loan free shipping on all sorts of c-r-a-p.

 

At least the stores still in bidniz. Most have gone belly-up in this "robust Recovery" economy.

Raw land prices also sinking pretty fast across the south and west. Lan that was selling for over $12,000/acre is now listed at less then $3,500 with zero takers.

They are reverting slowly but surely to the norm. However, they are all mortgaged to the hilt in this zirp environment so the Bailout will be to the bankers again.

HalinCA's picture

I'm on the market for that kind of land deals ... what states? What counties?

CJgipper's picture

If we close borders and end trade deals, we can begin to normalize rates a year or so late when we're opening new factories in the US.

AnonTrader's picture

let's face it - as madoff said - its the bigger ponzi in history

buzzsaw99's picture

But, at some point, of course, the madness will all end.

wrong motherfucker, wrong.

RawPawg's picture

my position is covered

that's the only thing that matters

Keep Stacking

Bill of Rights's picture

In other more important news

Obama To End Single-Sex Bathrooms on Federal Property

 

http://www.breitbart.com/big-government/2016/08/18/obama-administration-...

rz the 1st's picture

Looks like time to go long nail guns, until it's turned over to the IRS.

Keep reloading.....

xrxs's picture

Somebody's been watching Designated Survivor

richsob's picture

Hold on.  Just wait until if Hillary Clinton, Nancy Pelosi, Huma Abedin, Maxine Waters, Elizabeth Warren, Diane Feinstein, etc. get their hands on the real power in this country.  That bunch working with Janet Yellen would push this country over the edge and there would never be any way to save ourselves.  It would be over.  Period.

Casey Jones's picture

People talk about the WSJ as if it were the old Journal and not the Murdoch propaganda machine that it is today. Another major feather in the cap for the CIA's Operation Mockingbird.

Nick Jihad's picture

True - it's hard not to think of the WSJ as it used to be, especially cuz i haven't read it ini years.

the grateful unemployed's picture

its not that hard, the fed had been inflating the monetary base, they want inflation, they would like to raise their target from 2 to 3%, and all this inflation inflation inflation is baked into the cake, invest appropriately

Killdo's picture

I spent most of last year aborad and when I returned to San Francsico, pretty much everythng was 10-30% more expensive (i.e. meat at Whole Foods, rent...)

the grateful unemployed's picture

and if you migrate out to the burbs a little you'll find prices havent moved much. in SF the tail (rent) is wagging the dog and though clearly you have a closed market (like hawaii) and you have asset bubble reflation from the fed pushing housing through the roof, service workers are going to raise their rates as well. so i drive a cab in SF and lived in Daly City i might be living better (pardon me my comparisons are twenty years off but you get it) its like shopping for gas at the station by the freeway or buying it at the one on the other side of town.

ThisUsernameFollowsTheRules's picture

The FED is going to restart QE. The markets are going to fly. Every time we fall a few percent they go into crisis mode.

roadhazard's picture

WSJ = Sometimes you are the windshield and sometimes you are the bug.

Goatboy's picture

Every market is a scam for at least one side.

wedderburn's picture

we're going up a lot lot more

WSJ moaning, billionaires shorting...... shorts will be taken out propelling the market higher

 

zerohedge is the worst guide to the stockmarket on planet earth

 

 

Radical Marijuana's picture

"At some point we'll revert to a world where good news is good and bad news is bad but we suspect that a lot of pain will have to be endured to get form here to there."

The central banking "experiments" are simply the extrapolation of the historical experiment of Neolithic Civilization based upon being able to back up lies with violence. The central banking "experiments" are based upon public governments ENFORCING FRAUDS by private banks, in ways which necessarily became exponentially more fraudulent.

The typical views expressed in Zero Hedge articles and comments are gross understatements of the degree to which the political economy has become about 99% based on ENFORCED FRAUDS, which are becoming exponentially more FRAUDULENT.

Successful finance based upon ENFORCING FRAUDS as symbolic robberies has been getting worse,faster, for the previous few Centuries, while those developments were based on thousands of years of previous history of successful warfare based upon deceits treacheries.

The typical content published on Zero Hedge grossly understates the degree to which civilization necessarily operates according to the principles and methods of organized crime, while only being somewhat superficially correct about the degree to which central banks, as the central institutions based upon ENFORCING FRAUDS, social successfulness necessarily results in civilization becoming exponentially more FRAUDULENT.

While more and more people are noticing the increasingly blatant ways that central banks are the best organized gangs of criminals, which effectively control governments to become the biggest forms of organized crime, despite that becoming more painfully obvious every day, in every way, the vast majority of people are only noticing those apparent anomalies through superficial analysis, which never goes through deeper paradigm shifts with respect to their perceptions of those political problems.

The problems that Neolithic Civilization is based upon being able to back up lies with violence, while advancing physical science and technology has enabled those become exponentially bigger and BIGGER LIES, are way worse than those who only superficially view the "experiments" in monetary policies made by central banks as being "the problem."

To "revert to a world where good news was good news, and bad news is bad news" would require INVERTING almost everything regarding the ways that almost everyone thinks and communicates, because the history of the social successfulness of warfare based on backing up deceits with destruction, becoming successful finance based on enforced frauds has INVERTED EVERYTHING.

Most people are only superficially noticing that, as the apparent anomalies become more painfully obvious, since the established systems based upon ENFORCING FRAUDS necessarily become exponentially more FRAUDULENT.

It is practically impossible to fully imagine or completely comprehend how every economic decision is being made through fundamentally fraudulent financial accounting systems. Furthermore, it is barely possible to exaggerate the degree to which civilization has become based on thinking about everything in the most absurdly backward ways possible, while, at the same time, it appears to most people that they are being socially successful because of the degree to which they have adapted to living INSIDE ENFORCED FRAUDS.

In order to "revert to a world where good news is good and bad news is bad" is absolutely sure to result in that "lot of pain will have to be endured to get form here to there."

Indeed, theoretically speaking, the magnitudes of cognitive dissonance that enough people would have to suffer through in order to understand how and why governments are the biggest forms of organized crime, dominated by the best organized gangs of criminals, and therefore, that central banks are able and willing to engage in various "experiments" to create more and more "money" out of nothing as debts, to unprecedented degrees, are due to the basic social facts that civilization necessarily operates according to the principles and methods of organized crime, while the intensely paradoxical corollaries to that are the ways that the biggest and best organized gangs of criminals are able to get away with publicly presenting themselves AS IF THEY WERE NOT CRIMINALS.

The largest scale ENFORCED FRAUDS, operated by central banks, continue to be publicly presented AS IF THOSE WERE NOT FRAUDULENT.

Furthermore, those are only the highest tips of an enormous iceberg of ENFORCED FRAUDS which are the basic structure of the pyramid systems known as Neolithic Civilization.

Triumphantly being able to back up lies with violence for thousands of years has resulted in EVERYTHING BEING INVERTED, to degrees that are far beyond what most people are able and willing to begin to seriously consider. The ways that central banks are ENFORCING FRAUDS within that overall context are some of the leading examples of those phenomena. However, the INVERSIONS, that have apparently stopped "good news from being good news, and bad news from being bad news," have actually been built into the dominate natural languages, and philosophy of science.

In that context, it is barely possible to exaggerate the degree to which civilization has been thoroughly INVERTED, and therefore, perverted! That public governments ENFORCE FRAUDS by private banks, and thus, that the central banks are becoming exponentially more FRAUDULENT inside of that overall context, are merely the most noticeable ways that civilization as a whole has become runaway criminal insanities, due to its triumphant dishonesties becoming more and more psychotically out of touch with relatively objective realities.

The necessary "corrections" to "markets" that are about 99% rigged by about 99% fundamentally fraudulent financial accounting systems, will surely take more "pain." Indeed, I doubt that the relatively mainstream morons and professional hypocrites working for the Wall Street Journal are able and willing to face facts about everything they are participating within being based on ENFORCED FRAUDS BECOMING EXPONENTIALLY MORE FRAUDULENT!

I find it quite superficial to merely recognize that "markets have become so distorted by central bank activity that they are no longer transmitting very useful information about the economy at all."

The ways that almost everyone thinks about themselves has been totally distorted, indeed utterly INVERTED, by so much triumphant dishonesty, for so long, indeed, for generation after generation, for thousands of years. The rise of the international bankers' triumphant dishonesties have been more and more dominating the globalized political economy, almost everywhere, almost totally, for Centuries, while that overall system based upon ENFORCED FRAUDS EXPONENTIALLY INCREASED ITS OVERALL FRAUDULENCE.

There is NO way that the Wall Street Journal is going to public admit and address the basic facts that everything Wall Street does is almost totally based upon public governments ENFORCING FRAUDS by private banks, in order to enable those banks to engage in symbolic robberies through those ENFORCED FRAUDS, in ways which necessarily became exponentially more FRAUDULENT.

The only things which are changing are due to that EXPONENTIALLY INCREASING FRAUDULENCE becoming more and more blatantly obvious apparent anomalies, such as that ""markets have become so distorted by central bank activity that they are no longer transmitting very useful information about the economy at all."

However, recognizing that only superficially skims the surface of the degree to which everything that people think, and therefore, communicate about, is done through the dominate natural languages and philosophical presumptions, based upon almost total INVERSIONS of the perceptions of everything, on much more profound levels than the vast majority of people are able to even barely begin to suspect.

The vast majority of people never understood the previously established systems of paper money frauds, backed by gunpowder weapons. Most of those who few who are now more and more noticing the ways that there have developed globalized systems of electronic money frauds are still NOT thinking in more deeply critical ways regarding that, because they are NOT remotely close to going through the series of intellectual scientific revolutions and profound paradigm shifts needed to admit and ad

P.S.

Regarding the WSJ, see my comment, buried near the end, under:

http://www.zerohedge.com/news/2016-08-15/wsj-editorial-board-unleashes-t...

WSJ Editorial Board Unleashes On Trump, Says He Should "Turn Nomination To Mike Pence" If He Can't Change

Westcoastliberal's picture

Let me sum it up for you RM: Things are fucked up and shit.

Radical Marijuana's picture

Although human beings and civilization participate in the transcendental perfection of energy BEING conserved, the ways that human beings have developed a dominating civilization based upon the maximum possible deceits and frauds indicates that the most probable finite futures for that kind of civilization ARE "fucked up and shit."

There are philosophical consolations in remembering that when civilization manifests runaway criminal insanities, that is still consistent with the overall laws of nature, which continue to operate, even though civilization overall becomes more  collectively suicidal. Everything that depends upon the laws of nature will continue working ... Although, tragically, that also includes that the excessive successfulness based on ENFORCING FRAUDS will continue to become exponentially more FRAUDULENT, until that necessarily drives series of psychotic breakdowns, crazy collapses into chaos, as severe social storms blow through, since more and more energy is pumping up and UP systems based upon being able to back up lies with violence, which still never stops those lies from being false, no matter how much violence can be applied. Rather, the paradoxical final consequences are that the more that legalized lies are able to be backed up by legalized violence, the worse the longer term results from doing that become!

For civilization to become criminally insane, because everything it does is based upon some people ENFORCING FRAUDS against other people, does NOT violate the laws of nature, but rather, continues to be consistent with the laws of nature. But nevertheless, there will surely be LOTS OF PAIN caused by civilization becoming so totally psychotic that everything it does becomes more and more "fucked up and shit."

The GREAT PARADOXES driven by the unprecedented monetary policy "experiments" being conducted by central bankers are that those boil down to the excessive successfulness of being able have public governments ENFORCE FRAUDS by private banks. The more socially successful doing so becomes, then the worse the social polarization and destruction of the natural world also becomes. However, due to the ways that the vicious spirals of political funding operate, through the privatization of the profits, and the socialization of the losses, the increasing losses, in the form of social polarization and destruction of the natural world, can NOT stop the vicious spirals of political funding still reinvesting the profits from frauds in more frauds, such that civilization as a whole becomes exponentially more FRAUDULENT, but yet, everyone who personally benefits from that in the short to medium term either will not, or can not, prevent that overall resulting in civilization becoming exponentially more "fucked up and shit" in the longer term.

Radical Marijuana's picture

"At some point we'll revert to a world where good news is good and bad news is bad but we suspect that a lot of pain will have to be endured to get form here to there."

The central banking "experiments" are simply the extrapolation of the historical experiment of Neolithic Civilization based upon being able to back up lies with violence. The central banking "experiments" are based upon public governments ENFORCING FRAUDS by private banks, in ways which necessarily became exponentially more fraudulent.

The typical views expressed in Zero Hedge articles and comments are gross understatements of the degree to which the political economy has become about 99% based on ENFORCED FRAUDS, which are becoming exponentially more FRAUDULENT.

Successful finance based upon ENFORCING FRAUDS as symbolic robberies has been getting worse,faster, for the previous few Centuries, while those developments were based on thousands of years of previous history of successful warfare based upon deceits treacheries.

The typical content published on Zero Hedge grossly understates the degree to which civilization necessarily operates according to the principles and methods of organized crime, while only being somewhat superficially correct about the degree to which central banks, as the central institutions based upon ENFORCING FRAUDS, social successfulness necessarily results in civilization becoming exponentially more FRAUDULENT.

While more and more people are noticing the increasingly blatant ways that central banks are the best organized gangs of criminals, which effectively control governments to become the biggest forms of organized crime, despite that becoming more painfully obvious every day, in every way, the vast majority of people are only noticing those apparent anomalies through superficial analysis, which never goes through deeper paradigm shifts with respect to their perceptions of those political problems.

The problems that Neolithic Civilization is based upon being able to back up lies with violence, while advancing physical science and technology has enabled those become exponentially bigger and BIGGER LIES, are way worse than those who only superficially view the "experiments" in monetary policies made by central banks as being "the problem."

To "revert to a world where good news was good news, and bad news is bad news" would require INVERTING almost everything regarding the ways that almost everyone thinks and communicates, because the history of the social successfulness of warfare based on backing up deceits with destruction, becoming successful finance based on enforced frauds has INVERTED EVERYTHING.

Most people are only superficially noticing that, as the apparent anomalies become more painfully obvious, since the established systems based upon ENFORCING FRAUDS necessarily become exponentially more FRAUDULENT.

It is practically impossible to fully imagine or completely comprehend how every economic decision is being made through fundamentally fraudulent financial accounting systems. Furthermore, it is barely possible to exaggerate the degree to which civilization has become based on thinking about everything in the most absurdly backward ways possible, while, at the same time, it appears to most people that they are being socially successful because of the degree to which they have adapted to living INSIDE ENFORCED FRAUDS.

In order to "revert to a world where good news is good and bad news is bad" is absolutely sure to result in that "lot of pain will have to be endured to get form here to there."

Indeed, theoretically speaking, the magnitudes of cognitive dissonance that enough people would have to suffer through in order to understand how and why governments are the biggest forms of organized crime, dominated by the best organized gangs of criminals, and therefore, that central banks are able and willing to engage in various "experiments" to create more and more "money" out of nothing as debts, to unprecedented degrees, are due to the basic social facts that civilization necessarily operates according to the principles and methods of organized crime, while the intensely paradoxical corollaries to that are the ways that the biggest and best organized gangs of criminals are able to get away with publicly presenting themselves AS IF THEY WERE NOT CRIMINALS.

The largest scale ENFORCED FRAUDS, operated by central banks, continue to be publicly presented AS IF THOSE WERE NOT FRAUDULENT.

Furthermore, those are only the highest tips of an enormous iceberg of ENFORCED FRAUDS which are the basic structure of the pyramid systems known as Neolithic Civilization.

Triumphantly being able to back up lies with violence for thousands of years has resulted in EVERYTHING BEING INVERTED, to degrees that are far beyond what most people are able and willing to begin to seriously consider. The ways that central banks are ENFORCING FRAUDS within that overall context are some of the leading examples of those phenomena. However, the INVERSIONS, that have apparently stopped "good news from being good news, and bad news from being bad news," have actually been built into the dominate natural languages, and philosophy of science.

In that context, it is barely possible to exaggerate the degree to which civilization has been thoroughly INVERTED, and therefore, perverted! That public governments ENFORCE FRAUDS by private banks, and thus, that the central banks are becoming exponentially more FRAUDULENT inside of that overall context, are merely the most noticeable ways that civilization as a whole has become runaway criminal insanities, due to its triumphant dishonesties becoming more and more psychotically out of touch with relatively objective realities.

The necessary "corrections" to "markets" that are about 99% rigged by about 99% fundamentally fraudulent financial accounting systems, will surely take more "pain." Indeed, I doubt that the relatively mainstream morons and professional hypocrites working for the Wall Street Journal are able and willing to face facts about everything they are participating within being based on ENFORCED FRAUDS BECOMING EXPONENTIALLY MORE FRAUDULENT!

I find it quite superficial to merely recognize that "markets have become so distorted by central bank activity that they are no longer transmitting very useful information about the economy at all."

The ways that almost everyone thinks about themselves has been totally distorted, indeed utterly INVERTED, by so much triumphant dishonesty, for so long, indeed, for generation after generation, for thousands of years. The rise of the international bankers' triumphant dishonesties have been more and more dominating the globalized political economy, almost everywhere, almost totally, for Centuries, while that overall system based upon ENFORCED FRAUDS EXPONENTIALLY INCREASED ITS OVERALL FRAUDULENCE.

There is NO way that the Wall Street Journal is going to public admit and address the basic facts that everything Wall Street does is almost totally based upon public governments ENFORCING FRAUDS by private banks, in order to enable those banks to engage in symbolic robberies through those ENFORCED FRAUDS, in ways which necessarily became exponentially more FRAUDULENT.

The only things which are changing are due to that EXPONENTIALLY INCREASING FRAUDULENCE becoming more and more blatantly obvious apparent anomalies, such as that ""markets have become so distorted by central bank activity that they are no longer transmitting very useful information about the economy at all."

However, recognizing that only superficially skims the surface of the degree to which everything that people think, and therefore, communicate about, is done through the dominate natural languages and philosophical presumptions, based upon almost total INVERSIONS of the perceptions of everything, on much more profound levels than the vast majority of people are able to even barely begin to suspect.

The vast majority of people never understood the previously established systems of paper money frauds, backed by gunpowder weapons. Most of those who few who are now more and more noticing the ways that there have developed globalized systems of electronic money frauds are still NOT thinking in more deeply critical ways regarding that, because they are NOT remotely close to going through the series of intellectual scientific revolutions and profound paradigm shifts needed to admit and address the central FACTS regarding central banks, that those are the single most significant institutions which express the ways that civilization NECESSARILY operates according to the principles and methods of organized crime, such what central banks actually DO are the greatest manifestations of civilization based upon being able to ENFORCE FRAUDS!

P.S.

Regarding the WSJ, see my comment, buried near the end, under:

http://www.zerohedge.com/news/2016-08-15/wsj-editorial-board-unleashes-t...

WSJ Editorial Board Unleashes On Trump, Says He Should "Turn Nomination To Mike Pence" If He Can't Change

Crisismode's picture

Once was barely bearable.

TWICE was painful/.

THREE TIMES IN A ROW!?!?!

FIGURE OUT HOW TO POST REPLIES, FUCKHEAD!!!

 

Radical Marijuana's picture

Sorry, a cat walked across the key board while I was almost finished writing, BUT, I did not realize that when I returned to the Zero Hedge comment page that the message I had been working on had already be posted twice ...

MASTER OF UNIVERSE's picture

WSJ sucks n' blows more than Central Banksters, and Alan Greenspan, plus Lawrence Samuelson Summers, and Phil Gramm, put together.