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Bad News Recoupling

Tyler Durden's picture




 

Perhaps we can finally dismiss the decoupling myths and hopes and dreams as nothing but the natural economic lags we were so clear about during the first quarter elation this year. As is clear from Citigroup's Economic Surprise Indices, Europe and the US are once again in sync from a macro-economic cycle perspective (both in terms of missed expectations and deteriorating data). What is more worrisome is the very close similarities between the last year or so evolution of the macro picture in the US and Europe with what occurred in 2008 (as is clear from the red and green ovals). We heard again and again then (as now) that markets would decouple but as the markets began to roll-over they reinforced one another in the downward spiral and we know how that ended.

 

Notice the US weakness (red arrow) accompanied by EUR stability (orange arrow) which then gives way with the two economies appearing to decouple (green oval) only to recouple (red oval) as deterioration becomes self-reinforcing after the hope of the previous decouple fades...

 

Chart: Bloomberg

 

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Tue, 05/29/2012 - 11:28 | 2471803 Cognitive Dissonance
Wed, 05/30/2012 - 01:50 | 2474301 Buttered Chiken
Buttered Chiken's picture

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Tue, 05/29/2012 - 11:31 | 2471826 Boilermaker
Boilermaker's picture

SURPRISE!!!

Tue, 05/29/2012 - 11:31 | 2471828 FieldingMellish
FieldingMellish's picture

"we know how that ended."

Yeah, gold went from sub-$700 to over $1900.

Tue, 05/29/2012 - 11:35 | 2471846 dcb
dcb's picture

well, I think the market is manipulated like crazy, and I'm not going to predict what will happen, but if one used speed line, on sso this is where the week top should be.

Tue, 05/29/2012 - 11:42 | 2471882 mrktwtch2
mrktwtch2's picture

i see a bad moon risinig..i see trouble on the way..

Tue, 05/29/2012 - 11:48 | 2471907 THX 1178
THX 1178's picture

I see bank runs and riotin'

Tue, 05/29/2012 - 12:09 | 2472013 Piranhanoia
Piranhanoia's picture

Hope you have got your shit together, hope you are quite prepared to die

Tue, 05/29/2012 - 12:14 | 2472040 _ConanTheLibert...
_ConanTheLibertarian_'s picture

no shit!

Tue, 05/29/2012 - 11:47 | 2471889 Stax Edwards
Stax Edwards's picture

as deterioration becomes self-reinforcing after the hope of the previous decouple fades...

As hope for the previous decouple fades, the purists are retooling their decoupling narrative and are expected to re-release the revised decoupling meme sometime in the fall.

Tue, 05/29/2012 - 11:46 | 2471895 SheepDog-One
SheepDog-One's picture

What? Nah we got high hopes of free monees up in this mahfakah!

Tue, 05/29/2012 - 11:46 | 2471897 Mark123
Mark123's picture

Off topic, but can someone please tell me how it is that stocks are up by 1% and bond yields are down by 1% today?  I must be missing something.

Tue, 05/29/2012 - 12:18 | 2472060 JeffB
JeffB's picture

Maybe some hot money coming in to push yields down & stocks up?

or dropping yields are making stocks a little more attractive in comparison?

Of course one would think that would push gold & silver prices up as well, I would think.

Risk off? Seems absurd.

 

Tue, 05/29/2012 - 11:52 | 2471931 q99x2
q99x2's picture

Off to the races. Back to Dow 13,000. The recession is over. And what is that? Why its a green shoot. We're decoupling from reality. I"m falling. Auntie Emme. A  rashka affainiffa rapplenoose.

Tue, 05/29/2012 - 11:53 | 2471937 spinone
spinone's picture

Dow up 110 you doomers! DJIA never goes down! Bernanke bid 4evah!

Tue, 05/29/2012 - 12:15 | 2472048 _ConanTheLibert...
_ConanTheLibertarian_'s picture

it always goes up before an epic crash...

Tue, 05/29/2012 - 12:58 | 2472260 dcb
dcb's picture

I don't mind loosing money on a trade if the trade makes sense. last week bothered me, but today really bothers me.

 

what you can see today, if you are a charter, esp usng speed line.

it is such manipulation. there is a point the algo's foer it to go to and then sell.

Tue, 05/29/2012 - 13:24 | 2472424 dcb
dcb's picture

we  borke it friday, sho shouldhave been down. I bought some emerging makets, took the profit just in case, but geeze

Tue, 05/29/2012 - 13:12 | 2472337 Shizzmoney
Shizzmoney's picture

OK DOW, just don't crash and burn UNTIL I come back from Vegas in June, k? Thx.

Tue, 05/29/2012 - 13:31 | 2472460 Nobody For President
Nobody For President's picture

Tis rather strange today, with the Consumer Confidence print of 64.9 vs an expected 69.2 and Dallas Fed Manufacturing Report printing at -5.1 vs an expected 3.0, which is a pretty fucking big miss - market goes up. WTF?

Algos forgot how to read headlines?

But the future looks good... 

Tue, 05/29/2012 - 13:52 | 2472558 macnomad
macnomad's picture

@ Cognitive Dissonance --> "Down so long it seems like up to me"

Comes from this 1928 Furry Lewis blues song :

http://www.youtube.com/watch?v=hZ-qmRS3-a4

Checkit! dirty oldtime music

 

Wed, 05/30/2012 - 07:42 | 2474713 boa74520
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