Bank of America On Why, Contrary To Popular Delusion, America Is Not Decoupling

Tyler Durden's picture

Everyone's favorite stock pitchman, Bob Pisani, who lately apparently has the capacity to learn just one line and just regurgitate it ad nauseam, was on CNBC earlier screaming how gold is down because the US is so much better than the world, when in reality gold is once again being sold to fund early margin calls (yes, institutionals are that levered right now). As for the US decoupling story, which time after time is dragged out, only to be shelved once the impact of trillions in liquidity fades, and which is never different this time, here is none other than Bank of America explaining to the likes of Pisani why "the US economy is likely to prove a faulty engine of global growth." Read - no decoupling, despite what the market may be trying to say. And yes, the market, and especially the Russell 2000 is never the economy.

From Bank of America:

US a faulty engine of global growth


It is a testament to the psychology of the marketplace that the first story on Bloomberg TOP News reads, "Economy of US Enters Sweet Spot as China's Growth Slows." The article notes that "the US once again may be emerging as a main engine for global growth -- and at an opportune time, as Europe slides into recession and China's economy decelerates." This is a risky proposition, in our view.

Consider the following:

  • Real disposable income has contracted two months in a row and is flat over the last three, even in the face of a pick-up in employment. The improvement in consumption has been financed by a drop in the savings rate, down to 3.7%, the lowest since mid-2009. Weak income + lower savings = softer consumption.
  • The housing market data has softened. Virtually every housing indicator released in February has come in below market expectations: starts, newand existing home sales. While prices likely bottom this year, they are unlikely to turn in a way that stimulates new residential construction.
  • The consensus is mistiming the impact of the shock from Europe to the US. Europe is a local shock that goes global, hitting via the confidence and trade channels. It should take time first for Europe to slide into recession and then for the US economy to weaken.
  • Investors are only now beginning to focus on the fiscal cliff at the end of the year. The range of plausible outcomes is very wide and includes some very ugly outcomes. Faced with a dense fog of uncertainty, businesses and households will likely slow down.

So, in a number of respects, the US economy is likely to prove a faulty engine of global growth.

Bob Pisani thanks BAC for explaining it so clearly, even a caveman will get it.

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vmromk's picture

When this piece of shit company finally go belly-up ?

Id fight Gandhi's picture

Bring back mark to mkt will do it.

I think I need to buy a gun's picture

bob pisani is doing a diservice to americans

I think I need to buy a gun's picture

how can he get up and work everyday making a dishonest living?

Vince Clortho's picture

 If you have no conscience, it's a great job.

Carl Spackler's picture

The way Cramer gets up every morning and does the same.

GetZeeGold's picture



Poor Bobby.......lost his credibility years ago. Just the shell is left....or is that shill?


Bansters-in-my- feces's picture

Around here we call bob,Bob Pissonme.

We have a picture hanging in the urinal bowl and  pisson him.

chipshot's picture


fonzannoon's picture

Anyone notice gasoline is up? This may be bad news for Ben. IMHO he wanted oil etc. to get knocked down with the metals. Stocks going down would just be collateral damge. I don't think he is going to get his way. Inflation is rising and if the bond auctions are a dud he is in deep shit. He may have to engage in QE at levels no one is comfortable with.

the not so mighty maximiza's picture

He WILL have to engage in QE at levels no one is comfortable with.

Dr. Engali's picture

Yeah gas refuses to budge. I don't think it will sell off unless things get really ugly in the markets. But then it will be only temporary.

Dr. Engali's picture

He doesn't have a choice. He will have to and gas will go to $6.00. Ben has to print it is just a matter of when. The polititcos will have to find somebody to blame high gas on. Iran looks like a prime target.

SheepDog-One's picture

I tell you guys what....the day Ben comes out and announces 'QE3' I promise to upload a video here of me eating my straw hat.

MachoMan's picture

Exactly...  stealth QE at best...  nothing or repos, et al, at worse.

Ben can still do this so long as the dollar can catch a bid...  sure, it means dunking other currencies under the water, which risks the whole "lets maintain a range for all the top currencies" plan, but it's also necessary given price increases in staples and consumer necessities...  he needs to blow off some steam.

And, the money changers don't care because they'll win on the whipsaw volatility...

The big issue though is each round, the fighter becomes more and more tired...  eventually growing weary and punch drunk...  and more susceptible to knockout/stoppage on shaky legs.  The system becomes more and more fragile with each successive cycle.

fonzannoon's picture

what if he does not announce it, but the money supply just expands for "other reasons"?

Amagnonx's picture

Well, I'm not sure he will announce it - but I can't see any alternative.


What do you see as the alternative path that might be taken?  Borrow from China, or the ECB?  Or cut spending by a heap?  I'm not sure any of those measures are credible - I guess the US could keep hitting up China for cash, but how much more will they take?

Vince Clortho's picture

Seems like the options are limited  to:

1. Hyperinflation

2. Massive Deflation

3. War

fonzannoon's picture

As Dr. Engali said take option 1 and blame it on choice number 3 (Iran)

SheepDog-One's picture

Those who think they have another option here to just 'coast along' may as well be talking about smooth sailing in a Cat 5 Shiticane in a rubber dingy.

fonzannoon's picture

I did not see coast along as an option. I saw Hyperinflation, massive deflation and war as the alternatives. People like me thinking they will do QE are not saying that they are right to do it. Most probably fall into the massive deflation camp and let the dust settle and start over.

Like I said yesterday by the way I am not your serial junker for whatever it's worth.

LongBalls's picture

How else is the government going to finance the $1.2T deficit? And if Obama care gets approved? He may not print in the short term. But he WILL print. 

SheepDog-One's picture

For all anyone knows, they may be done monetizing the debt, what some people call 'printing', and ready to move along to the next phase. 

Amagnonx's picture

Pick Ben for a default before elections man?  Hmm - not my opinion, he will print because there is no revenue and invading Iran is gunna cost mega bucks.  Though I have a feeling USSEnterprise is going to get sunk by IDF torpedoes, then Israel will lob nukes at Iran because 'they done it - I swear'.


China and Russia might actually do something then I guess - I think we are being forced into WWIII  -is everything just going to plan .. ?


Why should people be at the mercy of psychopathic states - lets all just ditch the retarded game and declare ourselves soveriegn beings who owe no allegiance to these out of control warmongers.

KickIce's picture

Not suprising with all the refineries being shut down.  They'll need more significant drops in crude before gas drops.

SheepDog-One's picture

LOL, the more demand drops and production slows, the HIGHER gas price goes! Watch and see!

youngman's picture

I heard his rant this AM....he sounded desperate to try to convince the sheeple that the USA is great.....all good...spend spend spend...the gold selloff is either a raid another defaulted hedge one is selling gold to buy Apple....

I think I need to buy a gun's picture

dont worry china will buy anything americans don't want to hold

Carl Spackler's picture

Not so fast, my friend.  The Chinese are tightening the reins too amid domestic uncertainty.

Article in April edition of Wine Spectator explains how he Chinese have suddenly stopped buying Bordeaux futures, and the price of the Bordeaux futures markets has dropped 40% this year.

The reasons cited...Chineses investors are bracing for the real estate bubble to pop, and are strapped for cash as the newly-developed real estate they must now service the mortgages for has massive vacancy and little cash flow.

Amagnonx's picture

Yeah - they are going to get hammered, Communists out in the next 5yrs?  Maybe.  If they could swing it, they should go buy up $1 tril in US real estate - its not cheap, but its hella better than paper.

SheepDog-One's picture

Got to somehow get retail to panic buy their stock bubble!

Dick Darlington's picture

 the Russell 2000 is never the economy


But but but!!! Lol!

gjp's picture

$5 coffee drinkers are somehow decoupling, it seems.  Another new high in Starbucks, a $40b coffee company trading at 35x earnings.

Apple barely down, carnage in commodities and overseas markets.  Central Planner Nirvana lives on ...

Dr. Engali's picture

No that's not Robo. But not a bad impression.

gjp's picture

I'm just trying to show how badly our 'markets' are allocating 'capital' as a result of central planning.

Markets may be down today, but the bet on US (over)consumption just keeps winnning, and it disgusts me so much I have to post about it.

evolutionx's picture

What is this?


Even Congress Wants To Know What The NSA Is Doing With This $2 Billion Utah Spy Center


Maybe you've heard of it and maybe you haven't, but in Bluffdale, Utah alongside one of the largest polygamist sects in America, the NSA is building a one-million-square-foot data collection center — five times the size of the U.S. capital.

Dr. Engali's picture

Even my 71 year old mother in law knows about this. It shocked me when she started talking about it. So it seems this is on peoples radar anyway.

q99x2's picture

You have CNBC at the first 100 point DOW drop blaming the FED because they won't print more. The Bernank has to do road tours for PR. And, Geithner is getting out while he still can. And, here we go into the ravine with the rest of the train.

Rumor PLease.

Confundido's picture

Somebody wrote an interesting piece on this decoupling lie, back in January: "

SheepDog-One's picture

'US economy the engine to fuel global growth'?

BAAH HA HA what economy? You mean borrowing and consuming, and printing fake money? GEE yea theyre might be a problem with that mighty economic engine! Its a lawnmower engine in a semi truck!

WoodMizer's picture

That's why bernanke is shifting as fast as he can.

gjp's picture

just sickening isn't it?  More like the bomb that will blow up the global economy.  The Anglo Saxon economies and their high finance scams are going to bring everyone down, and yet these sycophants can still trumpet their economic superiority with a straight face?  Sickening.

surf0766's picture

gas hit $3.93 here ..  7 more cents and economy stops. Just like it did in 2008 and 2011.


marcusfenix's picture

$ 4.03 where I live, and the company I work for suddenly decided "free delivery" was no longer a good idea.

hettygreen's picture

Add a buck and change to that figure in the city I live in north of the 49th. Second worst unemployment rate for a large Canadian city too. You'd never it know it though by the dual exhaust spewing, late model large SUV contribution to traffic congestion around here at all fucking hours of the day. Doesn't matter because our banking shit smells like lavender and  ho(u)sing is not in a bubble. We are all feeling sooooo wealthy and superior to you poor yanks!

What was that about pride coming before the fall again?

SheepDog-One's picture

Just the way I see it, they can carrot and stick and promise this or that all they like but $4-$5 gas shuts the whole thing down, and printing more only makes gas rise higher. Time to face the facts, this train is out of track here.