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David Rosenberg's New Normal: "The Economy Does Not Drive The Markets Any More"

Tyler Durden's picture




 

Bill Gross may be credited with inventing the term 'the New Normal', although his recommendation to purchase gold above all other asset classes, something which only fringe blogs such as this one have been saying is the best trade (in terms of return, Sharpe Ratio, and the ability to sleep soundly) for the past three and a half years, he is sure to be increasingly ostracized by the establishment, and told to take all his newfangled idioms with him in his exile to less than serious people land. Which takes us to David Rosenberg, who today revisits his own definition of the New Normal. And it, too, is just as applicable as that of the Pimco boss: "The new normal is that the economy doesn't drive markets any more." Short and sweet, although it also is up for debate whether the economy ever drove the markets in the first place. But that would open up a whole new conspiratorial can of worms, and is a discussion best saved for after Ben Bernanke decides to save the "housing market" by buying more hundreds of billions in MBS and lowering mortgage yields further, even though mortgage rates already are at record lows (something that mortgage applications apparently couldn't care less about as we showed last week), while "avoiding" to do everything in his power to boost the S&P, which recently was at 5 year highs, and certainly "avoiding" to listen to Chuck Schumer telling him to do his CTRL+P job, and "get to work" guaranteeing Schumer's donors have another whopper of a bonus season.

From Gluskin Sheff:

THE NEW NORMAL REVISITED

Markets are going in the opposite direction of the world economy if you're positioned fundamentally, you're positioned against these clowns.

John Burbank, Passport Capital, ECB Bazooka Faces Pefipherai Tests. page 12 of the weekend FT

What's extraordinary is that the euro is rallying almost because the ultimate taboo of central banking is being violated, the proactive financing of fiscal imbalances through the central bank balance sheet Before this all other QE was to further monetary policy when the interest rate lever had been exhausted. Here it's financing a government deficit because the market won't is the ECB going to be a fiscal inquisitor or enabler?

Louis Bacon. Moore Capital (same article)

Indeed, the data and the markets have gone their separate ways just about everywhere on the planet because of this ever-rising threat of additional policy stimulus (see Optimism over Central Banks Lifts Risky Assets on page 11 of the weekend FT). Shorts are getting squeezed as a result. Wednesday is a key day from that perspective ... the consensus is now widespread that the Fed will announce a $600 billion QE extension, likely in MBS.

Who would have thought that in a week that saw such an awful pair of data from two critical reports like ISM and nonfarm payrolls that the S&P 500 would have managed to rally 2_2% and the Nasdaq hit a new 12-year high? Not even the main earnings development, Intel cutting its sales guidance, could elicit much of a market reaction.

Page M3 of Barron's (The Trader) cites three reasons for the extended bullish sentiment last week_

1.    An electrifying speech by former President Bill Clinton.

2.    Mario Draghi pronounced the euro to be "irreversible- and laid out a plan to stabilize beleaguered euro-zone nations_

3.    China did its part for the markets Friday when it announced a plan to spend $157 billion on 60 different infrastructi ire projects.
Clinton. Draghi. China.

The horrible employment data? That showed up in the tenth paragraph (imagine zero job growth outside of three sectors- leisure, professional services and health/education).

The new normal is that the economy doesn't drive markets any more.

The correlations today are tighter with yield spreads between Spain and Germany (the overall positive tone globally coincided with Spanish 10-year yields sliding below 6% for the first time since May alongside a 20 basis point jump in German bund yields ... this has become the pulse for financial market confidence in general). In fact, we ran correlations between daily changes in 10-year spreads and in the S&P 500 level and found that the correlation has gone from -13% from 2000-2011 to -33% since 2011 (2011 to now, meaning widening in spreads is associated with negative returns on the S&P500 and that inverse relationship has been magnified nearly three-fold in the past two years).

 

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Mon, 09/10/2012 - 19:32 | 2780219 Michael
Michael's picture

I'm voting for the Mulatto guy on the Presidential ticket.

Revenge is a dish best served cold.

Mon, 09/10/2012 - 19:56 | 2780285 hannah
hannah's picture

i'm voting for the gelato dude....!...it's even colder.

Tue, 09/11/2012 - 07:45 | 2781095 orangedrinkandchips
orangedrinkandchips's picture

"that is why you fail"

 

Yoda

Mon, 09/10/2012 - 19:35 | 2780226 zorba THE GREEK
zorba THE GREEK's picture

Zorba's wife drives the economy. She spends money like there is an expiration date on it.

Mon, 09/10/2012 - 19:43 | 2780236 LMAOLORI
LMAOLORI's picture

 

 

Reminds me of MOO chelle her vacations and servants alone could feed thousands of hungry children and look at the U.S. debt 

The global debt clock

 

Our interactive overview of government debt across the planet

http://www.economist.com/content/global_debt_clock

 

Mon, 09/10/2012 - 20:32 | 2780368 knukles
knukles's picture

What was the number, complimentary to Moo chellos that Nazi Pulozi wuz spendin' on her aireoplane bewteen DC and Sanfranzitko for food and booze a month?  I think it was about $100,000/month.
Wuz reported by the SFEnqueerer....

Talk about leeching off the peasantry.
Welcome to the New Versailles.

Mon, 09/10/2012 - 20:41 | 2780380 Whoahthere
Whoahthere's picture

Our dolt of a first nazi lady (recipient of affirmative action positions because she herself is too toxic to make it on her own), always telling us how to eat, breathe, shit, and then stands there in all her calorie-infested existence, extolling the virtues of her White House garden (Yeah, like she actually gardens).  The garden is planted in soil so heavily tainted with lead and other pollutants, it made DC news for about a day.  Since then, 4 long years ago, nothing is ever mentioned about the toxic levels of crap each and every veggie the first family stuffs down their ill-gotten throats.

The piece de resistance was when some cooking show had all of the veggies used for that day's competition grown from the White House garden. Genius.

Mon, 09/10/2012 - 21:15 | 2780454 Fecklesslackey
Fecklesslackey's picture

Eugenics in action

Mon, 09/10/2012 - 19:43 | 2780254 Jay Gould Esq.
Jay Gould Esq.'s picture

"Page M3 of Barron's (The Trader) cites three reasons for the extended bullish sentiment last week_"

"1. An electrifying speech by former President Bill Clinton."

It is no wonder that Barron's is now little more than a $5 ( cover priced ) weekly financial pamphlet. Amazing that it still exists in hard copy...a "program guide," of sorts, for that handful of dedicated CNBC viewers.

Mon, 09/10/2012 - 20:46 | 2780396 knukles
knukles's picture

"All the news that fits"

Mon, 09/10/2012 - 20:17 | 2780332 RSloane
RSloane's picture

Nice, and apt, description.

Tue, 09/11/2012 - 00:22 | 2780794 SmackDaddy
SmackDaddy's picture

good one.  i like the expiration date bit...

Mon, 09/10/2012 - 19:35 | 2780227 RSloane
RSloane's picture

The data and the markets have gone their separate ways! Duh!!! Really?!?! Duh!!

Mon, 09/10/2012 - 20:52 | 2780409 FreedomGuy
FreedomGuy's picture

The markets are completely political. The economy is tortured between economic laws of physics and unending interventions by central planners.

I do not know how you professional traders do it. I admire you for just having the guts to wade in with your own or clients money when the next political headline or pronouncement can crush your best guesses and plans.

Mon, 09/10/2012 - 21:11 | 2780443 RockyRacoon
RockyRacoon's picture

Looks like somebody finally came up with an Easy Button for the deficit!  Look for its promotion at a Main Stream Media source near you.  I love the Presidential address to the sheeple near the end:

Beyond Debt/Deficit Politics: The $60 Trillion Plan for Ending Federal Borrowing and Paying Off the National Debt
Tue, 09/11/2012 - 09:13 | 2781328 AynRandFan
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Makes about as much sense as what we have now, with the Fed buying Treasuries.  Good one.

Mon, 09/10/2012 - 19:35 | 2780228 NemoDeNovo
NemoDeNovo's picture

The Economy Dosen't Drive the Markets Anymore - No Shit Sherlock, thanks for telling us.

Mon, 09/10/2012 - 20:13 | 2780324 roadsnbridges
roadsnbridges's picture

What 'economy'?  Congress's?

Mon, 09/10/2012 - 19:38 | 2780232 Waterfallsparkles
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The real problem with the Housing Market has nothing to do with low interest rates.  Banks took over the Appraisal process. And now you may have low rates and a Bank willing to loan but the House will not appraise.  So, Borrowers are denied the purchase.  Borrowers have to come up with more Cash or the Sellers need to reduce the price of the house they just sold for more.  Most of the time the Sale just falls thru.

Bernanke is focused on the ideology and not the Mechanics.

Tue, 09/11/2012 - 09:18 | 2781349 AynRandFan
AynRandFan's picture

The question is why some people are willing to pay more than an appraisal.  The housing market is moribund because most people don't trust housing prices to maintain current levels, and so they don't participate as buyers.  Appraisals are low because of the number of cash sales and foreclosures, and the corresponding lack of comparable arms-length sales, a merely inconvenient and temporary statistical abberation.

Mon, 09/10/2012 - 19:37 | 2780233 Jack Burton
Jack Burton's picture

I think we know Fed stimulus and mass money printing drives markets. A few trillion in liquidity injected into the financial system, everyone knows it will end up in the markets as it has to go somewhere. So traders trade the Fed.

We can easily have rising markets as the economy heads south. In fact we see this right now. Fundamentals are for fools, the Fed drives the market in it's self proclaimed attempt to juice the economy via the wealth effect of a rising stock market.

It is anything but a price discovery mechanism!

Mon, 09/10/2012 - 19:39 | 2780238 obessoligarch
obessoligarch's picture

well this form of greek tourism can pretty well drive economy up!!

http://forum.santabanta.com/showthread.htm?299471-greek-girls-at-greek-beaches

Mon, 09/10/2012 - 20:42 | 2780390 Ricky Bobby
Ricky Bobby's picture

Those curves are always skewed - Demand near infinite - supply  scarce.

Mon, 09/10/2012 - 20:50 | 2780406 knukles
knukles's picture

Give it another few hours until their body hair has grown back out.

Mon, 09/10/2012 - 22:51 | 2780645 ZeroAvatar
ZeroAvatar's picture

WoW!  I'm pretty sure I just spilled my Oikos.

Mon, 09/10/2012 - 19:39 | 2780239 chump666
chump666's picture

And a central planning cartel is?

Frightening.

Mon, 09/10/2012 - 19:39 | 2780240 buzzsaw99
buzzsaw99's picture

the markets don't need the economy anymore they have the bernank

Mon, 09/10/2012 - 19:40 | 2780243 css1971
css1971's picture

The economy is us.

...

...

...

...

...

...

 

Mon, 09/10/2012 - 19:57 | 2780288 DVDBeaver
DVDBeaver's picture

'We have met the economy and the economy is no longer us...'

Mon, 09/10/2012 - 20:00 | 2780294 css1971
css1971's picture

Without us, the economy is nothing.

Mon, 09/10/2012 - 20:11 | 2780313 chump666
chump666's picture

Which is true.

The markets, stocks, still rely earnings to justify prices.  Now, wall street is a machine it relies on volume, in and out, volatility to set prices and make cash.  This isn't happening due to cartel/commie style support via central banks.  Won't last, never did, the market had to rise from 2009 lows.  It was over sold, but after each QE, the market sold off, some times brutality.  Maybe no new lows, but no new highs.  1400 is our market cap.  It's extended that by madness via the ECB and Fed, but as ZH has pointed out.  It's priced in.  So a profit take is about to hit, that and the Germans might tell the ECB who actually runs what.  So we may have a mini crash, a bad one, will it hit 1000?  Probably not. 

When eastern Europe's commie cartel blew apart in the 1980's, they forget to price in...that the market is us.

In summary, we are f*cked.

Mon, 09/10/2012 - 20:51 | 2780407 knukles
knukles's picture

You didn't economy that.

Mon, 09/10/2012 - 20:55 | 2780417 chump666
chump666's picture

I know but everything comes to an end.

Mon, 09/10/2012 - 19:43 | 2780249 oldfruit1
oldfruit1's picture

sheff thinks the fed is going to do QE but through MBS buyback? that would be crazy on a new fucking level?! financing shit debt on overpriced property?

also does this not contradict view on ZH that there will be no QE announced this thursday?

 

Mon, 09/10/2012 - 19:48 | 2780264 Implicit simplicit
Implicit simplicit's picture

What will happen?

Who nose? Eye don't, butt no sweat.

Mon, 09/10/2012 - 20:01 | 2780298 oldfruit1
oldfruit1's picture

benanke aint going to do QE using MBS .. MBS market are still completely fucked .. in fact i wouldnt even call it a market as who the fuck is trading mbs today? no one. he would be the only motherfucker in dodge buying this shit.

still i take your point .. never say never .. benanke is one crazy motherfucker.

 

  

Mon, 09/10/2012 - 19:44 | 2780252 falak pema
falak pema's picture

Bruce Krasting once made a remarkable statement in the middle of 2011 : "The market is the economy." 

It was an affirmation that stated the classical belief that what was good for WS was good for the economy; aka in the west, government decisions were marginal on the economic side in a free market and consumers were all led by what the corporates dictated.

NB : GDP = I+C+G +(trade bal).

This is a market where 80% of the derivative OTC and highly toxic leveraged action is controlled by 4 or 5 major banks; aka 300 T in the US alone.

This is a market where 80% of market moves are algo-bot controlled and work for those same banks on a ST speculative horizon basis totally decoupled from the real market.

Not surprising if the real economy finally decouples with THIS marke! 

BK has to reconsider his classical iconic statement.

It now looks like the state and CB officially run the economy again, as surrogates to the corporates who have total latitude to manipulate the market, as the state regulators look the other way.

Tue, 09/11/2012 - 07:38 | 2781089 Bruce Krasting
Bruce Krasting's picture

I wrote about this the other day:

http://www.zerohedge.com/contributed/2012-09-09/sub-zero-and-decoupling

I was talking to a hedge fund manager and he said this:

"Equity prices have decoupled from the business
cycle. Stocks can do well when the broad economy is struggling and
government financing is in ruin."

 

I responded with this:

 

"That sounds crazy to me."


So I'm still back where I was in 2011, thinking that the economy drives stocks, not the other way around. But the weight of evidence is piling up against me on this. Let me repeat:

That sounds crazy to me.

 

 


Tue, 09/11/2012 - 09:49 | 2781457 falak pema
falak pema's picture

thanks Bruce for posting.

Mon, 09/10/2012 - 19:45 | 2780257 machineh
machineh's picture

'[gold] is the best trade (in terms of return, Sharpe Ratio...)'

Because gold is more volatile than stocks, it doesn't produce a very high Sharpe ratio over any period of a decade or more.

Since 31 Dec 1974 when gold became legal for U.S. citizens to own, it has produced an annualized return of 5.90%; volatility of 19.24%; and a Sharpe ratio of 0.03 [not a typo].

Gold is important in a portfolio as an uncorrelated asset. But as a source of high Sharpe ratio, gold does not cut it.

Mon, 09/10/2012 - 19:51 | 2780275 Tyler Durden
Tyler Durden's picture

How about its Sharpe ratio from 1933 to 1974? Or from 2001 to 2012, the period when the equity VIX hit an all time record of 80? Obviously the point is that there are correct assets for different time periods, and in the current one when central banks have become shadow counterparts to every entity (in order to prevent the ascent of precisely gold as the medium of exchange), the one defining variable is counterparty risk of which gold has virtually nil. There are many, many other aspects to discuss here but for those we would suggest reading some of the over 1,000 post on the topic we have posted in the past.

Mon, 09/10/2012 - 21:12 | 2780448 LMAOLORI
Mon, 09/10/2012 - 19:58 | 2780292 css1971
css1971's picture

Gold returns nothing. Gold is neutral. Gold is what you should be using as the measuring stick, rather than dollars. If dollars were worth saving, gold should be returning 0%.

Mon, 09/10/2012 - 21:10 | 2780434 ElvisDog
ElvisDog's picture

If the price of gold goes up because of currency debasement, it does return something. If it helps, think of the percentage gold price rise each year as "interest".

Mon, 09/10/2012 - 21:27 | 2780487 A Lunatic
A Lunatic's picture

Unless you're talking an insatiable demand for unobtainable gold then the prices are based on the perceived value of the currency in question. Gold is not worth any more today than it was 100 years ago.

Tue, 09/11/2012 - 05:07 | 2780959 CharlieSDT
CharlieSDT's picture

Except now we have GLD soaking up much of the investment demand.  If we have true price discovery I'd say gold could prove to be more than a store of value in that situation.

Mon, 09/10/2012 - 22:33 | 2780612 jimmyjames
jimmyjames's picture

Because gold is more volatile than stocks, it doesn't produce a very high Sharpe ratio over any period of a decade or more.

**************

I think this shows gold being less volatile than stocks-

http://bit.ly/R057Im

Mon, 09/10/2012 - 19:46 | 2780262 Wakanda
Wakanda's picture

Those are not markets.  Those are propoganda tools.

All your fond memories are belong to us.

Mon, 09/10/2012 - 19:52 | 2780276 Implicit simplicit
Implicit simplicit's picture

The market goes up because shit floats to the top. It really does need to be flushed. It smells terrible.

Mon, 09/10/2012 - 20:16 | 2780329 GlomarHabu
GlomarHabu's picture

 

 

...so a whipped cream and shit latte. How ultra.

Mon, 09/10/2012 - 20:00 | 2780297 DeFeralCat
DeFeralCat's picture

Cute but I will take the other bone. The bots will turn and lock into their profit in a minute. These banks are on survival mode at the moment. Anyone who is long right now has at least one hand on the sell button. Big players can hedge in the futures market overnight. They hit the exit first. No one should be surprised that Bernake will talk big but the crux will be pulling bad property debt off the banks. With Merkel verbally capitulating in Germany for electoral purposes, this could be a sharp run-up followed by the ugliest of declines. The world is hurting in a bad way right now and the planners are left with verbose words to counter it. The words are false but until proven false the charade continues for a bit. I would like to be a fly on the wall of the German hearings on the legalty of soverign bond purchasing. Dow sells off 1000 points if it is deemed illegal or the conditions attached are stringent. It could happen.

Mon, 09/10/2012 - 20:08 | 2780309 oldfruit1
oldfruit1's picture

i think we are fooling ourselves in over estimating odds of a negative outcome as ZH readers want this whole farcade to crumble .. but why would they say no to ESM outright? i reckon they do what all fucking cockroach lawyer types do .. sit on the fence, argue it out both ways & come to some decision whereby they say its ok but with some caveats etc built in. it will be a long fucking report .. which the press, market, public will gloss over as its so fucking boring .. predct people will see the headlines whic hwill read something like as follows:

*KKK APPROVE ESM  MECHANISM

* KKK SAY SOME CONDITIONS NEED TO BE FULFILLED

* KKK SAY GERMAN LEGISLATURE WILL HAVE TO BE AMMENDED

final is most important as these cunts are likely to want to keep creating work for themselves ofcourse ..bet u these motherfuckers end up acheiving diddly fucking squat.

Mon, 09/10/2012 - 20:21 | 2780340 DeFeralCat
DeFeralCat's picture

You make a good point both well taken and well expressed. However, what has changed in the last two weeks is that Draghi says the bond buying is without condition. If I attach conditions to it-since it is my money- then I directly contradict the hopium. Whereas a week ago the Court was probably quite cool with the whole idea, well this was before it was without condition. I think they will back it; however, my point is that if they don't, the charade crumbles quite quickly. This is how lofty we feel about ourselves right now.

Mon, 09/10/2012 - 20:56 | 2780415 recidivist
recidivist's picture

"without condition" can be spun.  Instead, there will be "provisional contingencies" or "low-probability failsafe mechanisms" or some other term which will of course mean the same thing but be called something else.  Remember that the drivers of the bull market are terminal optimists, both digital and living.  Until they're not, then its crash time.

Mon, 09/10/2012 - 20:07 | 2780306 IMA5U
IMA5U's picture

My favorite are the bearish equity guys 

 

 

A stopped clock is right twice

Mon, 09/10/2012 - 20:19 | 2780336 Tyler Durden
Tyler Durden's picture

Or, for the simplest portfolio - have a hard asset portfolio (with greater convexity to additional liquidity than stocks) for inflation, and deep OTM LT equity puts rolled every quarter (lower theta) in high beta stocks for deflation. That way clocks are right all the time, and make most money during volatile downward market spasms.

Mon, 09/10/2012 - 20:48 | 2780383 mccoyspace
mccoyspace's picture

OTM is Out of the Money
LT is what ? Long Term?

Mon, 09/10/2012 - 20:57 | 2780418 knukles
knukles's picture

lunch time

Mon, 09/10/2012 - 21:29 | 2780491 buzzsaw99
buzzsaw99's picture

The strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy any security. There is no guarantee that any strategies discussed will be effective. The information provided is not intended to be a complete analysis of every material fact respecting any strategy. The examples presented do not take into consideration commissions, tax implications, or other transactions costs, which may significantly affect the economic consequences of a given strategy.
Zerohedge cannot guarantee that such information is accurate, complete, or timely. Zerohedge makes no warranties with regard to such information or results obtained by its use. Zerohedge disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Always consult an attorney or tax professional regarding your specific legal or tax situation.
Investment returns will fluctuate and are subject to market volatility, so that an investments, when redeemed or sold, may be worth more or less than their original cost. There may be significant differences between stated and investments that are not discussed here.
Neither asset allocation nor diversification can ensure a profit or guarantee against a loss.
Investing involves risk, including risk of loss.

Mon, 09/10/2012 - 23:10 | 2780675 A Lunatic
A Lunatic's picture

Investing involves risk, including risk of loss.

Well, for you and me anyhow............

Tue, 09/11/2012 - 09:53 | 2781395 falak pema
falak pema's picture

I prefer it the other way round : Oligarchy investing involves novelty benefits thanks to botty-potty electronic nanosecond profits, including all loss of risk !

 

Mon, 09/10/2012 - 20:12 | 2780320 GlomarHabu
GlomarHabu's picture

Talking about the current world and US economies really requires an entirely new argot. Using what is now the equivalent of old middle English or Chaucer’s Merchant’s Tale from the Canterbury Tales:

Here lets use this language to define what’s what today cause it’s as good as anything going:

The Merchants Tale …of course we understand it..just like todays financial argot.

Whilom ther was dwellynge in Lumbardye

 A worthy knyght, that born was of Pavye,

35 In which he lyved in greet prosperitee;

 And sixty yeer a wyflees man was hee,

 And folwed ay his bodily delyt

 On wommen, ther as was his appetyt,

 As doon thise fooles that been seculeer.

40 And whan that he was passed sixty yeer,

 Were it for hoolynesse or for dotage,

 I kan nat seye, but swich a greet corage

 Hadde this knyght to been a wedded man

 That day and nyght he dooth al that he kan

45 T'espien where he myghte wedded be,

 Preyinge oure lord to graunten him that he

 Mighte ones knowe of thilke blisful lyf

 To try and define something we have never seen or experienced before is dysfunctional.

There must be acknowledgements that just as the policies we are laboring under are dysfunctional so is the language we are still using in an attempt to define and understand what is happening.

It’s apparent that no one knows whats happening.

 

Mon, 09/10/2012 - 20:15 | 2780327 virgilcaine
virgilcaine's picture

Fundamentals don't matter.. until they do.  Just a repeat of bubble madness that ends badly.

Mon, 09/10/2012 - 20:15 | 2780328 luna_man
luna_man's picture

 

 

Thanks, MY MAIN MAN!...Been sleeping like the very content baby!!

 

perfect remedy, for that economic turmoil

Mon, 09/10/2012 - 20:17 | 2780331 Deep79
Deep79's picture

What happened to rosenberg " I see light at the end of tunnel" a few months ago

Now the world economy is rolling over

This guy is a joke

Mon, 09/10/2012 - 20:21 | 2780342 chump666
chump666's picture

Goodbye Merkel, you weak Fraulein

  • German CDU Gauweiler lodges complaint with crt vs ECB bond plan Rtrs
     
  • Merkel, Schaeuble tell conservative lawmakers ECB acting within mandate

Chaos trade about to hit.

 

Mon, 09/10/2012 - 20:23 | 2780346 Nid
Nid's picture

Did Barron's really write that? Dooooshes...

Mon, 09/10/2012 - 20:24 | 2780350 virgilcaine
virgilcaine's picture

QE will be like pissing in the wind soon..

 

vc

 

 

Mon, 09/10/2012 - 20:28 | 2780357 Colonel Klink
Colonel Klink's picture

This guy's full name has got to be David Rosenberg PALMER!  Because remarking the obvious seems like he's jacking us off for entertainment.  This guy flip flops like a fish outta water.

I just wanna know when the game ends.  After that we can all have a serious discussion about investing again.

Mon, 09/10/2012 - 20:28 | 2780359 Herdee
Herdee's picture

I was reading on Bloomberg how banks and insurance companies are trying to lower the standard of collateral used for derivative trades down to A- or 4 steps above junk status.CME seems like they want to go along with it.Same thing goes for California's biggest pension fund.Truth is,the mafia linked clearing houses are becoming hard up for decent securities.Now they want more corporate securities to back all their crooked under the table settlement agreements but what is really happpening is a big merry-go-round similar to what's happening in Europe.Crooks just want any junk they can get in order to keep up the level of high commissions that they rip off from traders and private deals as well.Seems like risk keeps piling up higher and they'll do anything to hide what's been going on in the OTC market.

Mon, 09/10/2012 - 20:42 | 2780389 Fecklesslackey
Fecklesslackey's picture

I would love to see Ben Bernanke's personal investment portfolio ... is a closet Oro Toro?

Mon, 09/10/2012 - 21:01 | 2780422 miker
miker's picture

I'm kindof thinking Benanke has been playing hardball with Congress and may continue to do so.  That is NO QE this week; continue to let things simmer and put the pressure on Congress to act.  Everyone says that Fed can't solve this alone; that there has to be fiscal action. 

What does anyone think about this?

Mon, 09/10/2012 - 21:07 | 2780431 knukles
knukles's picture

Hmmmm....

Tue, 09/11/2012 - 00:04 | 2780774 lakecity55
lakecity55's picture

I think they will keep twisting.

the big bazooka don't work anymore, law of dimishing returns.

let the fiat filter slowly into the system, the inflation won't appear too bad too quick.

PMs will be on low bake, but they will rise......

 

Tue, 09/11/2012 - 00:16 | 2780786 Nobody For President
Nobody For President's picture

Miker - i kinda think you got that right. Schumers comment to Uncle Ben to 'Get to work' must have pissed him off mightly, because it is Congress that needs to get to work and get a coherent fiscal policy. (Hint: Don't hold breath.) The very best 'fuck you' would be a 'watchful waiting' - one month of bad job numbers don't make a trend, blah blah blah. He just might lob the ball right back at 'em - even though he has to know Congress will not do doodle squat until after the election. Might not do doodle squat after the election either, fiscal cliff or not. 

Mon, 09/10/2012 - 21:04 | 2780426 eddiebe
eddiebe's picture

'The new normal is that the economy doesn't drive markets any more.'

No shit Sherlock.

Mon, 09/10/2012 - 21:11 | 2780437 ekm
ekm's picture

The way it's going, seeing that NYSE's business is 50% down due to Primary Dealers buying up most of the stock market with Fed's money, I predict that Bernanke on Wednesday will have a surprise announcement:

The Fed will be bailing out NYSE, Nasdaq, BATS, CME and all other stock exchanges and merge them all in one under the name:

The Federal Exchange.

Mon, 09/10/2012 - 21:12 | 2780444 Fecklesslackey
Fecklesslackey's picture

"An electrifying speech by former President Bill Clinton." ... "nobody makes money betting against America" ... Buy and Hold Bill and I'm sure you'll be a winner

Mon, 09/10/2012 - 21:15 | 2780455 orangegeek
orangegeek's picture

The economy never drove the markets.  The markets indicate future potential about companies - in effect, the economy.

 

http://bullandbearmash.com/index/sp-500/weekly/

 

If you consider the drop in 2007, it wasn't until we were into wave (3) before the masses started to realize this drop was serious.  Why, because the economy will LAG markets by 3-6 months.

Tue, 09/11/2012 - 02:42 | 2780480 Radical Marijuana
Radical Marijuana's picture

The Fraud Kings always controlled our "economy."

Since 2008, that has simply become more obvious.

The "new normal" is that things are bad enough for more radical social truth to emerge a bit more. Consider the analogy to thousands of years of Chinese history, which was mostly oscillations between periods of relatively stable empire, followed by collapse into civil wars, then return out of that to another relatively stable empire.

During the "normal" Chinese times, hypocrisy was "normal." Indeed, hypocrisy is the normal way that human societies have operated most of the time. However, during the "abnormal" Chinese times, more social truth could emerge, for a while.

Philosophically, that was like the swings from Confucian philosophy, during periods of stable empire, which was sublimely hypocritical, to the Legalists, which only appear for a short while, during the periods of social disintegration, and civil wars, when it was difficult to tell which new sort of empire was going to eventually triumph and emerge as the new normal hypocrisy, that people would finally accept, or be forced to accept.

The TRUTH is continuous and consistent. The changes from the old normal to the new normal are merely that more people are willing or able, or forced, to face the deeper realities, which were always there.

Ideally, what we should due is go through profound paradigm shifts to prevent us from reverting back to the old-fashioned hypocrisies, after we perhaps survive through the transformations.

Of course, these days, unlike any time in the past, the insanities of the breakdown of the old normal bullshit social stories might result in the totally destruction of civilization itself, so that the new normal becomes practically the extinction of civilization.

Anyway, the point is that the "economy" was never driven by the ideals of the "market." There were always the principles and methods of organized crime controlling the markets from behind the scenes. The only thing that has changed is that reality has become more patently obvious to more people now ... Likewise, the better solutions are not a return to some new normal form of impossible ideals and hypocrisy, based on false fundamental dichotomies. The better solutions are for us to finally face the fact that money is based on robbery, and the true "markets" are much bigger, and include the evolutions of human and industrial ecologies.  That would be the ONLY theoretically possible ways that our actual human and industrial ecologies could be integrated within the natural ecologies, in order to actually save them, and ourselves.

The more that our beliefs in huge lies, and our being controlled by fundamentally fraudulent accounting systems continues, the more that we will continue to destroy the natural ecology, and then the more difficult it will be to save and fortify enough of that artificially, for us to still survive.

Mon, 09/10/2012 - 21:27 | 2780489 fonzannoon
fonzannoon's picture

check this out...

A variety of Chinese blogs and news-discussion sites across the Internet are buzzing with rumors about Vice President Xi Jinping, widely tipped to become China's next president, after Xi missed a series of appointments with foreign dignitaries. Xi hasn't appeared in public for more than a week, and has cancelled meetings with U.S. Secretary of State Hillary Clinton and Singaporean Prime Minister Lee Hsien Loong, reports from the region said. Reports had Xi missing a third appointment Monday with Danish Prime Minister Helle Thorning-Schmidt, although the Associated Press cited the Chinese Foreign Ministry as saying no such meeting was ever planned. The AP report cited Internet rumors of an assassination attempt on Xi, as well as a car accident

Mon, 09/10/2012 - 21:32 | 2780495 Tommy Gunner
Tommy Gunner's picture

And Ben Bernanke sat in the town square proudly stroking the donkey cack that he labouriously stitched onto himself while on a trip to the Ghan (where he purchased said giant cack from a donkey herder) while at the same time looking at passersby as if his depraved act was totally normal.   However Ben should be careful because his pride is false i.e. the cack is not a natural occurrence rather it is an abomination stolen from some persecuted donkey from the ghan.

Mon, 09/10/2012 - 21:36 | 2780503 q99x2
q99x2's picture

I hereby accuse Rosenberg of reading ZH.

Mon, 09/10/2012 - 21:41 | 2780511 chump666
chump666's picture

thy chaos begins.  Oh the irony of life.

Has cancelled at least four scheduled meetings over past week
Move comes at a time of a rare China leadership transition
WSJ: Chinese Mystery: Where is Xi Jinping: http://link.reuters.com/wux52t

Mon, 09/10/2012 - 22:18 | 2780573 proLiberty
proLiberty's picture

Economist Franz Oppenheimer said that the two ways of  acquiring wealth were the "economic means" (free exchange) and the "political means"  (government favor and cronyism).   It looks like governments have intruded into the markets enough to destroy important price signals and an increasing number of companies have economic performance that is due more to the political means than to the economic means.  The more free market price information is destroyed and distorted, the easier it will be for companies to have false profits- that is profits that come at a greater expense from others than the profit itself.  In short, where the economy on balance is destroying resources than creating them.  

 

 

Mon, 09/10/2012 - 23:14 | 2780683 ZeroAvatar
ZeroAvatar's picture

I'm sick and tired of calling 'IT' the 'Federal Reserve'.  It's not Federal, it's privately owned.  'IT doesn't 'Reserve' anything. 

 

If we can figure out a good NEW, more APPROPRIATE name for it, maybe it will help awaken the Sheeples....

 

Suggestions?

Tue, 09/11/2012 - 00:17 | 2780787 Colonel Klink
Colonel Klink's picture

The Private taxpayer funded banking cartel?

Tue, 09/11/2012 - 05:44 | 2780981 Just Ice
Just Ice's picture

A few suggestions:

 

Federal Destroyer of America's Purchasing Power

Federal Wealth Confiscation Outfit

The Dollar Debasement and Destruction Organization

Dollar Devaluation and Theft Administration

 

The Federal Reserve should have one mandate:  restore and maintain the dollar's purchasing power.  Period.

Tue, 09/11/2012 - 06:29 | 2781004 GlomarHabu
GlomarHabu's picture

Great idea. New words to describe our current financial world. Great idea.

Tue, 09/11/2012 - 06:40 | 2781008 GlomarHabu
GlomarHabu's picture

 

 

We learned about the Libor manipulation a while back, however daily I read dozens of other indexes quoted here and in other places.

Does anyone have a handle on how factual they are?

Does month after month of historically low volume effect those indexes?

I mean in political polling and other polling the smaller the sample the greater the margin of error.  For each index ,what is low volume doing to it's margin of error?

Tyler, I think this is your territory. Please advise, Thx.

Tue, 09/11/2012 - 06:56 | 2781025 GlomarHabu
GlomarHabu's picture

 

Eons ago in an alternate universe, filled with "O" val office bathroom sink climaxes and stained blue dresses, with important matters of state being discussed while POTUS was getting a blow job the lead up mantra to that era was :It's the economy stupid"

Realistically the only game on the globe now is "It's all about gold and silver'

Surprisingly most of the grand pooh bahs in this and other countries still haven't caught onto this, clinging to failed policies and eating very bad caviar.

Horace, in his Epistles,gave excellent adive. "When we have ceased being productive it is time to make room for those who are.

Actually stated, "You have played enough,eaten and drunk enough" Now ..."tempus abire tibi est' It is time for you to go away.

Are you listening obama?

 

Tue, 09/11/2012 - 09:12 | 2781320 falak pema
falak pema's picture

hey HAbu,

You've found him a replacement that doesn't speak squid language?

Don't tell me its Mormon jam and blueberry pie! 

Tue, 09/11/2012 - 11:25 | 2781883 alp
alp's picture

My bet is that we're all heading to a tulip like market crash on a global scale: http://en.wikipedia.org/wiki/File:Tulip_price_index1.svg

 

The only problem, of course, is to time that right. I would think that until there most fundamentalists or hedgers have to be squeezed from markets.

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