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Europe and US Un-Decoupling

Tyler Durden's picture




 

The US is no longer the cleanest dirty shirt, or least syphilitic hooker in the whorehouse as we so responsibly noted previously. Year-to-date, the US Dow Jones Industrials 30 and Europe's EuroStoxx 50 - the two major blue-chip indices of the beleaguered regions - are now equally awesome at +11.35%. Of course, Gold and Silver are outperforming both of these (and the long-bond is unchanged) but nevertheless, even with EURUSD now up over 200 pips on the year, 2Y Spain yields are unchanged and 10Y Spain yields up 70bps. Context is king here, especially when we just keep anchoring to the latest 5 minute trend.

Year-to-date changes for broad asset classes... Silver winning with Gold 2nd, and EU/US equities tied for an honorable nominal bronze...as the USD is down 1.8% and the long-bond unchanged...

 

Charts: Bloomberg

 

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Fri, 09/14/2012 - 12:00 | 2795284 LawsofPhysics
LawsofPhysics's picture

Uncle Ben has publicly committed to killing the dollar.  Something Ron Paul has been saying would happen for 30+ years.

Fri, 09/14/2012 - 12:06 | 2795309 Dr Paul Krugman
Dr Paul Krugman's picture

If you had ever attended a macro economics class you would know that to increase exports you need a weaker currency.  In times of a recession/depression, which we are in, exports are of the highest importance.  Once exports begin to increase then jobs follow.  So decreasing the price of the dollar is textbook economic science considering today's economic environment.

Fri, 09/14/2012 - 12:08 | 2795333 LawsofPhysics
LawsofPhysics's picture

Unfortunately you also need energy to do anything, now how's this going to work out for energy costs again?  FAIL.

Admittedly, my energy portfolio thanks you Mr. Krugman, now about that delivery...

Fri, 09/14/2012 - 12:13 | 2795361 Dr Paul Krugman
Dr Paul Krugman's picture

If the prices increase then more money is spent.  When more money is spent than growth occurs.  When growth occurs jobs are made.

Simple logic on this one.

Fri, 09/14/2012 - 12:32 | 2795391 Schmuck Raker
Schmuck Raker's picture

So just jack up prices and everyone will have jobs?

Retard

Edit: Here you go Doc...

IEA chief economist says oil prices are unbearable for consumers; could help push global economy back into recession

I suppose he's saying oil prices are TOO LOW.

Fri, 09/14/2012 - 12:39 | 2795501 Dr Paul Krugman
Dr Paul Krugman's picture

Oil prices are transitory.  What is important is to get the economy out of this recession/depression.

Fri, 09/14/2012 - 13:41 | 2795633 OneTinSoldier66
OneTinSoldier66's picture

Everything is transitory. Central Planners such as yourself use force and/or coercion to try and keep your 'special interests' from transiting to their proper state. For one example, you steal from the poor to bail out the TBTF Banks, in order to maintain the illusion that Bankers are somehow rich and that their paper is money.

 

"If you had ever attended a macro economics class you would know that to increase exports you need a weaker currency."

 

You obviously have no idea how the "value of the medium of exchange" effects "the demand for the medium of exchange". Oops. I have to constantly remind myself that you are a thief; therefore you do know how it effects the value of money. It's just that there's no shame in your game of debauching, debasing, and devaluing other peoples money(opm).

 

Fri, 09/14/2012 - 17:29 | 2797077 Ungaro
Ungaro's picture

Dr. Krugman, you seem to be fighting the last century's recessions (inventory excess). The current crisis is one of confidence, not overproduction or even liquidity. All economic actors have borrowed too much, plus the system is levered up with nth order derivatives. The thinking that if banks would just lend more of their excess reserves all would be well is a giant fallacy. More debt will not solve the crisis of debt (confidence in the ability to repay same).

With confidence low, employment will not improve. Thus, wages will not keep pace with inflation (wealth destruction) and the economy will continue to stagnate or shrink. The only way out is to deleverage -- write off or repay the debt and let the lenders fail if their capital base is inadequate. Return to honest money, end fictional reserve banking and restore Glass-Steagall.

Fri, 09/14/2012 - 12:47 | 2795545 LawsofPhysics
LawsofPhysics's picture

Wrong, we have spent several trillion since 2009 and how much growth has occurred?  Simple observations in the real world, okay, I'll stop feeding the trolls.

Fri, 09/14/2012 - 12:54 | 2795572 Dr Paul Krugman
Dr Paul Krugman's picture

We neded more spending from the get-go.  We would have seen a stronger recovery if that had been the case.

Fri, 09/14/2012 - 13:41 | 2795832 LawsofPhysics
LawsofPhysics's picture

right because growth is infinite in this finite world of ours - FAIL.

Sun, 09/16/2012 - 12:40 | 2800653 Colonel Klink
Colonel Klink's picture

Apparently Krugman has been getting anally probed by the aliens who should be attacking instead.

Fri, 09/14/2012 - 13:21 | 2795721 teahouse
teahouse's picture

you gotta be kidding...

"If the prices increase then more money is spent.  When more money is spent than growth occurs.  When growth occurs jobs are made."

that only happen when high salary job creation are created, not when everyone is making McDonalds Burger for 5 bucks an hour.

Did you get to realize that people struggle to live a shitty life with the salary thay earn.

Where shall they spend the money, that they don't even earn? Oh, yes, right, making loans on loans on loans on loans....should they make a loans on their coffin too?

Get real! To do waht are you suggesting you need lots of High End Manufacturing. And i really mean A LOT, becasue you see USA is a 300 MILLION COUNTRY PEOPLE.

Not a small Singapore with 4.

 

Fri, 09/14/2012 - 15:45 | 2796670 roadhazard
roadhazard's picture

Oil prices will Kill any Growth.

Fri, 09/14/2012 - 17:37 | 2797114 knukles
knukles's picture

Thank you for showing the sensabilitites and logic behind your position....

If money expansion leads only to price increases it's Nominal GDP expanding, not Real GDP.
So, you're all A-Ok-Hunkie Dorie with increased inflation and no way for the peasantry to make ends meet.

Glad you ain't King, just a hustler for the Official Organ of the Democtrratic Socialist Republic of America.

Fri, 09/14/2012 - 12:16 | 2795377 PoorMan429
PoorMan429's picture

What do you say to China energy demand decreasing being able to drive aggregate demand down controlling prices. The effect of speculation on curruncies value vs oil cannot possibly compare with the aggregate demand of the world economies influence on global oil prices. 

Fri, 09/14/2012 - 12:36 | 2795482 Dr Paul Krugman
Dr Paul Krugman's picture

Oil prices are transitory.

Fri, 09/14/2012 - 12:47 | 2795546 LawsofPhysics
LawsofPhysics's picture

So is eating and your survival apparently.

Fri, 09/14/2012 - 15:49 | 2796693 roadhazard
roadhazard's picture

Yes, but the transition will always move Up, speculation will see to that.

Fri, 09/14/2012 - 12:08 | 2795334 asteroids
asteroids's picture

Export to who Herr Krugman? The rest of the world is hungry and  broke, or didn't you notice the flames in Greece, Italy, Eygpt, etc...

Fri, 09/14/2012 - 12:09 | 2795341 LawsofPhysics
LawsofPhysics's picture

Mars, or the incoming aliens...

Fri, 09/14/2012 - 12:15 | 2795369 Schmuck Raker
Schmuck Raker's picture

If you'd ever had to work for a living you would know that debt is bad.

Fri, 09/14/2012 - 12:24 | 2795417 michael_engineer
michael_engineer's picture

You can't print oil, rare earths, water, phosphorous, or other resources. And those are the things that really form the basis for jobs, food, clothing, and shelter. It's like bringing store coupons to a pot luck dinner and thereby claiming rights to graze the food table.

Fri, 09/14/2012 - 12:38 | 2795494 Dr Paul Krugman
Dr Paul Krugman's picture

Over time technology will increase production output of those goods while decreasing cost.

Fri, 09/14/2012 - 14:55 | 2795719 OneTinSoldier66
OneTinSoldier66's picture

But The Fed is here to insure that the worker does not get the benefit of the decreasing costs. That is the purpose of The Fed, one of it's mandates... to insure that there is always an amount of inflation! The hidden/silent tax on the poor, which gets handed over to the already wealthy. In the name of 'price stability' of course, even though there is no such thing as price stability as all things are transitory. Value cannot be mandated by central planning.

 

Central Planning is for Special Interests, silly Keynesians.

Fri, 09/14/2012 - 13:44 | 2795852 LawsofPhysics
LawsofPhysics's picture

wrong, you disenguenuous fuck.  Techonology require energy to develop and while technology has indeed advanced, you ignore all the deaths that have resulted from those periods where technology could not keep up with human needs.  Think Easter Island on a global scale. troll harder.

Fri, 09/14/2012 - 20:52 | 2797692 ersatzteil
ersatzteil's picture

Indeed, it certainly reduced the cost of printing money!

Fri, 09/14/2012 - 13:57 | 2795932 Thought criminal
Thought criminal's picture

Are you serious or just trolling? By devaluing the currency you impoverish the citizens and exports only start rising because people have less purchasing power to buy the goods. I still don't get how can someone be so dumb to think that you can create prosperity by making something out of nothing.

Fri, 09/14/2012 - 14:22 | 2796139 AmCockerSpaniel
AmCockerSpaniel's picture

NO FREE TRADE. America first, with Americans. FREE TRADE is what made China, and took down America. We all know what the end here is. The American/ world standard of living must equal, or be lower than China's.

Fri, 09/14/2012 - 16:38 | 2796919 Mysteerious Roo...
Mysteerious Rooshian Vooman's picture

 

 

It was crony capitalism and "globalism" that destroyed our manufacturing base and just about everything else, not free trade.

Sat, 09/15/2012 - 17:40 | 2799309 Ryuukai
Ryuukai's picture

Free trade implies globalism, Einstein

Fri, 09/14/2012 - 17:42 | 2797136 skitalo
skitalo's picture

Dr Krugman, excuse my ignorance, but if what you say above was correct, how is it possible that Zimbabwe isn't one of the greatest exporters in the World today?!

In fact, come to think of it, I have never even seen a product made in Zimbabwe, despite all their debasement and well-documented hyperinflation...

Would you care to explain?

Also, could you please tell us have you ever lived and worked in a country with hyperinflation, and what have you observed there?

(I happen to have lived through one such story and worked in a small firm)

Fri, 09/14/2012 - 12:03 | 2795305 malikai
malikai's picture

Is WTI getting margin hike fever?

http://blog.quantsig.net/2012/09/14/wti-3/

Fri, 09/14/2012 - 12:09 | 2795337 LawsofPhysics
LawsofPhysics's picture

Make margins 100%, go ahead, I double fucking dog dare you...

Fri, 09/14/2012 - 12:09 | 2795344 malikai
malikai's picture

One can only hope..

Fri, 09/14/2012 - 12:35 | 2795474 Village Smithy
Village Smithy's picture

Something is up with oil, it's not partying nearly as hardily as the rest. Not yesterday, and not today. Has Ben put out a warning "Avoid speculating in oil or I will fuck you up" ?

Fri, 09/14/2012 - 13:45 | 2795858 LawsofPhysics
LawsofPhysics's picture

see post above. go ahead Ben, make margins 100% and let's see who fucks up whom?

Fri, 09/14/2012 - 12:13 | 2795364 Unbezahlbar
Unbezahlbar's picture

"The subprime problem is local....isolated. I guarantee it."

Ben Shalome, 2008

Fri, 09/14/2012 - 12:16 | 2795375 adr
adr's picture

Benny's printing spree is a cover to allow US multinationals to beat earnings using the EUR/USD conversion to fake profits.

Remember third quarter earnings were going to be terrible. Now every company can blow past their sandbagged numbers with the dollar tanking.

UP, UP, and AWAY!!!!!

Fri, 09/14/2012 - 12:43 | 2795527 Thamesford
Thamesford's picture

Obviouslty the helicopter was a chinook, not a Huey

 

Fri, 09/14/2012 - 14:31 | 2796206 orangegeek
orangegeek's picture

Call it whatever you want.  Euro markets are out of phase with US markets - Euro markets topped mid-2011.

 

SP500 may still continue to rise - on government/fed meddling with taxpayers dollars - the final card is played.

 

http://bullandbearmash.com/chart/standard-poors-500-weekly-september-07-...

 

Earnings season starts in four weeks - that's about as long as this market should last, if it does last this long.

 

 

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