Fed's Easing Efforts Having Less And Less Impact As Macro Seasonals Turn Negative

Tyler Durden's picture


As we noted this morning, the hope trade seems to be morphing from 'we don't need no stinking QE' to 'good is good but bad is better' as 14 of the last 16 data points have missed expectations. With a relatively heavy calendar of data this week, we are sure there will be ups and downs and micro-trends to call for the all-in but as Jim Reid if Deutsche Bank notes, this is the start of the point in the year when seasonals have often led to data disappointments over the past decade. The data typically beats expectations between November and January but then disappoints for 8 of the next 9 months with the notable exception of May. Overall its certainly a relationship to have in mind, especially as we travel through a period, theoretically, post maximum liquidity for now. Adding to this concern is the fact that real economic activity has 'improved' less and less with each extreme easing action by the Fed - with 'Operation Twist' barely budging the needle on ECRI's growth index relative to QE1 or 2 - and with economic data missing expectations rather consistently already, history suggests negative returns for the S&P will be evident.

Monthly average US data surprises versus S&P 500 monthly average returns. These micro-cycles in the US data are very consistent over the past 10 years and whether it is a behavorial anchoring bias or a reflection of weather (or non-weather) impacts on the toughest season of the year is unclear.


As for the impact on equities the correlation isn't perfect but there is evidence that the data 'surprises' have influence.

And while the Citi Econ Surprise index basically tracks the mean-reverting nature of analyst/economist behavioral biases to extrapolate the current trends (i.e. performance vs expectations), the ECRI tracks actual data and cealry shows the lower and lower positive impacts of QE1, QE2, and then Twist...

Furthermore, it is clear that in recent weeks, US data has been disappointing rather consistently, which clearly has led to negative returns in the S&P 500 in the past...



The Deutsche Bank Macro Pulse Index (MPI) is calculated by DB’s FX research team as the average of the last 30 z-scores of data surprises relating to each currency. A reading above (below) zero indicates that the data flow has been better (worse) than expected.

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Mon, 03/26/2012 - 14:18 | 2291825 Ahmeexnal
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Martial law is just around the corner.

Mon, 03/26/2012 - 14:21 | 2291840 SeverinSlade
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I wonder just how long it'll be until ZH is shut down for matters of "national security."  After all, we can't have financial terrorists telling the American sheeple the TRUTH.

Mon, 03/26/2012 - 14:24 | 2291858 brewing
brewing's picture

99% of people are fools, and the rest of us are in danger of contamination...

Mon, 03/26/2012 - 14:36 | 2291895 Winston Churchill
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Mon, 03/26/2012 - 14:58 | 2291902 Flounder
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The dictionary now has a picture of Rick Santorum next to its definition of "Megalomaniac" - Megalomania is a psycho-pathological condition characterized by delusional fantasies of power, relevance, or omnipotence. 'Megalomania is characterized by an inflated sense of self esteem and overestimation by persons of their powers and beliefs'

Seems a bit scary and foolish to support this dude.  Cue up Incubus - Megalomaniac.


Ron Paul anyone?


Mon, 03/26/2012 - 15:30 | 2292080 gangland
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"Ron Paul’s SuperPAC is based in Salt Lake City, and one of the founders is Ladd Christensen, John Huntsman’s business partner in Huntsman-Christensen and Huntsman Chemicals...Ron Paul’s SuperPAC sugar daddy, Peter Thiel, whom I wrote about for The Nation, has a proven track record of using his money to play the cynical game of politics.

According to a recent San Francisco Chronicle profile, “libertarian” Peter Thiel is funding a Democrat and former Obama trade official, Ro Khanna,

in a primary challenge against anti-war, anti-PATRIOT Act liberal Democrat Congressman Pete Stark.

* Ron Paul’s SuperPAC sugar daddy Peter Thiel also funds other candidates supposedly anathema to antiwar, anti-PATRIOT Act, pro-gay marriage libertarians,

including frothing pro-war GOP social conservatives Dana Rohrabacher, Ed Royce and Dan Lungren.

* Dr. Paul’s SuperPAC sugar daddy Thiel also donated the maximum allowable to the 2010 gubernatorial campaign of Meg Whitman,

who was Mitt Romney’s campaign finance chair in 2008. Whitman was a protege of Romney’s when she worked at Bain capital;

later, when Whitman was CEO of eBay, she made Peter Thiel rich when she bought out his PayPal in a deal roundly slammed as bad for eBay, but good for Thiel and Whitman.


It's funny, because Ron Paul fans love a good conspiracy, but they're not going to dig into this one because it's a direct assault on the precious integrity of their libertarian golden boy. There's definitely something going on behind the scenes of the Ron Paul campaign, and none of these rabid true believers are interested in figuring out what's going on."


please stop with the ron paul judas goat. they have us entirely covered and atomized.


why is it that Ron Paul never attacked willard or huntsman like he attacked rickehhh and Gargamel aka noot, in any of the debates?

I am not anti Ron Paul, I was very much attracted to him, like a fly to fly paper you might say, that desperate.

But some issues have come about that make me question him.

I am simply questioning.  This is not an anti libertarian rant.

I'm going to get junked and i dont care, the more junks i get the more bias is showing.

wake up.


Mon, 03/26/2012 - 15:32 | 2292100 walküre
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worth noting.

Mon, 03/26/2012 - 16:09 | 2292208 UGrev
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If I hated you and everything you stood for, but I gave you money because I was playing a game that you didn't know about... would you say "NO" to the money or would you use it against me?

Mon, 03/26/2012 - 16:57 | 2292383 brewing
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this was very very close to being interesting as well...

Mon, 03/26/2012 - 16:59 | 2292388 Cast Iron Skillet
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A big "hello" to all you sheeple out there reading Zerohedge tonight!!

Mon, 03/26/2012 - 14:22 | 2291844 TruthInSunshine
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The more and faster that The Bernank prints, the more demand destruction takes place in the real economy.

The Bernank broke the markets with his incestuous circle.

Mon, 03/26/2012 - 14:23 | 2291854 devo
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Greenspan cracked the foundation. The Bernanke is just the wrecking ball.

Mon, 03/26/2012 - 14:27 | 2291870 Everybodys All ...
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Greenspan wasn't in the same league as this fascist.

Mon, 03/26/2012 - 15:37 | 2291932 malikai
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Bullshit. They're one in the same. Greenspan had the fortune of being the first one of the two to print, which meant he could do more with less. Wait til you see what the next guy does.

Mon, 03/26/2012 - 14:41 | 2291899 TruthInSunshine
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$1.50 is worth more when that which you need to purchase costs $1.35 than $3.00 is when that same 'basket of goods' costs $2.90.

The fun starts when that basket costs $3+.


Mon, 03/26/2012 - 14:19 | 2291832 Moneyswirth
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Adding to this concern is the fact that real economic activity has 'improved' less and less with each extreme easing action by the Fed - with 'Operation Twist' barely budging the needle on ECRI's growth index relative to QE1 or 2 - and with economic data missing expectations rather consistently already

Good luck getting that unemployment number down.  Next weeks March NFP print should be interesting.

Mon, 03/26/2012 - 14:25 | 2291866 SeverinSlade
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I'm still waiting for when UI prints at negative due to  a CTRL-C/CTRP-V error of labor participation 6.3% instead of 63.0%.


Only then will their manipulation be exposed to the sheeple. 

Mon, 03/26/2012 - 14:33 | 2291887 Moneyswirth
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And the inevitable "the economy created or saved 10 billion new jobs this past month.  The number could've been bigger but alot of job seekers took tiime off from their search because of the unusually warm weather."


Mon, 03/26/2012 - 15:46 | 2292128 walküre
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jobs "created or saved"

classic propaganda piece. how can people not think this is all bullshit?

Mon, 03/26/2012 - 14:20 | 2291835 bullnutz
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Stack your phyzz while you have the chance.  The Doc at SilverDoctors selling 90% Junk for 5 cents under spot


Mon, 03/26/2012 - 14:21 | 2291842 Jason T
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If you think you have a magic money tree, then money will become as leaves do.. picked up and thrown in bags or burned. sic Ron Paul

Mon, 03/26/2012 - 14:23 | 2291848 devo
devo's picture

They have less impact because the market front runs, so an official QE3 announcement is really QE4, etc.


Mon, 03/26/2012 - 14:24 | 2291859 Hedgetard55
Hedgetard55's picture

What is the proper punishment for that Professor Moriarty of financial crimes, the BenBernank?

How about we drop him off on a deserted island in the Pacific, give him a pistol with 100 rounds, a sleeping bag, a first aid kit, a canteen, two sets of clothes, a huntingknife. We come back in a year, if he is still alive we take him home and put him in prison for life, or allow him to stay on the island permanently.


Mon, 03/26/2012 - 14:59 | 2291973 adr
adr's picture

Nah, lock him in a room with a sharp knife and 1 gallon of water. Tell him if he wants to live he'll need to eat his own fingers and toes. Or he can just slit his wrists and end it.

Personally I favor chaining him up to a wall and force feeding him his own fingers and toes, cauterizing the wounds with a blowtorch each time. That way he can endure the representation of the intense pain he has inflicted on a few billion people for as long as possible.

Mon, 03/26/2012 - 14:25 | 2291861 LongSoupLine
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Less impact?  Look at this bullshit ramp job going on right now.  Ohhh, you mean "real", "productive" impact...got it.

Mon, 03/26/2012 - 14:24 | 2291864 Bartanist
Bartanist's picture

Of course, because malinvestment is not investment.

People really have to understand that, regadless of what the Fed continually says its purpose is, the effect of its actions are the only thing that is important. And, its actions say that it is all about putting control of ALL assest (of significance) in the hands of its cronies. It is a complete takeover.

When there was real capitalization instead of funny-buck manufacture and distribution, one could argue that the US and the world prospered from the creation of "money". Now, since the effect is the exact opposite, one has to agree that the Fed's effect is disasterous on the US and the world.

Mon, 03/26/2012 - 14:25 | 2291867 GrinandBearit
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I'm sick of waiting for it.  For crying out loud, just FUCKIN' CRASH ALREADY!

Mon, 03/26/2012 - 14:36 | 2291891 Sudden Debt
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Patience little padwan, he who owns the silver and gold can wait and buy more before printing happens.

Mon, 03/26/2012 - 14:25 | 2291869 gjp
gjp's picture

It's having all the impact the central planners want.  Stock market euphoria, bond markets still well bid at insane low interest rates, and people all over the world still accepting US dollars for their wares.  Central planner nirvana.  Try telling them it's not working.  What do they have to be disappointed with?

Mon, 03/26/2012 - 14:27 | 2291872 Ted Baker
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Mon, 03/26/2012 - 15:02 | 2291989 ChrisDG74
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April 16th. The Bernank don't work on Sundays. Only the little people work weekends.


Mon, 03/26/2012 - 14:32 | 2291880 Sudden Debt
Sudden Debt's picture

Einstein was wrong when he said "only a fool repeats the same dumb things and expects a different outcome every time"!

Now what about that E=mc2

Mon, 03/26/2012 - 15:26 | 2292073 lizzy36
lizzy36's picture

No he wasn't.

The greater fool has always been the public, the retail investor. So far they aren't bitting this time around.

Confidence, going back to the same old pre 2008 market, hoping people forget, has so far been a completely ineffective strategy.

Only time will tell whether greed eventually wins out.

Mon, 03/26/2012 - 14:41 | 2291904 virgilcaine
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Only something BIG will end this party, A Sov default, WW3,  something like that.. until then.

Mon, 03/26/2012 - 14:42 | 2291910 devo
devo's picture

This reminds me of a 4th of July firework show finale.

Mon, 03/26/2012 - 14:49 | 2291930 Sudden Debt
Sudden Debt's picture

When that drunk guy threw his burning sigaret in the boxes witht he reamining fireworks?

Mon, 03/26/2012 - 14:45 | 2291915 optimator
optimator's picture

But, it is working out fine for our owers.

Mon, 03/26/2012 - 14:44 | 2291917 Temporalist
Temporalist's picture

I love the all out assault by the Frederel Preserve against gold and the "ensuring" the public about the sound monetary practices only to announce the "need to print" more just one week later.


Ehh most likely they are unrelated...like inbred ex-royalty..

Mon, 03/26/2012 - 14:46 | 2291924 unionbroker
unionbroker's picture

when you have access to endless cash supplies at 0% then the market can go on forever.. 0% cash cost = 20000 D0w

Mon, 03/26/2012 - 14:51 | 2291942 Sudden Debt
Sudden Debt's picture

Yes, and greed will take over and funnel the money into commodities

Mon, 03/26/2012 - 14:55 | 2291956 q99x2
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Mon, 03/26/2012 - 15:02 | 2291987 adr
adr's picture

QE3 may be good for a few hundred thousand homes bought up by speculators. Stocks like Select Comfort can go even more parabolic. There is no market, it is only an invite only casino where all your bets are covered and you get to keep the winnings.

Mon, 03/26/2012 - 15:02 | 2291988 devo
devo's picture

If QE3 is on the table, I think we can safely assume April earnings are going to be bad...


Mon, 03/26/2012 - 16:29 | 2292284 1eyedman
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Mon, 03/26/2012 - 16:29 | 2292299 1eyedman
1eyedman's picture

market is well into counting the chckens before they're hatched; or even before they are laid.  quite the pavlovian response today...but does make for a nice s/t blow-off 5th wave up with very nice fib relationships to the october low and high and the climb out of 11/24.   just making an observation.  

its also too bad that the spending/consuming big ben is looking for wont EVER come back; boomers largest asset- their homes' equity has been gutted---no future spending from that; gen x and y have been pre-emptively gutted of any equity or savings and saddled with student loan debt---no ramp up in spending coming from them.   maybe we can all hope that generations of chinese and indian culture will suddenly change and they can 'spend' on something.


Mon, 03/26/2012 - 15:31 | 2292088 walküre
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In a nutshell.

Hello, Benster! "Funny" money doesn't increase demand.

Even more of your "funny" money doesn't increase demand. It just increases cost and prices.

Benster, you're exposed and you have no more UMPF!

Do NOT follow this link or you will be banned from the site!