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Macro Data Weakening On Seasonal Unwinds
Much has been made of the positive impact that seasonal adjustments have made to the crop of supposedly better than expected macro prints that remain anecdotal evidence of why the S&P 500 is trading above 1400 again. Unfortunately the pleasant after-glow of a time-series-based adjustment that has become increasingly unstable and hard to justify post-crisis is starting to fade. Morgan Stanley's Business Condition Index dropped a very significant 5 points in March to 51%. Just as pointed out here (in Bernanke's scariest chart) the seasonal factors are almost entirely responsible as the trend of recent data is just not meeting expectations (both in analyst and market perceptions). Under the surface, things are a little gloomier also as their Hiring Plans Index dropped for the first time in six months and the business conditions expectations plummeted 11 points to 57% in March. Given this (leading) data, is it any wonder MS believes QE3 is inevitable and imminent? Though as we have noted again and again, until the market starts to get the sad joke that unless market momentum chasers start to defect from the current strategy, we suspect the impact of QE3 (if it comes) will be far more muted (in stocks) than the previous acts of exuberance by the Fed (and their buddies) - as implicitly the cost of the much-higher-than-normal strike price of Bernanke's put means ever-increasing QE needs to counter underlying weakness/perception.
Source: Morgan Stanley
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"Given this (leading) data, is it any wonder MS believes QE3 is inevitable and imminent? Though as we have noted again and again, until the market starts to get the sad joke that unless market momentum chasers start to defect from the current strategy, we suspect the impact of QE3 (if it comes) will be far more muted (in stocks) than the previous acts of exuberance by the Fed (and their buddies) - as implicitly the cost of the much-higher-than-normal strike price of Bernanke's put means ever-increasing QE needs to counter underlying weakness/perception."
But they'll die trying, right? This pony only has one trick!
QE3 has been inevitable and imminent for about 2 years now.
And what else would we get from QE3 besides irrelevant stock effect? $7 gas.
Tantric QE
The March NFP print should be interesting...
Probably up about 5 million new jobs I'm guessin.
Well, duuhh...
Im guessing 3 million jobs created, while the administration saved about 10 million jobs.
I'm surprised the administration hasn't redefined "jobs". How about all those campaign workers for Obama .. they have "jobs" right? They've probably created a million jobs just by running for re-election.
$5 gas like concrete highway dividers across a drag strip.
Ben won't print with gas at these levels.
He needs some good oil retracement before doing so.
But he should stop buying equities and let them drop as they should, a thing he might not understand.
Can't anyone email him with some instructions?
Print he must and print he will.
Why? With a litany of good economic news, why would he?
He will when there's bad news, after the winter's warm weather is undone in spring seasonal adjustments, but then it's too close to election day to risk the facade of Fed political independence.
And then there is oil . . . .
Relax. All is well! Bob Piss-on-me told me so this morning. (Could this guy be any more of a WS tool?)
Much has been made of the positive impact that seasonal adjustments have made to the crop of supposedly better than expected macro prints that remain anecdotal evidence of why the S&P 500 is trading above 1400 again.
S&P 500 trading above 1400 is mostly due to devalued dollar, but they never say that. They never mention the effect of inflation and devaluing currency.
Today's 13,000 Dow is 7,800 in 2007 dollars, still down 44% from the 2007 14,000 high.
Today's $1,700 gold is $1,020 in 2007 dollars.
They want all major currencies to devalue together so nobody notices. Forex pairs stay stable as all currencies slowly lose value.