Market Priced In Dollar Devaluation Terms Down 8.6% YTD, Almost Back To Jackson Hole Levels

Tyler Durden's picture

For all those wondering if Bernanke has given himself the permission to go ahead with QE3 (which is the only permission that matters, coming courtesy of his bosses at Goldman of course), here is the chart that confirms it. Priced in the anihilated "value" of dollar, the S&P is now almost back to Jackson Hole levels. It is also down 8.6% for the year. As for that far more prosaic chart of the market priced in gold, we won't even go there: basically the entire rally since the March 2009 low has now been wiped out.

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the not so mighty maximiza's picture

We are where we begain. We are starting again soon where we left off to end where we started before.

Pay Day Today's picture

All this has happened before, and all of it will happen again.


SolidSnake961's picture

when is jackson hole?

bobafett164's picture

So who is this jackson guy and why is everybody still talking about his hole?  I'll never understand you kids on here! 

DormRoom's picture

QE3 would be very problematic for the USD.  you're already seeing pushback from the BOJ & Swiss Central Bank.


QE1&QE2 didn't help with unemployment.  Fiscal stimulus via infrastructure spending and an Infrastructure Bank is how the US gets out of this mess.


I say nothing will be announced until 2012.

Mike2756's picture

Or until spx 600, whichever comes first.

DormRoom's picture

if spx goes down to 600, but there's not a spike in jobless claims, or disinfation in CPI, the Fed will be ok with it.  QE was an expirement in creating a wealth effect from portfolio rebalancing, and intended to incentivize businesses to deploy capital, and start hiring  It's been an utter failure.  Consumer deleveraging remains very strong.  If I can see this, central bankers will too.


Hopefully the FEd will try to convince Congress of the need for more fiscal stimulus, before going all in with QE3.  If we do see QE3, it'll be the end of the USD as the reserve currency, creating an even bigger systemic risk.

buzzsaw99's picture

-1 for talking as if the fed owners give a crap about anything other than themselves.

dpr10's picture

more fiscal sti....whattttt---what are you on my friend....they just raised the ceiling and most of the additional 400bn that they have is already goneeee....

dpr10's picture

more fiscal sti....whattttt---what are you on my friend....they just raised the ceiling and most of the additional 400bn that they have is already goneeee....

dpr10's picture

more fiscal sti....whattttt---what are you on my friend....they just raised the ceiling and most of the additional 400bn that they have is already goneeee....

dpr10's picture

more fiscal sti....whattttt---what are you on my friend....they just raised the ceiling and most of the additional 400bn that they have is already goneeee....

tekhneek's picture

You act like they give a shit about the actual outcome of their actions. They wouldn't have raised the debt ceiling if that were the case. Hell, I'm sure there's a whole universe of things they wouldn't have done if htat were the case.

Wrong you are, sir. They'll announce whatever-the-fuck-they-want to announce, and it will most likely be QEIII on Augsut 9th, 2011.


Archimedes's picture

Apparently everyone and his brother thinks the Fed will start actually buying houses! I have seen this posted at least ten times on numerous sites.

I have no idea if the Fed has the authority to buy home or what they would do with them or how they would manage it but it stinks of desperation. Also, that whole operation twist thing. Isn't that now out the window with yields already so low?

I really don't see what the Fed can do. More liquidity certainly won't help things.



buzzsaw99's picture

maiden lane much? the fed owns a shopping mall down the street from here.

dwdollar's picture

Do you live in OKC buzzsaw? They own Crossroads Mall in south OKC. However, I wouldn't call it a mall anymore. More like a thunderdome.

ping's picture

Which way is it? I mean, if, theoretically, I needed a Thunderdome to test something in. Which I don't.

And definitely not involving midgets.

zorba THE GREEK's picture

According to CNBC's Ron ' InSANEa', we will have QE3 but in different form
and much more potent.

Archimedes's picture

Ha! Well CNBC always drags out the useless dipshits. It amazes me how that show is still on the air. I wonder how Ron's Hedge fund is doing...oh that's right.

buzzsaw99's picture

He couldn't make it in the real world so he went crawling back to cnbs.

Reptil's picture

Super QE administerd by a Super Congress in a different form? A very large suppository?

When is the ECB going to "spring into action"? Is that today? That's what the FED's waiting for IMO.

hedgeless_horseman's picture

As you go to sleep tonight, remember that we closed just above 1200 on 9/26/08.

hamster wheel's picture

I'm going to force myself to watch Cramer tonight, just for giggles.

Eireann go Brach's picture

Reports that O'robyomomma literally shit his pants at his birthday lunch when he heard the news about the DOW have yet to be confirmed! but the stain on his kaki's probably gave it away when he got up to go to the bathroom!

Burticus's picture

C'mon, Tyler, please humor us anyway by showing three-year charts of the S&P500 index measured in FeRNs ($SPX) compared to a chart of the index measured by a stable yardstick ($SPX:$gold).  Index is quickly approaching the March 2009 crash low, measured in gold.  I wish I was young and sophisticated enough to attach myself.

Of course, millions of poor unwitting saps will get taxed on their stock "gains" even though they have lost buying power.

Random_Robert's picture

I'm a huge Constitutionalist, but one feature of European Parlimentary gov't I sure wish our Founders had provided us with is the vote of no confidence....

I'd like to set this country on a path to weekly Congressional elections until we can get a crew in DC that understands what the will of the people is really all about.



ping's picture

There is literally no downside to this plan. I'm in. Incidentally, we can hold the congressional sessions in a nifty new property I've just picked up in Buzzsaw.

adr's picture

So what? The market is down 10% but stocks like Chipotle are only off a few bucks and is still trading at $313.00 with it's insane P/E. Linked-in is trading over $100 again.

QE1 and 2 doubled and tripled the values of so many stocks that we need a total collapse losing $100s of dollars per share just to get back to reasonable valuations.

Netflix needs to drop to somewhere around $50 to make me a buyer. The great Ponzi has made people believe that corporations with extremely poor business models run by idiots are somehow worth billion dollar valuations.

This sell-off means nothing, absolutely nothing. Someone who bought just about any BS momentum stock in 2010 can sell off their shares for double what they paid. Sorry my friends but that is not the definition of a market in crisis.

Grand Supercycle's picture

S&P500 head and shoulders target is 1,176 and further downside

As mentioned for some time - S&P500 monthly has been tracking sideways this year. This extensive distribution signified a bearish big picture and that a significant downtrend would follow.

gnap's picture

Listening to NPR, people are started to smurf up and smell the smurf berries.

tony bonn's picture

the moron powers that be could have let the market crash all the way in 2008/2009 to purge the system of its indigestion, constipation, and cancer but of course as conceited fools they could not....the market should have hit 5000 or so and seen many marquee names go belly up but life would have continued and recovery begun...

yet in a sclerotic dirigiste fascist kleptocracy all money must be shoveled in the bellies of banksters so that tftf can become a self-fulfilling prophecy....

fuck the banksters and their goddamned incompetence and engineered destruction.....

Reptil's picture

Yes, all this, including the "exend and pretend" is purely artificial from a macro economic POV. So many missed opportunities. Here in europe it's exactly the same. They could've easily fixed it, of course it would've hurt, but fixing it is not the plan. A world reserve credit card is the goal. United in debt at last. That too isn't going to work either.

cranky-old-geezer's picture

People are polarizing into 2 camps: Paper-world camp and real-world camp.

Paper-would camp is people making their living trading financial paper. In America it starts with TBTF banks at the top, extending all the way down to individual paper-trading investors.

Paper-world camp believes paper values are all that matter. They want paper values to keep rising.

These people see only nominal values. They ignore what's happening to currencies their paper is valued in. They ignore how the US dollar is losing value against a defacto standard like gold. They ignore how the Euro is losing value against a defacto standard like gold.

It doesn't have to be gold. It can be milk, eggs, bread, Jack Daniels, cigarettes, ammo, gasoline, silver, copper, Campbells Soup, any stable real-world commodity not subject to wild supply-demand swings.

Try telling an investor up to their eyeballs in AAPL the dollar is losing value. They ignore it. They block it out. Try telling a banker up to their eyeballs in T-Bills the dollar is losing value. They ignore it. They block it out. Try telling an MBS investor homes & shopping malls backing those MBS are losing value ...rapidly. They ignore it. They block it out.

People in the paper-world camp simply ignore what's happening in the real world. They just ignore it. As long as their paper investments are gaining value in nominal terms, they're happy.

They ignore how the Fed is printing more currency, putting it into the stock market via proxies, bidding stock prices up. That AAPL investor couldn't care less. They ignore how the Fed is printing more currency, buying T-Bills, bidding T-Bill prices up. That T-Bill investor couldn't care less. That MBS investor couldn't care less how Freddie & Fannie are having to borrow billions of dollars ...from the Fed ultimately... to keep paying those MBS returns.

To some extent they're right. Fed has more or less guaranteed their paper investments aren't going to lose value nominal terms. Fed isn't going to let AAPL and NFLX and T-Bills and MBS collapse back to their real-world values. No way. Fed will print all the currency needed to keep those paper values inflated ...and rising nominal terms.

Yes, Bernanke has pledged his firm loyalty to that paper-world camp and their paper investments. And he can make good on that pledge. He can print all the currency needed to keep those paper investments inflated ...and rising nominal terms.

Yes, Bernanke is single-handedly propping up that quadrillion dollar paper-world. Both here in America and abroad. Yes, he'll print hundreds of trillions of dollars if necessary to keep that worldwide paper world propped up.

We're only seeing the beginning of Fed bailouts. $700 billion TARP? Peanuts. $600 billion QE2? Peanuts. $2,000 billion post-TARP back-door bailouts? Peanuts. $3,000 billion foreign back-door (off-balance-sheet) bailouts? Peanuts.

Bernanke has pledged to single-handedly prop up that $1,000,000 billion worldwide paper-world.

How much currency will he have to print ultimately? $500,000 billion? $500 trillion?

I'd say that's a good guess.

What do you think printing $500 trillion is going to do to the US dollar?

Make it lose world reserve currency status perhaps?

Make it worthless perhaps?

Collapse that entire paper-world to ruins?

Collapse the American economy to ruins?

Collapse AMERICA to ruins?

The real-world camp believes all five will happen.

Alpha Monkey's picture

So, what you're saying is, Buy Gold?

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