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Swirlogram Crashes Into Contractionary Brick Wall

Tyler Durden's picture





 

Following our discussion of the significant drop in Goldman's Global Leading Indicator (GLI), the 'Swirlogram' depiction of the business cycle (that we have described in detail here and here) has crashed hard into a contractionary phase. Three things stand out dramatically: 1) the velocity of entry into contraction (which empirically suggests a much harder landing) is extreme; 2) the difference between the initial and final data is dramatic indicating the false sense of hope from seasonals had given investors coming out of Q1; and 3) the current position of the Swirlogram is at nearly the same place as this time last year (with growth close to 2011 lows) - which we note was only solved by globally coordinated central bank largesse. With the market seemingly buoyed by risk sentiment currently, and with macro fundamentals still deteriorating, it appears biasing to the short-side makes sense should data weakness continue.

 

Source: Goldman Sachs

 


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Tue, 07/03/2012 - 10:57 | Link to Comment GMadScientist
GMadScientist's picture

Strange attractors, muppetz!

Tue, 07/03/2012 - 11:18 | Link to Comment Buckaroo Banzai
Buckaroo Banzai's picture

Well what do you expect. If you fill up the bowl with too much shit, the toilet won't flush properly.

Tue, 07/03/2012 - 11:48 | Link to Comment The Monkey
The Monkey's picture

Here comes 1380, and we're not done yet!

Frigging awesome.

Tue, 07/03/2012 - 13:18 | Link to Comment NotApplicable
NotApplicable's picture

"Aww, Geeze, Edith. Meathead's plugged up the tirlet again!"

Tue, 07/03/2012 - 10:57 | Link to Comment CreativeDestructor
CreativeDestructor's picture

Rally bitchez

Tue, 07/03/2012 - 10:58 | Link to Comment GMadScientist
GMadScientist's picture

Vapor-riffic!

Tue, 07/03/2012 - 11:03 | Link to Comment Comay Mierda
Comay Mierda's picture

 "it appears biasing to the short-side makes sense should data weakness continue"

BTFD BTFD BTFD BTFD BTFD BTFD BTFD BTFD BTFD BTFD BTFD BTFD BTFD BTFD BTFD BTFD BTFD BTFD BTFD BTFD

::pause to catch breath::

BTFD BTFD BTFD BTFD BTFD BTFD BTFD BTFD BTFD BTFD BTFD BTFD BTFD BTFD BTFD BTFD BTFD BTFD BTFD BTFD

Tue, 07/03/2012 - 14:00 | Link to Comment _ConanTheLibert...
_ConanTheLibertarian_'s picture

Reverse rally !zehctiB

Tue, 07/03/2012 - 10:59 | Link to Comment sudzee
sudzee's picture

My toilet kinda swirls just like that.

Tue, 07/03/2012 - 11:07 | Link to Comment tarsubil
tarsubil's picture

Maybe it will go down under and reverse spin in the contraction zone?

Tue, 07/03/2012 - 11:14 | Link to Comment TheInfoman
TheInfoman's picture

The world economy is in the toilet. 

Tue, 07/03/2012 - 11:24 | Link to Comment francis_sawyer
francis_sawyer's picture

So according to the Coriolis effect ~ if we move the economy to the southern hemisphere, things ought to work out different...

Tue, 07/03/2012 - 11:41 | Link to Comment Lofty
Lofty's picture

Yeah, we'd be upto our necks in it and need the services of a plumber...

Tue, 07/03/2012 - 11:00 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Everyone needs to wake the fuck up.  Despite ZIRP and NIRP there is a very real cost for capital creation, especially when you create no real fucking value.  The only other thing that fixes this is the need for real consequences for bad behavior.

Unfortunately, there have been no real banking laws since the last of them was eliminated in the 90's and the CONgress and SEC is 100% fully owned by the banks and financial houses.

Welcome to another long era of robber barons - sell into strength and hedge accordingly.

 

Tue, 07/03/2012 - 11:07 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

LoPdood, I should like to direct your attention to another effect, namely correlations.

The articles yesterday of individualt stock analysts being fired because stocks are all correlated with the index and the analyst serves no purpose . . . that derives from some recent data released based on M* -- namely,

that for all classes of equity, large caps, mid caps, small caps, divvie payers, divvie growers, EVERYTHING, there is for no individual class a correlation to the index lower than 90%.  This is utterly insane and there is some evidence it is extending itself.

Reason: there is no market.  The computers have erased price discovery.  Nothing is fundamentals anymore.

Tue, 07/03/2012 - 11:18 | Link to Comment LawsofPhysics
LawsofPhysics's picture

No shit, hence, the age of robber barons (unless you are foolish enough to really belive there is nobody on the other side of those computers).

Tue, 07/03/2012 - 11:15 | Link to Comment MachoMan
MachoMan's picture

kudos for using the phrase "real consequences for bad behavior" instead of "uphold the rule of law".

Tue, 07/03/2012 - 10:59 | Link to Comment HaroldWang
HaroldWang's picture

Trend is your friend in the market, regardless of what the Swrilogram says. And right now the trend in the markets is up. Hard to short into the market strength we've been seeing. It'll be a nice short but not fighting this trend that's pointing straight up.

Tue, 07/03/2012 - 11:09 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

There is no market.  You should not own any securities at all.

Tue, 07/03/2012 - 11:13 | Link to Comment HaroldWang
HaroldWang's picture

Correct, don't "own" securities or equities, just trade them. When they're going up, as they have been from the bottom of the range, you buy. At the top of the range you sell and short. Rinse repeat. 

It's not about "owning", it's all about following the daily trends and "trading".

Tue, 07/03/2012 - 12:40 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

Nope, you should not be trading either.

You are at the mercy of 10 millisecond response to an event that is entirely whimsical.

That's not trading.  That's not even gambling.  That's just waiting for your money to be stolen.

Get out of the market.  Entirely.  Forever.

Tue, 07/03/2012 - 11:48 | Link to Comment mendigo
mendigo's picture

Translation: Daddys buying you a pony, so play right.
Trend analysis is horseshit when it is largely the result of corrupt governments and thier lackys. It can come unglued tommorrow or it could take-off like a rocket - dependant on the humors of sir Bernanke.
The larger trend is that the market is unstable being driven by drunken salors.

Tue, 07/03/2012 - 11:01 | Link to Comment CreativeDestructor
CreativeDestructor's picture

Isn't this diagram a Fed's wet dream of circle jerk?

Tue, 07/03/2012 - 12:06 | Link to Comment Andy_Jackson_Jihad
Andy_Jackson_Jihad's picture

So who eats the biscuit when the line hits the origin?  Taxpayer or banksters?

Tue, 07/03/2012 - 11:04 | Link to Comment Dr. Engali
Dr. Engali's picture

Perfect cover for uncle Ben to print. Gas and oil is down, the economy is slowing,now if the stock market would break Ben will be free to print again. Of course he will have to make it big because ths will be his grand finale before the whole system blows up.

Tue, 07/03/2012 - 11:06 | Link to Comment This is the end
This is the end's picture

Bias to the short side, that is funny. There is no stopping this market higher and higher. The only way to play is long and strong until it implodes. They will put all of the money they can print into propping up the finanical markets. Apparently no one can or will stop them. Yesterday we had a recessionary PMI, Bullish!!! Today oil is up $4 on war in the Middle East, Bullish!!! Data does not matter, reality does not matter.

Has the economy gotten any better since 2008? Is anyone better off? Doesn't matter the S&P is pushing to new highs, which is a command to be happy and tell all of your government leaders how smart, great and good-looking they are.

Tue, 07/03/2012 - 11:17 | Link to Comment Spastica Rex
Spastica Rex's picture

Plenty of people are better off. Get real.

Tue, 07/03/2012 - 11:06 | Link to Comment Temporalist
Temporalist's picture

It's obvious that the recovery is only a month away! 

 

Shit Flavored Swirl-O-Grams...it's what's for breakfast!

Tue, 07/03/2012 - 11:07 | Link to Comment Turin Turambar
Turin Turambar's picture

It looks like a noose, and we're all caught in it.

Tue, 07/03/2012 - 11:26 | Link to Comment francis_sawyer
francis_sawyer's picture

More like TPTB giving all the serfs a collective 'swirlie'...

Tue, 07/03/2012 - 11:16 | Link to Comment Eastwood
Eastwood's picture

What the hell is this crap? Did GS really put that out? Where are the axis labels? Like sudzee says it might as well be his toilet flushing.

Tue, 07/03/2012 - 12:17 | Link to Comment bubbleburster
bubbleburster's picture

Not that he was alone in this call, but months ago I saw Dr. Marc Faber on an interview and he was clear in his prediction that by years end the world would be in recession.  Seems that his batting average is climbing as the swirling cesspool of financial leadership falls.  He was just as certain that Bernanke would go on printing money no matter what name we all gave it.  Ditto for European banks.  He is also fairly certain that the Euro will not survive.  We'll see on that one.  So much at risk if it rips apart.  BTW, notice that news media has now totally ignored Greece, as if they had not even existed?  World Cup over, back to cess pool investigations.....

Tue, 07/03/2012 - 12:22 | Link to Comment Overflow-admin
Overflow-admin's picture

Quantitave Easing Death Spiral ^^

Tue, 07/03/2012 - 12:41 | Link to Comment Oldwood
Oldwood's picture

I would like to see a graph showing a timeline contrasting Obama's popularity or electability to the economy's leading indicators. I believe that in a general way, whenever Obama is up, the economy heads down. I know that is how I feel. When the media is telling me how much Obama is loved, or how his chances of re election are good, Ii feel like puking and don't want to spend a dime on anything that doesn't secure my future.  Is it just me? I hear people suggesting that conservatives are deliberately trying to kill the economy to defeat Obama. Not true from my pespective, as i want to prosper, regardless of who is in control. I just don't want to be stupid and behave as though it doesn't matter. Is it all a coincidence that once Obama was declared to be in the lead by the media in 08, that the economy started its nose dive? Is it also a coincidence that the economy actually showed improvements durring the time the Tea party and the conservative surge was going on for the 2010 elections? And that it all started back down the drain once we figured out that the new conservatives were just as ineffective as those before them? Which way is it going now with Obamacare upheld and Obama's rating improving? Is it all a coincidence or what? Nothing makes sense to me except that his popularity is killing the economy. It seems impossible that his popularity is improving because of this stinking economy! But then again, it would seem equally impossible that the stock market is going up with the lies, corruption and financial wreckage all around. I'm so confused.

Tue, 07/03/2012 - 12:42 | Link to Comment FranSix
FranSix's picture

Edith:  "Where's Archie?"

*very loud, unmitakeable sound of a toilet flushing*

*hilarious laugh track*

Tue, 07/03/2012 - 12:59 | Link to Comment Arkadaba
Arkadaba's picture

Edit: wrong thread - so much fraud, so little time

Tue, 07/03/2012 - 13:15 | Link to Comment Socialized Losses
Socialized Losses's picture

Toilet bowl dynamics. We're almost flushed.

Tue, 07/03/2012 - 13:51 | Link to Comment FREEEEEEEEEDOM
FREEEEEEEEEDOM's picture

This will only get tighter and tighter until its recession by breakfast, depression by lunch, boom by supper and bust by midnight.I predict algos will eventually grow a sexual identity due to massive overstimulation. Bearish human and bullish machine in the long run...

Tue, 07/03/2012 - 14:21 | Link to Comment Grand Supercycle
Grand Supercycle's picture

Rally Warning Confirmed...

As mentioned earlier, further equity strength and USDX weakness expected this year according to my analysis.

http://www.zerohedge.com/news/2012-12-24/market-analysis

Tue, 07/03/2012 - 16:00 | Link to Comment janus
janus's picture

i believe WB Yeates had something to say about the current state of affairs:

http://www.youtube.com/watch?v=4EUIc4ZwVp0

and so it is...

the center cannot hold,

janus

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