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Will The US De-Couple? Or Is It Time To Re-Couple?
Via Peter Tchir, of TF Market Advisors,
Maybe, but not in the way everyone seems to think. Haven't we already decoupled?
YTD stock returns in the US are 0% for the S&P and Nasdaq, and the Buffet owned DJIA is actually up 5%.
YTD Performance (rebased to USD) for major global equity indices. The Dow is flat the last two months as every other index is showing lower highs and trending notably lower.
Euro Stoxx 50 is -18% YTD with Germany outperforming and Italy underperforming (it is basically the same performance whether expressed in $'s or Euro's since YTD the FX rate is basically unchanged).
Outside of the Euro users, the UK is down 7% and Switzerland is down 10% (again the FX rate versus $'s is finishing very close to unchanged on the year)
Russia, possible "savior" of Europe is down 20% or so depending on the index and is slightly worse when adjusted for FX moves.
Closer to home, the Canadian stock market is down 11% in loonies and 14% when converted to USD. Argentina is down 27% and 32% respectively. And finally there is Brazil. For another potential "savior" of Europe, it is down 17% in local currency terms, and 24% in $'s.
Japan is down 15% for the year, though with currency appreciation it is only down 12% for the year in $ terms. The Hang Seng is down almost 20% on the year. The CSI 300 index is down about the same (which seems strange for another "savior" country to be down by so much).
Even South Korea and Australia are both turning in -10% returns in $ terms for the year.
The final BRIC country (that are supposed to save Europe) is India, down 22% in local currency terms and a whopping 35% in $ terms.
So, could the US de-couple? Sure, but maybe we will just finally catch up to the rest of the world. The US stock market has outperformed the world this year. It seems just as easy that we decouple by other markets outperforming - especially since most people talk about the opposite occurring .
The data while better, is still not great (jobs seem to be getting created, but part-time salesclerks for the holiday season is not going to sustain a massive rally) and for all the talk about the US economy and data, we had Intel warn today, following Dupont and Texas Instruments warning last week. We seem to take record corporate profits as a given, but that should be questioned. Banks will also not benefit from DVA this quarter (unless something really bad happens in the next two weeks).
Another possible concern is that the dollar has been improving relentlessly since August. DXY was around 74 from April until the end of August. Great for exports. It is fast approaching 80 again, which isn't so good for exports.
We have decoupled, so I would be worried about re-coupling, or that we decouple in a bad way. The "decoupling" theory seems very priced in global stock markets so be careful using this as a reason to get too bullish.
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As Europe’s leaders roll up their sleeves and prepare to slug it out for the euro’s very survival, German parliamentarian Frank Schaeffler explains to RT why piling new debts on top of old ones can only lead to collapse. http://djia.tv/russia-today/eu-uses-euro-collapse-threat-to-blackmail-taxpayers/isn't obama the only politician who rolls up his sleeves?
JHK on Obama last night.... sums it up perfectly
+100 PAradigm change, deglobalization, energy moves, economic use of RM and energy whatever form. (recycling/econ energy). In case energy sky rockets (ME wars, embargoes, you name it) the US transport scene is horrendous : individual cars and long distances, USA needs rapid collective transport; big time.
O'bammy's take on WS 'legalese' is pathetic. He belongs to them.
De-Re-Me-Fe-See-Piss-off-COUPLE... bull shit - fuck the stock markets and all speculators and "investors" - unproductive, lazy, fucking scumbags.
Pie in the sky pipe dreams I wanna be rich mf cry-babies.
Get a job, fucking bankster losers and paper pushers.
Everybody go to work - make your own business and local production - boycott Chinese crap "goods" - BE INDEPENDENT.
Let's make stuff in the US again. FUCK FINANZIALIZATION AND FUCK GLOBALIZATION.
Amen - and Merry Christmas. ANd Cheers in Anglo Ale - the one good things left in Anglo culture.
Wait till Iran decouples a couple of tankers to the bottom of the Straits of Hormuz.
I was always wondering about that. The Strait of Hormuz has a maximum depth of 90 meters and it's narrowest point is 54 kilometers. Between that and the Suez Canal, the shipping routes have two choke points.
I have no idea what is being said on the tele, is anybody talking about physically blocking one of the choke points or is it the same ole dance?
Yea theres a ZH story today about the Iranians practicing dry runs to block the Straits.
This seems to be the perfect time to call out all the other currency manipulator's and do a trillion bucks of lsap to try to keep the rising dollar from crimping our recovery.
Sure, very soon the invisible hand of the market will step in to buy US securities. This, in turn, will solve all financial ills.
Decoupling is a myth in this interconnected global economy. Hence the term contagion. In 1997 when Thailand asked for bail-out money it was not granted because the US thought it was an isolated case. Wrong, next it caused the Asian financial crisis. Next they bailed-out Korea in order to avoid a global economical meltdown. If there was no decoupling in the case of Thailand or Korea 15 years ago, there will certainly be no decoupling possible now with Europe.
i guess it's bc the us is out of recession....
buahahahahaha
dream on bitchez, it's collective hopium
The US markets have outpeformed the others by 20-25% nominally. But if we take into account USD exchange rates, where do we stand on this? Just asking...
about same, the FX rates for most major crosses for $'s are about the same as they were at start of year..bizarre but true
All fiats are just paper going to parity and the "bizarre" correlation you see is engineered. Now get back on that wheel.
@falak
Did you read the article?
Jesus fucking Christ people are dense!
"yes I see the Dow is down 160 but how much have we lost in relation to Fridays close?" Sarc off/
I missing something there, I read it and it reads YTD.
I am evaluating relative performances since Jan 1...That seems the rational cut-off point. I agree that DJIA has outperformed bourses in EU and Asia by the amount indicated. WHats the blind spot on my screen?
Unemployment only looks to be declining in the US if you manipulate the numbers by eliminating people from the work force because their unemployment benefits have run out. They're not dead and haven't moved to another country. They are still unemployed, but few care anymore. Net income has appeared to rise for the past 3 years only through cost cutting measures by the S&P 500 et.al.. That game has about run its course. Many larger companies are already warning of future declines in net income and more will be joining that band-wagon as we go through 2012. There is still no real driver for growth.
Growth? Please don't use dirty words!
David Zervos- JEFFERIES: ...every investor must make contingency plans for that day in 2012 when a red line flashes across the bloomberg news screen - "Greece misses coupon payment, CDS triggers, Drachma to return"...
The catalyst for TBTF/SIFI bank "unwinds" will likely be a Euro credit event. If there is one rule for 2012 it is - "move positions to exchanges". The world of bilateral OTC derivative trading is about to be purged.
how about if Greece uses Groupon payments instead?
Germany caught in the jaws of biflation: as exports drop, wholesale price index reported today blew away expectations and is growing at an annualized 4.9%
Ben is spent.
If Ben was going to print and shower pallets of $100 bills on Wall St, he'd have already done it by now.
Its not possible to decouple untill politicians pull their head out of the ass of the politican in front of them. This is a world wide phenomenom. Until we hear a loud slimy pop as millions of politicians pull heads from asses there can be no decoupling. Unfortunately I think they actually enjoy this position so dont expect to hear any pops any time soon.
The other shoe has to fall off at some point. Even if people are getting jobs, wages aren't keeping up with CMI wages indictators. At some point, inflation will hit the average American, and it WILL affect how we treat each other, and the stress in the nation as a whole.
It may come as quick as Q1 next year.
I'd like to suggest the cause of the decoupling - something that I think has been mentioned recently on ZH - just look the Fed's own statistics on 13-week money supply, required reserves, etc. They grew significantly through August - October.
We're in yet another short-term manipulated "expansion". Just be ready for the markets to bubble and crash sometime between the new year and July. Sell into it.
The US markets would be down just as much as the international markets if Ben and his team of magician fraudster fairies at the PPT were not hard at work every day at 3pm...
I have been noticing this. I think it is time for a good, anti-de-coupling pairs trade: long the Rest of the World, short S&P500.
it's time to spoon in bed.
I remember a print this year of strong export growth amid a strong dollar so it's not so necessarily bad for exports unless we're only able to compete at the items that everyone else is doing which speaks to the overall weakness of relying upon the export sector for growth because if everyone can sell toothpaste (assuming its lead free) for the same $1 who's going to buy it? Martians?
Let's not rely on currency manipulation and be on the same trade as every other central planner... oh wait it's too late.
Isn't all this de-coupling/re-coupling just major world markets having sex with one another?
Lol, yeah right, more like the major world economies stepping on top of eachother to try to be the first out of the door of a burning building. If all the regions decoupled with eachother we would be facing an economic collapse.