Jim Cramer

Same Shit, Different Day; yet again the S&P 500 is trading tick-for-tick with the all-important EURJPY cross rate. As the following chart shows, its all about fun-durr-mentals...

If you BTFATH today, this is the forward-looking fundamental backdrop that is supporting your decision...

You decide...

The last few years have seen over $10 trillion in global central bank liquidity 'drugs' pumped into the system of the world's economy. Some may remember the '80s commercial, "this is your brain on drugs;" we suspect, after looking this chart below, they will want to "just say no" to the Fed...

With the almost extinction of 'bears' we noted last week, the bull-bear index has now crossed the Rubicon into a euphoria mode that marked the turning point before the last 2 major corrections in the US equity market. Of course, we are sure, this time is different; but hasn't the Fed 'always' had our back? Perhaps, as GenRe's CIO notes, "gravity will win," after all?

Until early May of this year, trends in US macro fundamentals and US stock markets were 'relatively' well correlated. However, since the first stirrings of Taper concerns, the relationship has seemingly explicitly inverted. Day after day we see markets react to "good" or "bad" news but over time, as the following chart shows, the Fed's total farce has been exposed. Simply put, if the last 7 months of market-macro relationships hold (which makes sense in a world entirely driven by Fed liquidity), the Bulls should be praying for the economic fundamentals to collapse or things will get painful fast for stocks.

"Peak Hope"...?

On the heels of his recent appearance pouring cold water on Jim Cramer's housing recovery exuberance, recent Nobel Prize winner Bob Shiller unloads another round of uncomfortable truthiness (presumably on the basis of his future-proofing tenure guaranteed by the Nobel). "Bubbles look like this," Shiller tells Der Spiegel, adding that he is, "most worried about the boom in US stock prices." As Reuters reports, Shiller is concerned since "the world is still very vulnerable to a bubble," and with stock exchanges around the world at record highs despite an economy that is "still weak," the Nobel winner proclaimed, "this could end badly."

Faith, hope, and confidence are the 3 key factors driving stocks at this point with fundamentals lagging an awkward 4th place. Faith in the perpetual central bank put (and bad news is thus good news); Hope that repeating the same 'experiment' following its previous failures will work this time; and confidence that the old normal is re-attainable (no matter how many times we kick the can). Year-to-date, S&P 500 earnings are up around 7% (and the trajectory is declining); accordingly, as we noted previously, confidence is ultimately responsible for levitating nominal stock prices through multiple expansion.. and is responsible for the rest of the market's gains. With confidence now fading (according to most surveys) investors will not be willing to pay increasing multiples unless they are confident that the future streams of earnings are sustainable and forecastable...

Dodos, Dinosaurs, and soon 'Bears"...

Forget "A Tale Of Two Cities," the entire world is "A Fiction Of Two 'Economies'"...

Presented with no comment*...

This isn't going to end well...

With all eyes glued to the anniversary of the assassination of JFK 50 years ago, we thought it worth noting that the death of another important American figure - the USDollar - began exactly 100 years ago. Today in 1910 Sen. Aldrich, 1 yr after introducing an amendment to establish an income tax, convened the first secret meeting at Jekyll Island.

With the duration of the current bull market now the 4th longest in history, we thought it worth noting just how unusual this business cycle has been. As the following chart shows, the current 'expansion' has lasted longer than 80% of all the 33 previous NBER expansionary periods. Of course, given projections from Wall Street to the Fed, there will never be another recession (by decree) ever again...