Jim Cramer

$1 Trillion worth of central banking money printing around the world just does not seem to go as far as it used to... behold, the death cross of faith in monetary policy.

You really can't make this shit up. From the funniest person on financial comedy TV (whose most memorable TV appearance will always be roaring that Bear Stearns is fine days before its collapse), here is his "opinion" on Best Sell Buy, entirely in his own words.

While victory was declared yesterday, today was a let-down for the exuberant. High beta (NASDAQ and Russell) pushed on but the S&P, Dow, and Trannies slid leaving the NASDAQ YTD best performer (+1%) and the S&P back into the red for 2014. Financials underperformed, Utilities outperformed. Treasuries rallied all day - with the long-end underperforming and a notable flattening across the curve (30Y -2bps on the week, 5Y +2bps). The USD had a quiet day as JPY strengthened modestly (hence the weakness in the S&P) as overnight AUD weakness (poor jobs data) left that carry pair alone in the dark. VIX and credit markets have been notable underperformers relative to stocks in the last 2 days. Commodities were quiet all day with some early downside pressure in the precious metals unwound (leaving then down 0.5% on the week). Of course, it wouldn't be the US equity market without the ubiquitous VIX slam attempt to ignite momentum and get the S&P green - it failed for once!

While the market seems to have rapidly given up worrying about the piss-poor jobs data from last week, the fact of the matter is the longer-term trend of 'employment' in America is anything but questionable. As we pointed out, and was so broadly understood, the number of people in the labor force in American is fading fast. In fact, as the chart below shows, the last 2 times the civilian labor force fell on an annual basis like this, the US economy was already in recession...

As equity markets revert to their new normal BTFATH, Japanese-Yen-pinned reality, we thought a gentle reminder of the longer-term state of the real (not financial) economy would prod more than a few into the realization of just how 'encouraged' they should be by the nominal high after nominal high that is gloated over day after day...

Following yesterday's worst day in stocks in 4 months, something had to be done. Starting at yesterday's US close JPY was sold after defending USDJPY 103 and that - along with a slamdown in gold, silver, and VIX provided the admittedly low volume melt-up in stocks today. Trannies and NASDAQ made it back into the green year-to-date. The small beat in retail sales this morning trumped the relative hawkish tones from Fed speakers today as the best day for USDJPY since the taper provided enough magical carry juice to lift stocks by their most since the taper (and the NKY up 400 points) with JPY-ES correlation over 0.92 today. Treasuries bled higher in yield with the belly underperforming (to unch on the week) and 5s30s flattening 3bps. The USD was bid against all the majors with JPY's move the largest as CAD retraced its gains from yesterday to its weakest in over 4 years. Gold and silver were quadruple-whammied today with 4 legs down after daring to show strength yesterday. VIX floored out at 12% once again and leaked higher all afternoon with a late-day press to try and ignite more buying in stocks. In summary, stocks mirror-imaged yesterday's dump with a half-volume pump, that is all.

Presented with little comment aside to ask (rhetorically of course) how much longer the crushed consumer can subsist on a diet of increasingly saturated credit and dwindled-savings before retail sales revert to reality...

While the Fed pays lip-service to its increased transparency, the volumes of caveats and wordsmithing we exposed last week continue to surge. The problem is becoming worse for the Fed and is showing up in the oddest correlation to the Fed Balance Sheet we have found yet. As Deutsche Bank's Thorsten Slok shows, as the 'unemployment rate' approaches the 6.5% 'threshold', FOMC statements have surged in their verbiosity. Simply put, as Slok quantifies, it is becoming more and more difficult for the Fed to explain (away) what it is doing (and more and more expensive). And another thing we can look forward to: when the Fed's balance sheet hits $1 quadrillion in a few short years, at the current pace of expansion the FOMC statement will be 25,000 words, or the equivalent of a 100 page book.

For most of the major US equity indices today's plunge was the worst day since August 27th. All indices are now negative year-to-date once again as the outperforming Dow Transports were smacked over 1.8% from its intraday highs. NASDAQ once again touched green year-to-date early on in the day, then tumbled aggressively. Some of the best post-Taper performing sectors were slammed hard today with builders, financials, and discretionary spanked.  USDJPY 103 was defended heavily but stocks had already lost any connection as correlations broke rather notably. As we noted earlier, short-term bills were in heavy demand (and yields turned negative); Treasury notes and bonds rallied 3-4bps. Early weakness in gold and silver were rapidly dismissed with as PMs surged to fresh one-month highs ($1255 gold) and 2-month highs ($20.47 silver). VIX, after dropping below 12% early on smashed higher to close at 13.6% (following Friday's extreme steep close).

With today's biggest drop in stocks in over 4 months, we are reminded of three recent charts that raise considerable questions as to the path forward. From Mclellan's 1928 analog to Hussman's bubble trajectory and the extremes of bullish sentiment, this week marks a 'line in the sand' for bulls to take this to the Hendry moon or for it not to be different this time...

The economy is Boom(er)-ing...

Whether one sees this as a worrisome indicator of social unrest to come; or confirming evidence that the safety net in America provided by an increasingly fearsome government is only going to get bigger... there can be little doubt that this index is a dismal reminder of the 'real' recovery in America today...

There is the full-time vs part-time jobs debacle, the questions over job-quality, the "no country for young workers" problem, and Bernanke's "born-again jobs scam," but nowhere is the real 'recovery' in American jobs less evident than in the actual number of employed males...

USDJPY remains in charge of US equities this morning as hope sprang eternal for a few moments when the NASDAQ managed to go green for 2014 shortly after the open. However, the weakness in USDJPY began around Draghi's speech and stocks in the US inevitably caught down to the carry unwinds. Short-dated Treasuries continue to bleed higher in yield and the 5s30s curve is now its flattest in 4 months (and 2s30s 2-month flats) Credit markets have been waving a red flag for a few days and high-yield and investment-grade credit risk is now back at its widest since Dec 20th. VIX is leaking modestly higher as it seems managers prefer to 'sell' than 'hedge' as the realization of the Fed's QE-costs-and-benefits statement sink in.

As the following chart shows, investors can worry no more of over-exuberance, uber-complacency, and super-confidence as the AAII bull-bear survey saw bulls drop to a mere 60.6% this week... panic over... Not!