Jim Cramer

"...we have now graded two years worth of Cramer’s picks: those made from January 2011 through December 2012. That amounts to 552 calls overall, of which 254 outperformed the index (46% hit rate). On average, Cramer’s picks returned -0.08% versus the 1.35% S&P 500 return over the corresponding period. That amounts to 142 basis points of quarterly underperformance, or 568 basis points on an annualized basis, which amounts to an F grade in our grading system."

"Buying" versus "selling" volume has diverged dramatically in the last few weeks as AAPL-buyback-driven exuberance has lifted US stocks to record-er highs (amid record selling from insiders). We've seen this pattern before but that time The Fed was neck deep in QE3 and Janet was proclaiming everything was awesome (with a dovish reassurance that they'd keep pumping)...

Mission Accomplished?

With more than USD 200bn of Treasury securities held by the Fed due to mature in 2016, the Fed will have to make meaningful monetary policy choices in advance. Fed VP Stanley Fischer commented on SOMA maturities in his speech last Friday, but it appears very few have taken notice as yet and even fewer comprehend the challenge soon confronting The Fed. Many believe that Twist had pushed maturities farther “into the future”. The “future” is Q1 2016. (Note: a shrinking balance sheet is a defacto tightening)

Janet's direct line..

So much for that wall of worry...

Despite a collapse in US macro data in February, Markit somehow managed to conjure a better than expected 55.1 print for US Manufacturing PMI. Under the covers employment creation was the slowest since July and inflationary pressures loom as selling prices rose notably. ISM Manufacturing printed 52.9 - a small miss vs 53.0 expectations - down for the 4th month in a row to 13-month lows, with employment at its weakest since June 2013. Construction spending's modest rebound in (seemingly un-weather-affected) December (after dropping in November) has been destroyed with a 1.1% drop in January (against expectations of 0.3% rise) for the biggest drop in 8 months.

While the divergence between macro data 'dismalness' and equity price exuberance is by now well known, there is a greater threat looming to the rampapalooza that is underway. As forward Price-to-Earnings ratios have soared in the last year (aided and abetted - as Alan Greenspan explained - solely by The Fed's largesse) so bottom-up earnings growth expectations have cratered. So much so that veteran stock market investors and traders now see the divergence between multiple 'hope' and growth 'reality' as "ridiculous." Just how ridiculous? Worse than 1987, 2002, and 2011, when stocks fell over 20% upon realization of reality.

On the day when the MSCI World Stock Index hits a fresh record high - enthused by the exuberance of the US markets - we thought it more than a little ironic that Global GDP growth expectations for 2015 just hit a fresh record low...

It's fact-checking time once again. Having questioned the credibility of Dallas Fed's Richard Fisher previously, we thought this morning's comments by St.Louis Fed's Jim Bullard were worth investigating:

*DOLLAR EFFECTS ARE MARGINAL ON U.S. ECONOMY, SHOULDN'T INHIBIT GROWTH, FED'S BULLARD SAYS

Which just seems odd given the rest of the world's competitive devaluation efforts to 'improve' their economies. What we found will not surprise... but do not show this chart to Bullard.

While Crude Oil and Dr. Copper are often cited as economic indicators, as we noted previously, in fact Lumber prices are the most correlated with ISM and GDP of all industrial commodities (h/t @Not_Jim_Cramer). That is a problem. Lumber prices are tumbling - breaking to 18-month lows today. We have seen this picture before, and it did not end well...