Just 3 Charts

As the cracks in the vineer of central bank omnipotence grow ever wider, some brief reflection on the following three charts may awaken some 'animal' spirits of a different sort as the gap between fundamental reality and 'market' perception has never been wider...

 

Bottom-Up - It's Ugly...

Before-tax corporate earnings fell 4.9 percent in the second quarter from a year earlier, the fifth consecutive decline and the worst streak since the end of the recession in mid-2009, Commerce Department figures showed on Friday. The profit slump, included in the report on revisions to gross domestic product, softens the outlook for already-weak business investment and also poses a risk to continued strength in hiring, which has been a bright spot for consumer spending and for the economy.

 

Top-Down - It's Worse...

Since the reality-awakening lows in February, global central banks have unleashed over $1.8 trillion of freshly minted QE across various asset classes (e.g. corp bonds in Europe, Equity ETFs in Japan, gilts in UK) which has enabled the facade of confidence to spread - lifting US equity markets (and just look at EM inflows) to record highs as every fundamental indicator (except the well-managed jobless claims and payrolls data) shifts from bounce to bad to worse.

 

And The Wall Of Worry has Fallen...

 

Those trillions of dollars have enabled the biggest surge into short VIX futures bets in history as the so-called 'most-hated' rally of all time is now, by far, the most speculatively embraced with Dow and Nasdaq futures also having never been so speculatively long positioned.

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We are sure none of this matters though... corporate profits disappear, economic growth turns negative, industrial production and productivity collapse, but Dow hits 100,000 thanks to VIX slamming to zero as the world's central bank balance sheets go to the moon alice...

Bonus Chart: It seems one asset class was paying attention...