Stock Prices vs. Durable Goods Orders: Disconnected

Over the past two decades, whenever the year-on-year trend of durable goods new orders has been falling and subsequently drops below -5%, stock prices have generally followed suit -- except recently.

One reason why things are different this time, of course, is the Fed's program of quantitative easing, which is helping to keep stock prices propped up despite a deteriorating fundamental outlook.

Looked at another way, the current Wall Street-Main Street disconnect could be seen as further proof that, for all the Fed's claims to the contrary, its policies are doing little or nothing for the real economy.

The insanity continues.

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Comments

[roger]

Disconnect metamorphosing into global confrontation.
Because of quantitative easing fears are increasing about currency wars, (which in reality already exist) another clog in the wrong direction considering that global
trade is the key to prosperity. Of course in the mean time Ben keeps his job.

[Tom]

All civilizations collapse and ours is just beginning to do so. The past few years have shown the trend weatherwise - hotter and either wetter or dryer, depending on location with stronger storms, and we've also seen more earthquakes and tornados here in the U.S.

Financially, since all the large banks are insolvent we're living on borrowed time and with the Fed "printing money out of thin air" our currency will turn to scrip before too long. The full faith and credit of the U.S. is about to become meaningless nonsense.

The environment that has sustained human life for thousands of years is changing as a result of our failure to be stewards to it. We, as a species, are worse than army ants on the planet. We've fouled the air, polluted the waters to the extent that now the oceans have large dead zone areas from nitrogen run-off, huge plastic debris "gyres", coral reefs being bleached to the point that they can't support marine life, more acidification than sea life can stand, and now the very basis of the food chain - plankton, which also provide fully half of our oxygen - are dying off. We've also overfished the seas to the point that entire species of fish are on the verge of extinction.

The topsoil that is used to grow food on our land has become depleted by overuse of chemical fertilizers, while factory farming and monoculture crops have ruined the diversity that nature once provided. On top of that, large corporations like Monsanto have bought up many seed supply sources and are genetically modifying them so that farmers only get one year out of the crops (no saving of seed) and these seeds are also engineered to contain genetic pieces from other plants, animals, viruses, etc. that have not been tested for their long term effect on people. Recently a French report has noted that lab rats fed a diet of Monsanto GM corn died prematurely and developed tumors and lesions during their lives. Monsanto has resisted and lobbied to get laws passed that do NOT require their products to be labelled, so that consumers can make informed choices. As with Archers-Daniel-Midland, their products are so pervasive throughout foodstores that we have no idea what we're consuming or feeding our children.

The energy industry has been equally complicit in polluting the air with CO2, fine particulates, mercury, and many other noxious, toxic substances that are known to harm people. Why we still use coal to produce about half of our electricity is beyond me, especially since global warming has (beyond the shadow of a doubt) been solidly linked to the climate change we're experiencing. Nuclear energy has ALWAYS had big problems, not least of which is that they have no place to get rid of the radioactive waste and are currently storing it on site. After Chernobyl and Fukushima, there's definite reasons to be afraid of this source of energy. Hydro-power is suffering from drought conditions in many areas while the fracking industry is busy ruining millions of gallons of fresh water for each well they drill and ALSO have no place to dump the waste that they extract (the rest of it left underground to ruin groundwater and wells). The waste water is so toxic that it can't be "cleaned up" and made potable again.

We've been doing all this for far too long and now it's coming back to haunt us.
Our "civilization" is beginning the collapse that occurs when a species overpopulates to the point that it excedes the carrying capacity of the area. Well we've done that to the Earth now with our 7 billion and counting humans.

There's no "prepping" or "lifeboat" anyone can use to survive for very long once all these factors (and others) interact and feed off each other to make the living situation even worse each year. It'll become too hot or toxic to live for most species - including us, and resources we rely on for survival are disappearing (food sources, water, and topsoil just the top three).

[No savings, no income, no buying power]

How Crony Capitalism (Or The 'Undiluted Lunacy' Of The Fed) Corrupts The Free Markets

"This is the final abomination" is how David Stockman begins his epic rant on the Federal Reserve and crony capitalism in this clip. The "undiluted lunacy" of their actions prompted him to address the Fed's decision to "print ourselves to death" by saying "this has gone too far, it's street-fighting time" as he decides, instead of the erudite philosophical view of how capitalism is being destroyed by statist philosophies of one type or another, to launch into a full-strength tirade about The Fed. For starters, "The Fed is being run by the single most-dangerous man ever to hold high office in the history of the United States, "as he opines that Bernanke is more dangerous than Geithner, Greenspan, Summers, Hank Paulson all put together. Must watch...

"Bernanke is so bad that we should wish to return to the age of Marriner Eccles in 1935 - a fiscal Keynesian who believed that money-printing would fuel speculation and inflation; if the government were going to rob the people, it should do it the honest way - through taxes"

http://www.zerohedge.com/news/2012-09-27/how-crony-capitalism-or-undiluted-lunacy-fed-corrupts-free-markets

[roger]

Totally Disconnected.
Jobs are not coming back,ever. It is not only "labor' that is made obsolete, it is the human species that is targeted. Labor EI: the ability to do things with our hands (I am not talking about the labor class) has been the motor of knowledge and scientific advancement, from Feudalism to Industrial mode of production to automated assembly line to production run by Droids, human Raison d'aitre is been terminated,imagine a world without hands and you get the picture. Toms comment above are not exaggerated, they are very real and to the point, add those facts to the economic reality and the future looks anything but promising. Blaming individuals or having faith in a so called free markets is just plain foolish.

[No savings, no income, no buying power]

roger...in a free market.. whatever savings people had left... would go further.

How the Fed bluffs the financial system – Labor force participation back to levels last seen over three decades ago.

The US is facing a long trend of aging Americans entering into retirement or what can be viewed as life post-work. The vision of sitting on the sand in some resort villa is largely a dream. Nearly half of American when they leave this world go out broke like a country western song. Today as the stock market is nearing peak levels, one out of three Americans has no savings.

In 2000 we had over 5.2 million hires while today we are down at 4.2 million hires with the population going from 281 million to 314 million (an increase of 33 million people). So it is obvious why so many in the economy looking for work feel the pinch of finding work. It also is the case that household income has fallen back to levels last seen back in 1995. All in all the economy is really not doing well for middle class Americans.

http://www.mybudget360.com/fed-bluffs-financial-system-us-dollar-labor-banking-system-mbs-2012/

[roger]

No savings, no income, no buying power | thanks for your comment.
In a free market "an utopian view" goods would be exchanged free of any intervention of any kind, the question of value exchange however remains and nobody can come up with a definition of true value. Fed. or no Fed. goods go on the marked in order to increase ones wealth and sooner or latter a small group of people will become very rich. These are the people who will be in "CONTROL" and whatever control they impose,it will be in their favor. In a system where accumulation of Capital is the stated objective, NOTHING can be free or EQUALIZED.
PS: I'm retired and when it comes to my life saving, I'm totally screwed by the system.

[John]

The markets have been buoyant with the prospect of a successful business man, Romney, moving into White house. If polls show Obama pulling ahead the market will tank just like October 2008 when McCain started to fade. The smart money will pull out of the markets just like then. The FED is still running the presses 24/7 to make up for that loss of market capital. It's now QE to infinity. However, this time it will be worse because more people understand what is at stake. During October a tanking market is the best indicator Obama is going to win in November. The S&P is the best poll out there. We saw that action continuing today.

[leslie trager]

The Fed takes action in the name of the economy, but it seems more designed to help the banks. Since the QEs began, the Fed has paid interest on banks extra reserves (which mostly belong to the large banks). Result, most of the QE1 and 2 ended up at the Fed as excess reserves. Not only didn't the large banks use the cash to make loans, but as a result they lost interest in supporting the overnight market which smaller banks need to maintain liquidity to make loans. Result: smaller banks can't make as many loans to smaller businesses (the job creators). Prof. Alan Binder, among others, recommended reducing or eliminating payment for excess reserves to get jobs going. I asked Dallas Fed President Fisher last week the reason the Fed was keeping excess reserves. He said he could not give a full answer, but stated that the Fed was basically run for the large banks. Les

[Shawn @ Stock trading]

After analysis given trading chart, it looks that there is no relation between stock prices and durable goods orders. But I am assuming that it is still connected with several different ways.