Ouch

Macro Man burned his hand cooking last night (when these posts are composed) and is too sore to type at the time of writing.

As such, the post lampooning Mr. Hilsenrath's  latest Fed-planted story about the "puzzling" rise in stock prices will have to wait.

Readers wishing to fill in the blanks, or perhaps even to direct Mr. Hilsenrath to either a copy of the Fed balance sheet or Thomas Piketty's (in)famous tome bemoaning the apotheosis of capital over labour, have at it.
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Anonymous
admin
June 11, 2014 at 11:30 AM ×

Get well soon !

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Anonymous
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June 11, 2014 at 1:28 PM ×

Balance sheet expansion everywhere...

http://imgur.com/MreyQ2e

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Anonymous
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June 11, 2014 at 4:37 PM ×

What to make of the London Wall burrito place raising £1mio for 4 years at 8% a year from its customers ?
http://www.crowdcube.com/investment/chilango-the-burrito-bond-15934

http://moneyweek.com/crowdcube-earn-8-from-a-burrito-bond/

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abee crombie
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June 11, 2014 at 5:40 PM ×

The Fed's balance sheet and capital vs labour are good reasons, but why did the Japanese stock market stay in the doldrums even when similar measures there were applied there?

Of course explaining after the fact why something happened is easier than predicting but I believe the main reason driving the market in the US is increasing forward earning expectations. For all their inability to predict turning points, growing 1year Fwd earnings have been a good explanatory variable for global stock markets since 2008. Indeed, the slowdown in EM earnings growth hinted at their under performance.

Of course the rise last year in the US was mostly due to multiple expansion (and 100% in EU) but EXPECTED increases in earning were a necessary condition for that to occur. Thereafter a simple momentum and relative value basis explains a lot of global equity moves.

It seems like the base case now is that equities will keep going up until they dont. A sustained reversal in earnings estimates and momentum is needed to challenge the heard. Of course this will only come after a top has made and who knows the reasons or when that will happen.

My 2 cents

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Be_A_Debaser
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June 11, 2014 at 5:45 PM ×

pretty much agree with Abee Crombie

You can't buy an S&P future with an excess reserve; QE on treasuries is essentially an asset swap i.e. print the reserve but unprint the bond. So I think QE has had a predominantly placebo impact on stocks but probably assisted in a low vol environment which presses speculative assets higher because "the Central Banks have our back", even if the reality is that said Central Banks are far less potent than they pretend to be. Mean reversion of profit margins probably the canary to watch for, otherwise I just see more doldrums - which grinds stocks higher.

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Leftback
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June 11, 2014 at 7:32 PM ×

An accelerated exit from QE, if announced at the next Fed meeting might burn investors' sticky fingers and provide the fulcrum about which the market could tilt.

Wishing you a speedy recovery, MM. I reckon Mrs. Macro will have to keep you away from the toaster for a few days!

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Anonymous
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June 12, 2014 at 12:48 AM ×

The Bishop wonders what you were cooking for the Actress?

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