I took it upon myself to roam out into chart-land and see if there was anything – anything at all! – I could write about this weekend.

Pixabay

Well, it only took me one chart, and bang, I’ve got a topic. Please drink in this beautiful long-term chart of Manufacturer’s Value of Shipments, lovingly referred to as M3.

See how the pattern pulses up and down? Kind of beautiful, isn’t it? Growth and retreat. Growth and retreat. Kind of how things were meant to be. Backing and filling. You remember, right?

One would think that the stock market might following this important economic cycle, and for almost all human history, one would have been right in that very logical supposition. But, thanks to our dear, dear friends in the Eccles Building, the Fed has interfered so grotesquely in the economy that the love affair between economic production and the stock market has been utterly severed.

Take a look at the layered charts below. Even with zero time-shift, the ups and downs of the M3 and the stock market (represented here by way of SPY) were gorgeously in synch. About a decade ago, however, the Bernanke-fueled (then Yellen-fueled) meddling utterly wrecked this sensible relationship. Take a good look at the chart below. It’s heartbreaking.

Need more clarity? One click of a button later, I can provide that. By clicking the Spread button in SlopeCharts, I can highlight the relationship between these two. For decades, it was picture perfect. Poetry in motion. Pick any metaphor you want. And now? It’s a creamy pile of steaming dog poo on a dying lawn.

This won’t go unanswered. Market forces won’t allow it to persist indefinitely. And, as I’ve said so many times, I believe the blowback from all these perversions will be so severe, even I won’t be happy about it.

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