As the Ex-Post "Splain-a-thon" on falling oil prices goes full bubble, I thought I'd throw my 2 cents of kerosene on the bonfire of the positions. I'll do a quick rehash of some of our prior themes: Too much everything, yada yada, quantitative easing elasticizes economic relationships, yada, stocks vs flows.
The desire to link market price movements to economic general theory remains strong in most analysis. I find it odd since the vast majority of participants worship at the House of Charts. For the most part, you can copy and paste "Product X" on the chart and skip the heavy macro lifting. In a quantitative world, things move abruptly and extremely. Markets are driven by liquidation and failed belief systems.
The consistent, rolling belief system of the Quantitative Regime World has been the idea of impending inflation. Equity, debt, energy, fiat and "stuff" have all been periodically paraded in front of the masses as the next indication, or victim of the CB folly into QE. One by one, they have been systematically taken to the basement bowling alley and clubbed to death (confused readers please watch There Will Be Blood).
As Ray Dalio pointed out today at the Dealb%k Confab, he remains focused on the machinery of the financial transmission system. Although still constructive, he sees the efficacy of monetary monkey business waning. (Where have I heard that?) When the next stimulus demand is made by Mr. Market, a fiscal hand will be needed to make an economic clap. The Debt Truthers will most likely go ballistic.
Chatting with Mark Dow today, we found it odd that Fed watchers still focused on the timing of alleged FF hikes and statement phrase tweaking but not the possibility of balance sheet re-investment abatement ("shadow tapering"?) Until then, I remain happily aligned with the agnostics.