Business

The spread between "hard" and "soft", or survey and sentiment data, ever since the election has been extensively noted and discussed on this website in recent months (especially since over the past two months the soft data has rolled decisively over, while the Citi economic surprise index has crashed at the fastest pace on record). Which is why it will come as no surprise to readers that, as Goldman writes in a note looking at "Peak Sentiment", over the past six months, US “sentiment surveys” have outpaced both “activity surveys” and “hard data”.

In May of 2015, we watched in stunned amazement as the price of Shake Shack stock exploded from its January IPO to soar to just shy of $100/share. Just around the time SHAK hit all time highs for the first and only time, we showed just how amazing the value of any one Shake Shack restaurant was in the context of its peers. As of May 2, 2015, it looked as follows:

Authored by Lance Roberts via RealInvestmentAdvice.com,

Peak Exuberance

There have been numerous articles out as of late emphatically stating this cannot be a bubble as valuations are not as elevated as they were in 1999 nor are investors as “giddy” about investments as they were then.

Back in 2013, markets tumbled (if briefly) on the news that Detroit would file for bankruptcy, at the time the biggest municipal bankruptcy in US history with over $18 billion in liabilities. Yesterday, algos barely even bothered to look up when Puerto Rico's governor announced that the US Commonwealth would submit Title III (aka bankruptcy) protection, despite a debt load of more than $70 billion, or nearly four times greater than Detroit's.

Via Francesco Filia of Fasanara Capital

“Learn how to see. Realize that everything connects to everything else.” – Leonardo da Vinci

Hard data ceased to be a driver for markets, valuation metrics for bonds and equities which held valid for over a century are now deemed secondary. Narratives and money flows trump hard data, overwhelmingly.