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We exposed the ugly truth below the surface of Santa's rally yesterday, but today it just got even more fantastical...

The "Arms Index" or "TRIN" is a technical analysis indicator that compares advancing and declining stock issues and trading volume as an indicator of overall market sentiment.

Remember, you have to believe (in The Fed) to receive (from The Market) before these jaws of doom will snap shut one way or the other.

And it's not FANGs that are dragging the index higher...

Submitted by David Stockman via Contra Corner,

Our point yesterday was that the Fed and its Wall Street fellow travelers are about to get mugged by the oncoming battering rams of global deflation and domestic recession.

Back in March, we brought you “Drugs, Prostitution, Violence Plague Oil Boom Towns Gone Bust,” in which we detailed the plight of towns like Sidney and Bainville, Montana, where the slump in oil revenue has made it all but impossible for local authorities to cope with surging crime rates that some attribute to the influx of oil workers the communities experienced in the good old days of high crude prices. 

Moments ago, after the latest disappointing durable goods report, the Goldman economist team was the first to cut its Q4 GDP forecast from 2.2% to 1.9% (and down from 2.4% yesterday), saying "the durable goods report implied weaker capital spending and inventory accumulation for the quarter; details on November consumer spending were also slightly weaker than we had projected."

Having seen long-bond yields collapse on heavy volume immediately after The Fed's decision last week to hike rates, it appears the "policy error" message was just too much to bear for an un-manipulated market. The last 2 days have seen a very light volume 13bps surge in 30Y yields, now back above the Maginot Line of 3.00% - erasing any "policy error" questions post-Fed... for now.

Of note is the fact that China's Yuan has strengthened the last 3 days - correlating with the weakness in Treasuries.

Charts: Bloomberg