We know that many of the macro player out there watch this particular index closely. Over the past several months, the Economic Surprise Index (ESI) has been on a straight path down.

Essentially this is an easy way to look at actual economic as compared to where estimates were. Often times equity markets will lag the direction of the index by a couple of months, waiting for confirmation. At this point, the confirmation that the economic condition in the U.S are faltering should be apparent. . However, the markets continue to hold on tight to a range well above where they should be as compared to the actual economic conditions.

Part of the reason for this is that the Fed, through their friends in the media, have been stuffing us full of the idea that additional stimulus will save us from any major correction. How much the Fed can do to change the slope of the eco trend is anyone’s guess. For now, it seems that talk is one of the only tools left in a rather empty toolbox, especially with treasury yields close to record lows.