What a difference a year makes:

• A year ago, China was embarking on a massive fiscal and credit stimulus plan that would send commodity prices and global exports surging. Today, the People’s Bank of China (PBoC), along with other Asian central banks, is now withdrawing the stimulus (India as well). Is the near 10% correction in the Chinese stock market telling us something about the Chinese economic outlook? Something tells us the Reserve Bank of Australia was on to something when it didn’t hike rates yesterday when the market was fully priced for another move — after all, China is Australia’s most important customer.

• A year ago, it was all about saving the insolvent banking sector. Now it is popular to bash the banks and de-risk them. Notice how the financials haven’t done a thing in five months?

• A year ago, it was all about fiscal reflation. While there is now tepid support for job creation and small business incentives, the emphasis is also on ending the Bush goodies and taxing the rich (defined as anyone making more than $250k).

• A year ago, it was all about quantitative easing and the need for the Fed to add more than $1 trillion of mortgages to its balance sheet. Today, it is all about the exit strategy.

• A year ago, the U.S. dollar’s bear market rally was about to give way to a 6%-plus decline in support of global carry trades. Today, the dollar has broken out on a trade-weighted basis and has broken above the 50, 100 and 200-day moving averages.

• A year ago, the VIX index was at 40. Today, it is barely above 20.

• A year ago, Baa corporate bond spreads were in excess of 550 basis points. Today, they are 260 basis points.

• A year ago, the S&P 500 was undervalued by 18%, on a Shiller normalized P/E basis. Now, it is overvalued by 25%.

• A year ago, we were coming off a -6.4% real GDP print in the U.S. and a 35 ISM reading and only ‘green shoots’ lay in our path. Today, we are coming off a +5.7% GDP headline and a 58.4 ISM index and the days of “sequential improvement” are clearly over.

• A year ago, 10-year Treasury note yields were 2.7% and rising. Today, they are 3.7% and falling.

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