At 560 words, this was not only the lowest wordcount of any FOMC statement since October 2012, just before QE3 was launched in December of 2012, but actually had fewer words than Hilsenrath's 608 words "explainer" of what the Fed just said.
With everyone hoping that The Fed says something dovish (because after all stocks are 1% off their highs) there was some disappointment as the weakness was shrugged off as transitory:
- *FED SAYS WINTER SLOWDOWN PARTLY REFLECTS `TRANSITORY FACTORS'
- *FED SEES MODERATE GROWTH, JOB GAINS EVEN AFTER 1Q SLOWDOWN
In the end, once again, the dovish Fed provides just enough wealth-creating hope to keep stock dreams alive but knows it has to move sooner rather than later (keeping the "but we think the economy will strengthen" meme alive).
Pre-FOMC: S&P Futs 2099.50, 10Y 2.04%, EUR 1.1175, Gold $1210, Oil $58.85
Greek deposits fall €2.5 billion in March to the lowest level since 2005 as the cash crunch intensifies ahead of looming payments to government employees and the IMF. Meanwhile, Deutsche Bank sees a referendum on a "reluctant" reform agreement as the most likely "solution" (although most Greeks reportedly oppose such a step) but says the chances of a less favorable outcome are still at least 30%.
The news of Navinder Sarao's arrest, the scapegoat for all that is broken with the world's equity markets, may have come, gone and be largely forgotten, but while the CFTC is happy to have washed the corruption and incompetence off its hands by destroying the career of one insignificant trader (whatever happens, redirect public attention from the HFT firm that just came public and boasted of one trading loss day in 6 years) Sarao is facing decades in prison. And, what is worse for the alleged mastermind of the May 2010 flash crash, he won't even be able to enjoy a few weeks in quasi-freedom. Why? Because this lonely 36 year old, who "crashed" the entire market 5 years ago from his parents' basement (literally), can't even afford bail.
Unlike last year when every single weatherman, pardon "economissed", quickly declared the collapse in Q1 GDP from an initial consensus of 3% to an abysmal -2.5% was due to the weather, and not due to a dramatic tightening in Chinese end demand, this time there is suddenly no silver lining, and one after another, the economisseds are lining up to say that, ooops, they were all wrong.
The initial euphoria over a small Cushing draw has not stopped as the machines have run WTI crude up over $59, tagging all YTD stops and pushing the front-month to its highest since December 12th.
If US inventories, already at record high levels, and with the inventory to sales rising to great financial crisis levels, had not grown by $121.9 billion and merely remained flat, US Q1 GDP would not be 0.2%, but would be -2.6%.
While the images of Everest's avalanche were stunning, the following chilling clip captures the terror of Tibetans as this week's earthquake shook their world...
As first Bill Gross and then Jeff Gundlach suggest shorting German bonds, so it appears the message has sunk in that at 4.9bps 10 days ago, 10Y Bund yields were the short of a lifetime. Since then they have soared, with a dramatic doubling today from 14bps to over 29bps - the highest yield in 7 weeks. As Commerzbank warns, "a cascade of small events is creating a large splash in a structurally ever-thinner market," which has led to a plunge "similar to US Treasury flash crash of Oct. 15."
Just when you thought it was safe to pile all your money (at maximum leverage) into USD-denominated assets, the greenback plunges... The last 4 days have seen the 2nd biggest drop in 6 years. This has very significant consequences for a world that has become entirely consensus-based across at least 5 major themes... This poses a problem for talking-heads: if USD strength as indicative of US economic strength... what does a plunging USD imply?
For the first time since November 2014, Cushing saw an inventory decline (-514k) last week. This has promopted a spike up to yesterday's highs in WTI Crude. The total inventgory build was 1.9mm bbl (less than the expected 3.2mm bbl) but continues the record streak to 16 weeks.
What surprised even us is that far from subtracting from GDP growth, the harsh winter actually boosted consumption, in the form of utiility (mostly heating) spending, which made up the second largest increase in personal consumption in the first quarter. Because, to every economist's cries of horror, freezing weather while perhaps reducing discretionary spending actually boosts spending on such mundane, if very expensive, tasks as utilities which, to the same economists, also translates into growth.