What Happens To The Stock Market If The U.S. Follows The World Into Recession?

Regardless of income, history shows that stocks crater when payrolls, industrial production and real final sales all tank. The current euphoria for stocks has several components: one is soaring corporate profits, and the other is quasi-religious faith in the power of central banks to keep stocks lofting higher in a complete disconnect from fundamentals such as sales, profits, production or payrolls. History is rather unkind to blind faith in central banks, just as the rising U.S. dollar and stagnant sales are being very unkind to corporate profits.

US Producer Prices Tumble Most Since 2009 (And Don't Blame Oil)

US Producer Price Index (ex food and energy) fell 0.5% MoM in February (against expectations of a 0.1% rise) - the biggest drop on record (since 2009).The great news for Americans is that the drop in overall producer prices was led by a 1.6% fall in food prices. Year-over-Year PPI Final Demand has fallen (-0.6%) for the first time on record.

Kremlin Rejects Rumor Of Putin Illness, Shows Footage Of Today's Meeting

Following reports that after unexpectedly rescheduling two preannounced high level meetings, the social networks erupted with a cornucopia of theories and "confirmed" reports that the Russian president is sick, had a stroke, or has outright died. To be sure this is not the first time the 62-year-old's health has been put into question, the last time being 2012 when rumors swirled again. However this time it got so bad even Bloomberg felt it was relevant to ask "Where is Vladimir Putin." This morning the Kremlin answered.

WTI Plunges To $45 Handle - Lowest Since January

While none of the catalysts are new (IEA warning temporary stabilization amid rising oil glut and increased US production), it appears the February bounce is done as our discussions of storage limitations gains traction among the ETF-driven knife-catchers. April WTI Crude futures have collapsed in the last few days from over $52 to a $45 handle now - the lowest since January and only marginally above cycle lows... As oil cratered so EURUSD slipped and S&P futures fell.

Frontrunning: March 13

  • Again as first reported here: Record U.S. Oil Glut May Fill Storage, Cut Prices (BBG)
  • IEA sees renewed pressure on oil prices as glut worsens (Reuters)
  • No EU unanimity on renewing Russia economic sanctions (Reuters)
  • Tsipras says Greece doing its part in euro zone deal (Reuters)
  • ECB Set to Buy Fewer Bonds as Price Gains Ease Crunch (BBG)
  • These Americans Are Getting Rich Trading Derivatives Banned in the U.S. (BBG)
  • U.S. 2015 profits forecast to grow 1.7 percent; oil, dollar are concerns (Reuters) - in a month this will say "decline"
  • Manhunt for shooting suspects grinds on in Ferguson, Missouri (Reuters)

Russia Cuts Interest Rate From 15% To 14%, Ruble Rises

Following the dramatic December surge in Russian interest rates when the Bank of Russia scrambled to preserve confidence in the then-plummeting currency and sent the interest rate to a whopping 17%, now that the oil price crash has stabilized it has been walking down this dramatic move, and after reducing rates by 2% on January 30 to 15%, moments ago the Bank of Russia once again cut rates this time by the expected 100 bps to 14%. The bank also said that more rate cuts are in the pipeline.

Euro Resumes Slide After Goldman Cuts Forecast, Expects Parity In 6 Months; Futures Flat

Closing out another whirlwind week, which has seen the biggest S&P 500 intraday plunge and surge in months, futures are taking a breath (if not so much the Nikkei which closed over 19,000 for the first time since 2000 - one wonders how many direct equity interventions it took the BOJ to achieve that artificial "price discovery"). In lieu of any notable macro news, the most significant update hit less than an hour ago when Goldman piled on the EUR pressure, when it released a note in which it further revised down its EURUSD forecast.

The New London Gold Fix And China's Gold Strategy

China now has the opportunity to take a dominant role in London, without having to direct its order flows through the fixing banks. Therefore, it is no exaggeration to say that from 20th March, China will be able to control the global physical gold market, which will permit her to manage the price. She has the deepest pockets, backed by the largest single stockpile.

Tax Breaks For Oligarchs: The $100 Million NY Apartment With A Property Tax Rate Of 0.017%

Since QE has been far and away the most important variable impacting the economy and markets since the crisis, ignoring its impact on wealth inequality is simply unforgivable. Yet, it’s more than that. Much more. Many of the polices existing in these United States not only encourage foreign oligarch money laundering into luxury skyscrapers that remain empty, but our society seems to go out of its way to ensure they have to pay as little in property tax as possible. Indeed, tax polices don’t benefit the rich, they benefit the super rich. Nowhere is this more apparent that in the oligarch capital of America, New York City.

The West's Plan To Drop Russia From SWIFT Hilariously Backfires

If Vladimir Putin is alive and remotely capable of laughter (the jury is out on that one...) then he’s probably doing so right now. For the last several months, despite numerous warnings of the consequences, the US and UK governments have been pushing to block Russia from the SWIFT payments system. And so what is utterly hilarious - On Monday afternoon, not only did SWIFT not kick Russia out... but they announced that they were actually giving a Board Seat to Russia.

Government Admits It Can't Fully Guarantee 51% Of Insolvent Pension Plans

A new report suggests that the government agency in charge of backstopping private-sector pension plans (the Pension Benefit Guaranty Corporation) isn’t entirely optimistic about its own ability to provide an effective safety net for multiemployer plans. In fact, more than half of participants will see their benefits cut if their plans become insolvent and are forced to turn to government guarantees.

Harvard Business Review Throws Up All Over Stock Buybacks

GM did $20.4 billion worth of buybacks from 1986 through 2002. If it had saved that money and earned a modest 2.5% on it, the company would have had $35 billion on hand when the financial crisis and Great Recession hit and probably would not have had to file for bankruptcy protection. As Bob Lutz, the veteran auto executive, said recently, stock buybacks are “always a harbinger of the next downturn…in almost all cases, you regret it later”... Taxpayers and workers brought GM out of bankruptcy, yet it is the hedge funds that will reap the biggest rewards. Taxpayers and workers should demand that open-market repurchases by all companies be banned. Stock buybacks manipulate the stock market and leave most Americans worse off. In this case, it is clear that what is good for the hedge funds is bad for the United States.

Under The Hood Of A Subprime Lender Accused Of Illegally Repoing Soldiers' Cars

Accused of illegally repossessing cars from active-duty service members, Santander Consumer has agreed to pay $9.35 million to the Justice Department in the largest auto reposession-related settlement in history. A look at the company's subprime auto securitizations speaks volumes not only about the lender, but about the furture course of subprime ABS issuance in the US.

The Last Time Gas Prices Rose This Fast, The US Entered Recession

From February through May, gas prices have historically tended to rise. However, between refinery strikes and shutdowns (and blend transitions), 2015 has seen gas prices rise from the start of February at the fastest pace on record. Despite the total lack of 'surge in consumer spending' from the low gas prices that we were promised, the velocity of this price rise is eerily reminiscent of the 2007 surge that, within months, saw the US in recession...

Why 1.05 Is Far More Important To The EURUSD Than Parity

"Although the market seems obsessed with the euro/dollar parity, SG's Technical Analysis guru Stephanie Aymes stresses that it is the $1.05/1.04 level that is more important, being the lower limit of the EUR/USD?s massive upward channel (see chart below). Stephanie argues that the move since last summer has been relentless and is very similar to the one seen in the late 1990s. She suspects that a break below $1.05/1.04 will confirm that the ongoing move is not a correction of the upmove since 2000, but a much larger down move. In such scenario, the EUR/USD will achieve parity, but this may well be just a temporary support before the downleg extends towards $0.98/0.96 - and even perhaps towards the lows of $0.84/0.82 reached in 2000."

Bill Ackman Faces FBI Probe Over Possible Herbalife Stock Manipulation

Herbalife stock is up over 5% after hours after WSJ reports Bill Ackman (among others) made false statement about Herbalife's business models to regulators - in order to spur investigations into the company and lower its stock price. This comes just months after Ackman kinda-sorta-didn't-really insider-trade in the Allergan 'scam' that we detailed here. We suspect Whitney Tilson (and his Lumber Liquidators positions) is getting a little nervous now... and Carl Icahn is quietly laughing to himself.

Germans Furious After Varoufakis/Tsipras Admit "Greece Will Never Repay Its Debts"

The Greco-Germanic war of words continues... Having pissed off The Greeks with his "Troika" remarks, Germany's Schaeuble went on today to more ad hominum attacks by reportedly calling the Greek FinMin "foolishly naive." The Greek ambassador has 'officially' complained to "friend and ally" Germany about the personal insult. But The Greeks had the last laugh, as first Varoufakis and then Tsipras explained respectively that "Greece would never pay back its debts," and "Greece cannot pretend its debt burden is sustainable." The German response, via tabloid Bild, "there must be an end to this madness. Europe must not be made to look stupid."