If America is the Land of Opportunity, why are so many parents worried that their princeling/princess might not get into the "right" pre-school, i.e. the first rung on the ladder to the Ivy League-issued "ticket to the upper middle class"? The obsessive focus on getting your kids into the "right" pre-school, kindergarten and prep school to grease the path to the Ivy League suggests there aren't as many slots open as we're led to believe.
Surely the thinking folk out there must be asking themselves: what is the way out of this Federal Reserve three-card-monte, one-percenter-stuffing, so-called “economy,” and what is the destination of this society when that mendacious model for living fails? There really is no free lunch or get-out-of-jail card. The truth is, when you rig a money system with price interventions, distortions, and perversions, they will eventually express themselves in ways destructive to the system.
Dallas Fed's Richard Fisher had his credibility (whatever is left) crushed for the 4th month in a row. After explaining carefully to no lessor status quo glad hand than Steve Liesman that the Texas economy will see a net positive from low oil prices, Dallas Fed data has utterly collapsed - at its fastest pace since Lehman. Printing a stunning -17.5 (over twice as bad as expected -8.5), this is the 4th miss in a row (and increasingly worse misses). The Dallas Fed was last lower than this in Jun 2011. Across the board, the components were an utter disaster... employees contracted, prices paid and recoeved tumbled, production plunged, and new orders collapsed. More worryingly, furture capex tumbled once again.
Back in September 2013 we wrote "Coming Soon To A Theater Near You: MBIA's $1 Billion World War Z" in which we explained why MBIA will soon have a substantial problem (amounting to just about around $600 million) with several CLOs which we dubbed "Zombie CLOs" or as they were actually known, Zohar, on which it had written insurance, and which would become evident sooner or later once someone took a long, hard look at the collateral manager of the CLOs, namely Lynn Tilton's Patriarch Partners. Well, finally someone did take a long, hard look and today, our warning comes full circle following a shocker out of the SEC accusing Lynn Tilton of fraud and of "hiding the poor performance of loan assets in three collateralized loan obligation (CLO) funds they manage."
"When I was chairman, more than one legislator accused me and my colleagues on the Fed’s policy-setting Federal Open Market Committee of “throwing seniors under the bus” (to use the words of one senator) by keeping interest rates low. The legislators were concerned about retirees living off their savings and able to obtain only very low rates of return on those savings. I was concerned about those seniors as well."
- Ben Bernanke first blog post
Putting the last nail in the coffin of "the weather is to blame" meme, pending home sales surged in the abysmal weather conditions of February by the most since May 2013. Up 12% YoY, any rational economic being would be hard pressed to explain how the weather is impacting the economy when brave home-buying souls ventured out in such masses to buy... as The Midwest region saw the biggest surge in sales... up a stunning 11.6% MoM.
The day is starting off on a very bizarre footing after not only Ben Bernanke became a blogger and joined Twitter, but moments ago at least one American appears to have had enough with the Big Brother state, and moments ago WNEW reported that there has been a shooting, two injured and according to local reports, there appears to be one fatality at the gate of the NSA's Fort Meade, Maryland headquarters.
The horrible events of last week just go from bad to worse, if that is possible, as investigators dig further into the disturbed past of murderous co-pilot Andreas Lubitz and find more problems, as Reuters reports:
GERMANWINGS CO-PILOT HAD BEEN IN TREATMENT FOR SUICIDAL TENDENCIES IN THE PAST
Reports have suggested he was troubled by his sexuality and also seeking treatment for vision problems. While careful to note that recent treatments suggested no suicidal tendency, this merely raises questions about historical screening and ongoing monitoring among a group of people who are ultimately responsible for the lives of many others... especially after finding "a small mountain of anti-depressants" in his apartment.
As the deadline for Iran nuclear talks looms, the possibility of a deal which in some way lifts crude export sanctions is starting to be realized. As we warned 2 weeks ago, despite all the rhetoric, a confluence of political factors makes a deal highly likely at this point; and as The Telegraph reports, Iran is a sleeping oil giant holding 9% of the world’s proven oil reserves and with an estimated 2m barrels per day of excess supply already sloshing around international markets, any significant increase in Iranian output could easily trigger a further rout in prices. While OPEC may well clamp down on this in June, as The Telegraph concludes, by then a barrel of oil may already be selling for $20.
Regarding the major problem of the more domestic issue of economic recovery, unless we would agree, which we really shouldn’t, that making a small group of the population richer while the much larger rest is made poorer, is how we define ‘recovery’, we have no recovery. But it is still accepted and proclaimed like a gospel: our economies are in recovery. If you take a step back and watch things from a distance, it’s truly too silly to be true, but endless repetition of the same lines, be they true or not, has them accepted as being cast in stone. It’s like selling detergent. Of course it doesn’t hurt that people very much want to believe a recovery is here. The stories we are bombarded with 24/7 under the quite hilarious misnomer ‘News’ have been prepared, pre-cooked and pre-chewed for our smooth and painless digestion, and as such they contain only tiny little flakes of reality. They are designed to make us feel good, not understand the world around us. And, as Scott Minerd says, the economic future for your entire families will look utterly bleak. Because that recovery they talk about? It’s not for you.
For the 4th month in a row, personal spending growth missed expectations. With a 0.1% gain in February (against expectations of a 0.2% rise), this growth rate remains below all of 2014's growth. Income rose slightly more than expected at 0.4% (against +0.3% exp) but this is the same growth as January's upwardly reviused +0.4%. That leaves the powers that be very disappointed as the savings rate jumps to the highest since 2012... not exactly the Keynesian pump-primed, low gas prices tax cut spendfest all the smartest people in the room promised...
In addition to Janet Yellen's confused ramblings at 3:45 pm on Friday, which did all they could to push the S&P to close green for the year, the other catalyst that sent stocks higher on Friday afternoon was the unconfirmed rumor reported by the WSJ that Intel would purchase Altera, the news of which briefly sent INTC stock higher than the entire market cap of Altera on what can only be described as the latest short squeeze. Yet one entity that appears unhappy with this news is none other than Goldman Sachs which likely was snubbed as an advisor or an underwriter by Intel in recent months, and which all else equal, once again slaughtered the muppets who listened to its recommendation to Sell Intel stock (just days after another comparable slaughter by Goldman on SanDisk longs this time on the Conviction Buy side).
- Setbacks and progress as Iran, six powers meet to end nuclear impasse (Reuters)
- Russia’s Foreign Minister Sergei Lavrov to Leave Iran Nuclear Talks (WSJ)
- Obama Ramps Up Lobbying on Iran as Deadline Looms (WSJ)
- Greek yields edge up as lenders scrutinise reform pledge (Reuters)
- Oil prices drop on possible Iran deal, dollar (Reuters)
- Yemen’s Houthis Battle for Aden as Saudi Strikes Hit Rebels (BBG)
- Iran nuclear deal to see $20 oil if Tehran floods crude market (Telegraph)
- China’s Zhou Says PBOC Has Room to Act on Growth Slowdown (BBG)