One of the most curiously persistent surrealisms of Washington, DC is the reflexive deference given the Federal Reserve System. The Washington elite tends to accord more infallibility to the Fed than do Catholics the Pope.
The fundamentals for the US dollar are terrible, but people keep dumping money into it like trained monkeys simply because nothing else in financial markets makes any sense. This perception of 'safety' is based on a complete myth - every credible fundamental suggests that the dollar is dangerously overvalued; but if not the US dollar, then which currency is the safe haven? The euro is garbage, the Chinese are fighting a depression, Japan is a disaster. And that’s precisely the point. When every option in the financial system is grounded in absurdity, the only solution is to start looking for safety outside of it.
Don’t look now, but undergrad economics is rearing its ugly again at Wal-Mart as the retailer cuts workers’ hours in a desperate attempt to offset more than a billion in wage hikes.
With every passing week that money markets rates remain pinned to the zero bound by the Fed, the magnitude of the financial catastrophe hurtling toward main street America intensifies. When the next financial bubble crashes it can only be hoped that this time the people will grab their torches and pitchforks. Stanley Fischer ought to be among the first tarred and feathered for the calamity that he has so arrogantly helped enable.
"A cloudy fiscal policy along with unattractive economic data and oil prices continuing to decline fueled negative sentiment about the market which exaggerated fears among investors."
While the US has had a surge in violence over the past several years, its defining feature was the generally chaotic and uncoordinated nature of each such - usually lethal - act. That changed over the weekend when the FBI announced three US citizens - Brian Cannon, 37, Terry Peace, 47, and Cory Williamson, 29, - were sentenced to 12 years in prison for "conspiring to use weapons of mass destruction in attacks against federal government agencies. The defendants planned to attack critical infrastructure while motivating militia groups in other states to rise up and join them in removing government officials who they believed had exceeded their Constitutional power."
"In the almost 20 years I have spent following politics closer than close, I've never seen anything like the total reversal in how Trump is perceived by Republican voters. It is, quite literally, unprecedented."
On the face of it, the crash and massive rebound makes little sense, with many oil market analysts undoubtedly left shaking their heads. But there is a logic to what unfolded, just not the logic of the physical market for crude.
Attempts to explain exactly what happened last Monday when prices for a whole host of ETFs and mutual funds diverged markedly from fair value abound and while there's no way to know for sure exactly what went wrong, FactSet has drawn some tentative conclusions after conducting a bit of "voodoo, tea-leaf reading."
The tremors rattling markets are not exactly what they seem to be. A meme prevails that these movements represent a kind of financial peristalsis - regular wavelike workings of eternal progress toward an epic more of everything, especially profits! You can forget the supposedly “normal” cycles of the techno-industrial arrangement, which means, in particular, the business cycle of the standard economics textbooks. Those cycle are dying. They’re dying because there really are Limits to Growth and we are now solidly in grips of those limits.
Following Milt Pappas' September 1972 'no hitter', The Dow dropped over 40%. Carlos Zambrano's 'no hitter' in 2008 came right before the Lehman bankruptcy weekend and was followed a 6000-point-plus collapse in The Dow. So, when we saw Jake Arrieta's 'no hitter' this weekend, we can only imagine what doom it implies for US stocks.
World oil production is about 90 million barrels a day, representing a cash flow of about nine billion dollars a day which comes down to three trillion dollars a year. With the oil price 40 to 50% lower, this flow is also cut by 40 to 50%. This amounts to 10% US GDP. Compare it with the 0.5% growth we are now missing in China, we prefer to keep our eyes on the oil price. These extreme moves can not be without consequence.
"The market closed above last Monday's high, which was a gap downside. And it also closed above the prior Friday's close. And that led to exhaustion. We should see the market drift lower for the next month or so. And we could probably make a new low, the low of last week's low, before the market finally bottoms."
If not for the squeeze at the end of last week, this would have been European stocks' worst week since Lehman. However, with the 'save' Stoxx 600 (Europe's S&P 500) dropped almost 9% - its biggest drop since the peak of the EU crisis in 2011...