Archive - Jan 27, 2015

Despite stagnant wages, surging jobless claims, and global geopolitical anxiety, US consumers have not been this exuberant since August 2007... a month before the great quant fund blow-up and the top of US equities... But it's different this time, we're got money-printing and low oil prices... right? Texas confidence plunged from 119.4 to 111.9 (led by a huige crash in expectations from 95.8 to 83.5). Finally, expectations for higher incomes in the next 6 months surged higher - almost at record levels of hope - despite the slump in hourly average earnings.

Just when you hoped the bad news was bad enough to warrant an uber-dovish Fed statement, Markit's US Services PMI prints 54.0, beating estimates of 53.8 and up from December's 53.0. After 6 months of dropping, January's preliminary data rose; however, as Markit notes, new business expansion fell to a post-recession low, “The 5.0% an nualised rate of GDP expansion in the third quarter certainly looks like a peaking in the pace of expansion, with the surveys pointing to 2.5% annualised growth at the start of the year."

Just released this morning, following last night's plunge in industrial profits, China's Leading Index continued its freefall to its lowest level since Jan 2009...

Why but bonds when you can buy stocks that earn a higher dividend? "it's the risk, stupid!" Microsoft is down around 10% this morning, the equivalent of almost 4 years of dividend gains... still wanna get "paid to wait."

In a day of furious disappointments, the Case-Shiller housing report, albeit looking at the ancient economic picture as of November, confirmed what most had known: that the growth in housing prices slowed down yet again on not only a Year over Year basis, which rose just 4.31%, the lowest annual increase since October 2012 but also dropped by -0.22% decline on a monthly basis, which may not sound like much, but was the worst monthly drop since February 2012!

"Extreme" market volatility conditions... as NYSE explained it.

Straight forward look at the Federal Reserve and what to expect.  

Overnight, there was much commotion in the precious metal space when, out of the blue, the IMF reported that months after announcing it had unexpectedly repatriated over 120 tons of gold from the NY Fed, the Netherlands had also purchased some 10 tons of gold in the open market, taking its total to 622 metric tons, the highest since 2007, a period in which it had been unchanged for 8 years. Except... Moments ago Bloomberg blasted something even more unexpected. Namely that the "Dutch Central Bank Says It Did Not Increase Gold Holdings"!

Continued conversations on OIL...how does a trader approach such a trade?

Following November's across the board ugliness in Durable Goods data, the hockey-stick extrapolators all positioned for the bounce back... Only 1 of 57 economists expected a negative print! But the actual data was a total disaster. Against expectations of a 0.3% rise (following last month's 0.7% drop), December printed down 3.4% and November was revised drasticaly lower to down 2.1%. This is the lowest durable goods ex-transports since March.

The U.S. government is already bankrupt. This is old news to anyone who has been following the number-crunching of individuals such as former Reagan economic advisor, Professor Lawrence Kotlikoff. The U.S. government, the greatest debtor in the history of the world, claims that it is about to (finally) raise interest rates, which have been permanently/fraudulently frozen at 0% for now over 6 years.

Well that escalated quickly. While this morning's weakness in stocks is being pegged to earnings misses (and rightly so), the selling pressure started as Europe opened and Greek stocks and bonds accelerated their freefall. Greek stocks and bonds are now below ECB QE levels and WTI Crude back at a $44 handle as CAT CEO demands Fed does not raise rates due to the "fragile" US economy... The Dow is now 425 points off Friday's highs...

Well, pretty much anyone who had read any of our CAT monthly sales reports over the past 2 years.