Archive - Oct 29, 2015

Following the carnage in new home sales in September, amid sliding mortgage apps and despite soaring homebuilder sentiment, pending home sales in September also plunged - dropping 2.3% MoM (missing expectations of a 1.0% rise) and worse still from a downwardly revised history. This is the biggest MoM drop sicne Dec 2013 andthe second lowest level of pending home sales this year. While there is plenty of blame for this, NAR's Larry Yun, rather ominously warns, "signs of a slowing U.S. economy may be causing some prospective buyers to take a wait–and–see approach."

If you said "the Supreme Court-approved tax that is Obamacare", then give yourself a pat on the back.

“NATO military planning generates confrontational approaches to security issues that in our view should belong to the past. The creeping increase in NATO’s military presence on our frontiers [is] testing [our] patience."

Presented with little comment, aside to note it appears Americans need even moar in order to be happy...

We're all minions now of the stock market. By cowering in terror of a stock market tantrum, the Fed has surrendered everything: its vaunted (and completely phony) independence; its duty (yes, go ahead and laugh) to the nation and the real economy - everything. The Fed is nothing but an abject slave of the market.

Stop-running algos are panic-buying WTI crude this morning as a slightly disappointing GDP print must have triggered the "bad news is good news" function to horde oil with both hands and feet...

The long awaited inventory correction is finally arriving. Moments ago the BEA reported preliminary Q3 GDP, which at 1.49%, missed both sellside consensus expectations of 1.6%, and tumbled from the 3.9% reported in the second quarter as the quarterly volatility continues at an unprecedented pace. This was the second lowest quarterly GDP print since Q1 2014 excluding the "double seasonal adjustment" meant to cover up the collapse in Q1 2015 GDP.

The raw initial claims data rose 1k from 259 to 260k (beating expectations of 265k). But the less-noisy 4-week average of initial jobless claims has slid further this week - to 263.25, its lowest since Dec 1973 - as the divergence between "useless at this point in the business cycle" claims and 'real' job cuts has never been wider.

When it comes to the Fed's current "data dependent" thinking there is absolutely no agreement among the experts: it may or may not hike in December, or it may or may not hike in the 2016 election year. There is, however, much  agreement that what the Fed is doing can best be summarized with two simple words: "policy mistake" as the following chart showing the appearance of these two words in Bloomberg news stories confirms.

That didn't last long. You can fool all of the algos, and some some of the people some of the time.

As tipped earlier this month, Deutsche Bank just turned in a Q3 loss of €6 billion as a raft of writedowns hit the bottom line. The bank also announced more details of "Strategy 2020", which include layoffs and a corporate rethink that will see Europe's largest bank exit a multitude of markets. 

• Fed puts December rate hike firmly on the agenda (Reuters)
• Charting the Markets: A More Hawkish Fed Rattles Investors (BBG)
• China to modernize and improve fiscal and tax systems (Reuters)
• Deutsche Bank to Cut 35,000 Jobs in Overhaul (WSJ)
• Deutsche Bank Said to Near $200 Million Sanctions Settlement (BBG)
• Barclays profits drop as it abandons cost-cutting targets (FT)

While China had previously hinted that it's one-child policy is being phased out, most notably in 2013 when sources close to the National Population and Family Planning Commission said China may relax its one-child policy at end-2013 or early-2014 (read end) by allowing families to have two children, moments ago, during the Fifth Chinese Plenum, this 37 year old policy was formally scrapped and China will henceforth allow two kids for all couples in what is a clear bid to boost growth.

Based on the overnight market prints which are an oddly reddish shade of green, it took algos about 12 hours to realize that the reason they soared for most of October, namely hopes of an easier Fed which were launched with the terrible September jobs report and continued with increasingly worse US economic report in the past month, can not be the same reason they also soared yesterday after the announcement of a more hawkish than expected Fed statement which envisioned a stronger US economy and a removal of foreign considerations, which even more curiously took place on even worse data than the Fed's far more dovish September statement.

Gold’s biggest enemy is a brilliant Nobel Prize winning economist, university professor and columnist for the New York Times. Sadly, he is also a con man.